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M&M's portfolio review December 2018

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TheMotorcycleBoy
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Re: M&M's portfolio review December 2018

#189763

Postby TheMotorcycleBoy » December 28th, 2018, 4:10 pm

Will do the unitisation starting at £1, with Mel and my ISAs this weekend, and aim to update on the last weekend of the month.

We both use IWeb as our provider, and alas our ISAs share several firms, so being a computer nerd I'm going to try to come up with a way to consolidate both sets of datas, with minimal effort. If IWeb do offer an "extract-to-.xls" or ".csv" format option, then I'm afraid that I've not found it yet.

I'm glad I've procrastinated - since first thing this morning, I decided the next holding to top up: so I'll bought £1200ish of ULVR @4093p.

Matt

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Re: M&M's portfolio review December 2018

#190585

Postby TheMotorcycleBoy » January 2nd, 2019, 3:42 pm

Hi Doug,

Sorry for the late-ish reply to an earlier one of yours...

doug2500 wrote:I don't bother with bonds, but I have a long time horizon and high tolerance to risk. And a family business for security.

So given that you don't buy bonds as quoted above, what do you invest in when equity is valued high? Do you just endeavour to find the cheapest decent looking shares, or stay in cash?

Just wondered really, but from what you've already said my guess would be that you continue investing in equities.

So what do you do?

thanks Matt

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Re: M&M's portfolio review December 2018

#190593

Postby doug2500 » January 2nd, 2019, 4:10 pm

TheMotorcycleBoy wrote:Hi Doug,

Sorry for the late-ish reply to an earlier one of yours...

doug2500 wrote:I don't bother with bonds, but I have a long time horizon and high tolerance to risk. And a family business for security.

So given that you don't buy bonds as quoted above, what do you invest in when equity is valued high? Do you just endeavour to find the cheapest decent looking shares, or stay in cash?

Just wondered really, but from what you've already said my guess would be that you continue investing in equities.

So what do you do?

thanks Matt


I aim to be fully invested but am happy to hold cash until I see something attractive. I've had about 7% cash for a couple of years but that's dropped to 3% recently.

I don't trade much, I tend to choose my company and hold until something negative happens. I don't tend to sell on valuation.

I suppose I've been lucky in timing. After years of feeding new money in while valuations weren't too stretched, I've not had any spare for a couple of years so haven't had to try hard to find a home for cash. Even so I think bonds have (arguably) been as overpriced as equities for a couple of years so I wouldn't have bought any anyway.

Edited to add that the 7% cash is an average as it has risen and fallen due to modest activity. I haven't just sat on the cash as a dedicated portfolio constituent.

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Re: M&M's portfolio review December 2018

#190600

Postby TheMotorcycleBoy » January 2nd, 2019, 4:22 pm

doug2500 wrote:
TheMotorcycleBoy wrote:Hi Doug,

Sorry for the late-ish reply to an earlier one of yours...

doug2500 wrote:I don't bother with bonds, but I have a long time horizon and high tolerance to risk. And a family business for security.

So given that you don't buy bonds as quoted above, what do you invest in when equity is valued high? Do you just endeavour to find the cheapest decent looking shares, or stay in cash?

Just wondered really, but from what you've already said my guess would be that you continue investing in equities.

So what do you do?

thanks Matt


I aim to be fully invested but am happy to hold cash until I see something attractive. I've had about 7% cash for a couple of years but that's dropped to 3% recently.

I don't trade much, I tend to choose my company and hold until something negative happens. I don't tend to sell on valuation.

I suppose I've been lucky in timing. After years of feeding new money in while valuations weren't too stretched, I've not had any spare for a couple of years so haven't had to try hard to find a home for cash. Even so I think bonds have (arguably) been as overpriced as equities for a couple of years so I wouldn't have bought any anyway.

Edited to add that the 7% cash is an average as it has risen and fallen due to modest activity. I haven't just sat on the cash as a dedicated portfolio constituent.

Thanks for this Doug,

Yours seems like a very reasonable approach. I'm not sure whether our bonds in the portfolio were such a great plan - it comes about from reading to much literature about balanced portfolios I guess! Still they all (so far) pay out coupons so we are happy with keeping them as a dwindling proportion of our overall investments.

cheers Matt

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Re: M&M's portfolio review December 2018

#190803

Postby simoan » January 3rd, 2019, 1:51 pm

Matt & Mel,

It looks a nice portfolio with some quality companies. I don't really have much to say on your equity holdings other than I own some of them myself - BUR, BVXP, GAW, TRI, TATE, DGE, NXT etc. However, I'm with Doug (and Warren Buffett) when it comes to bonds:

https://www.cnbc.com/2018/02/26/buffett ... inute.html

I don't really see the point of bonds unless you're retired and need the certainty of income. So what are you trying to achieve by holding bonds? My understanding is that both of you are working and some way from "celebrating" your 50th birthdays? So why do you need the income?

Sorry, I'm just a bit perplexed as to why anyone in their 30's or 40's, still in full-time employment and with a long term investment horizon would want to hold any bonds at all.

All the best, Si

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Re: M&M's portfolio review December 2018

#190814

Postby TheMotorcycleBoy » January 3rd, 2019, 2:25 pm

simoan wrote:Matt & Mel,

It looks a nice portfolio with some quality companies. I don't really have much to say on your equity holdings other than I own some of them myself - BUR, BVXP, GAW, TRI, TATE, DGE, NXT etc. However, I'm with Doug (and Warren Buffett) when it comes to bonds:

https://www.cnbc.com/2018/02/26/buffett ... inute.html

I don't really see the point of bonds unless you're retired and need the certainty of income. So what are you trying to achieve by holding bonds? My understanding is that both of you are working and some way from "celebrating" your 50th birthdays? So why do you need the income?

Sorry, I'm just a bit perplexed as to why anyone in their 30's or 40's, still in full-time employment and with a long term investment horizon would want to hold any bonds at all.

All the best, Si

I agree that we perhaps shouldn't have bought the bonds. I think we were seduced by the "balanced portfolio" concept that some investment writers bang on about. But anyway they are there now so be it.

I think the time we should reconsider bonds is if equity price rise such that bonds actually offer better value. But anyway that's just my tuppence worth, I definitely don't claim to be an expert on such matters.

FWIW I'm not in my 30s or 40s. I wish. I'm 51 in March :cry:

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Re: M&M's portfolio review December 2018

#190830

Postby simoan » January 3rd, 2019, 3:21 pm

TheMotorcycleBoy wrote:I agree that we perhaps shouldn't have bought the bonds. I think we were seduced by the "balanced portfolio" concept that some investment writers bang on about. But anyway they are there now so be it.

I think the time we should reconsider bonds is if equity price rise such that bonds actually offer better value. But anyway that's just my tuppence worth, I definitely don't claim to be an expert on such matters.

FWIW I'm not in my 30s or 40s. I wish. I'm 51 in March :cry:

OK, so you're just latecomers to investing in individual companies, no problem - late is better than never! However, the point remains even for someone in their early 50's who is still working and has a long term perspective. Unless you're buying bonds in some kind of distressed situation where you expect to get a significant capital gain as well as income e.g. bank preference shares during the GFC, then I really don't see the point.

You need to remember that even in your early 50's you're liable to be at the younger end of the age spectrum of contributors on Lemonfool, so when someone suggests investing in bonds you need to bear in mind that whilst that may work very well for someone in their 70's who is looking for more secure income streams, you're a long way from that stage yet!

All the best, Si

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Re: M&M's portfolio review December 2018

#190839

Postby TheMotorcycleBoy » January 3rd, 2019, 3:38 pm

simoan wrote:It looks a nice portfolio with some quality companies. I don't really have much to say on your equity holdings other than I own some of them myself - BUR, BVXP, GAW, TRI, TATE, DGE, NXT

We recently entered the game re. BVXP, DGE and GAW. And we've bought BUR 3 times now (after a top slice in the summer).

Anyway....the crux of my question:

What are your views on topping up TATE, NXT or TRI anytime soon?

Matt and Mel

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Re: M&M's portfolio review December 2018

#190840

Postby TheMotorcycleBoy » January 3rd, 2019, 3:40 pm

simoan wrote:You need to remember that even in your early 50's you're liable to be at the younger end

Too bloodly right!! I aint checking out till I'm at least 100! I just mentioned my age by way of correcting your earlier assumption :lol:

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Re: M&M's portfolio review December 2018

#190851

Postby simoan » January 3rd, 2019, 4:25 pm

TheMotorcycleBoy wrote:Anyway....the crux of my question:

What are your views on topping up TATE, NXT or TRI anytime soon?

Matt and Mel

Sorry, I don't really have any views on timing of buys and sells. There's a saying that "the time is now" if you have cash to invest but with such an obvious known unknown as the 29th March not far away I'm happy to sit on my hands. Unless I spot an obvious price anomaly, so possibly BRBY is starting to look interesting again after today's fall, which I assume relates to Apple's warning about a downturn in China. That sounds like an excuse to me for what might just be a loss of market share and poor pricing of their own products. I'm not sure the latter effects most Burberry customers!

All the best, Si

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Re: M&M's portfolio review December 2018

#191771

Postby Clitheroekid » January 7th, 2019, 7:43 pm

TheMotorcycleBoy wrote:What are your views on topping up TATE, NXT or TRI anytime soon?

I'd been contemplating buying NXT for some time, as everything I've read about them indicates they are a very well run company, and managing the transition (if such it is) from High Street to online far better than most. In fact Next's proportion of its sales online is now actually more than that from its bricks and mortar stores, and it's more than making up in online sales what it's losing on the High Street.

Furthermore, they are executing a plan to gradually close down unprofitable stores as leases expire. If they can't obtain a hefty rent reduction when the lease comes up for renewal they simply hand the shop back to the landlord. This is in stark contrast to many High Street retailers who are stuck with long leases and no exit route for many years to come.

EPS guidance for this year is now 435.2p, which is up 4.4% on last year. This is very unusual over such a difficult year for retailers generally, and to my mind indicates excellent management and a loyal customer base. The PER is around 10.5.

I'm annoyed that I was away over Christmas / New Year, and missed the chance to pick it up at around £41, but I finally took the plunge today at £44.89. Although I'm quite happy to take a profit given the opportunity, with a yield of around 3.6% I'm also happy to stay in for the long term.

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Re: M&M's portfolio review December 2018

#191847

Postby TheMotorcycleBoy » January 8th, 2019, 6:22 am

Clitheroekid wrote:
TheMotorcycleBoy wrote:What are your views on topping up TATE, NXT or TRI anytime soon?

I'd been contemplating buying NXT for some time, as everything I've read about them indicates they are a very well run company, and managing the transition (if such it is) from High Street to online far better than most. In fact Next's proportion of its sales online is now actually more than that from its bricks and mortar stores, and it's more than making up in online sales what it's losing on the High Street.

Furthermore, they are executing a plan to gradually close down unprofitable stores as leases expire. If they can't obtain a hefty rent reduction when the lease comes up for renewal they simply hand the shop back to the landlord. This is in stark contrast to many High Street retailers who are stuck with long leases and no exit route for many years to come.

EPS guidance for this year is now 435.2p, which is up 4.4% on last year. This is very unusual over such a difficult year for retailers generally, and to my mind indicates excellent management and a loyal customer base. The PER is around 10.5.

I'm annoyed that I was away over Christmas / New Year, and missed the chance to pick it up at around £41, but I finally took the plunge today at £44.89. Although I'm quite happy to take a profit given the opportunity, with a yield of around 3.6% I'm also happy to stay in for the long term.

Well done with the topup. I think I'm going to top this up soon. They did fall as long as about £39.90 I believe.

I have been holding back over the past week (!) since I spent a disproportionate amount toward the end of December.

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Re: M&M's portfolio review December 2018

#191920

Postby simoan » January 8th, 2019, 12:14 pm

Clitheroekid wrote:I'm annoyed that I was away over Christmas / New Year, and missed the chance to pick it up at around £41, but I finally took the plunge today at £44.89. Although I'm quite happy to take a profit given the opportunity, with a yield of around 3.6% I'm also happy to stay in for the long term.

I think you need to be careful with the psychology here - It's not good to feel like you "missed out". Next time you're about to go on holiday you may remember this and make a rash decision to buy something in haste. I found I became a much better investor once I eradicated the idea of "missing the boat" from my thought process. The fact is that you still had the money to invest on your return, you can always buy something other than NXT, and let's face it, they could have released a lousy trading statement on 3rd Jan. How would you feel if you'd invested at £41 and the share price was now £35 and not £48?

In reality you did the right thing by waiting to buy until after the trading statement.

All the best, Si

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Re: M&M's portfolio review December 2018

#191957

Postby everhopeful » January 8th, 2019, 2:57 pm

I have been investing for forty years and all of these conversations reflect topics that go round and round. It is in my humble opinion silly to say that there is no point to owning bonds (fixed interest). It would be more sensible to say there is no point in owning individual stocks when all the evidence suggests you will not beat the markets and would be better off in trackers. Fixed interest securities can be a valuable and relatively low volatility way to ensure an income stream but can also be used for potential growth. I agree that valuations of bonds are not particularly attractive at the moment but over a longer time scale opportunities will arise. I bought Premier Oil retail bonds for example when they were valued at about 50% of their current value and have also enjoyed the income stream. The income stream is not only relevant to people in retirement needing the income. I do not take my income from fixed interest but reinvest it where I think best including individual stocks. Holding fixed interest does diversify a portfolio and will smooth out volatility and possibly reduce losses in a downturn. My overall holdings are about 60% equities including individual shares, ITs, ETFs, 30% Fixed Interest and 10% cash. I am down 4.76% in 2018.

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Re: M&M's portfolio review December 2018

#191972

Postby simoan » January 8th, 2019, 3:39 pm

everhopeful wrote:I have been investing for forty years and all of these conversations reflect topics that go round and round. It is in my humble opinion silly to say that there is no point to owning bonds (fixed interest). It would be more sensible to say there is no point in owning individual stocks when all the evidence suggests you will not beat the markets and would be better off in trackers.

Well, whilst I keep hearing this it is not my own experience of investing in equities for the past 20 years. The FTSE100 has gone nowhere in that time and here I am able to retire way before my time. I dread to think where I'd be if I'd been invested 100% in bonds for 20 years - probably facing another 5-10 years of full-time employment. I suspect this dogma that private investors can't do better than a tracker is supported by those who would rather you gave them your money. For many lay people not interested in the stock market it is undoubtedly the case that a tracker is best, but for people like Matt & Mel that are prepared to put the effort in and do the hard yards, it is pretty easy to beat the indices all ends up. If I can do it, anyone can! IMO it's far from silly to say that someone under 50 with time on their side should avoid bonds, but don't take my word for it, Warren Buffett thinks so too...

everhopeful wrote:I bought Premier Oil retail bonds for example when they were valued at about 50% of their current value and have also enjoyed the income stream. The income stream is not only relevant to people in retirement needing the income. I do not take my income from fixed interest but reinvest it where I think best including individual stocks. Holding fixed interest does diversify a portfolio and will smooth out volatility and possibly reduce losses in a downturn. My overall holdings are about 60% equities including individual shares, ITs, ETFs, 30% Fixed Interest and 10% cash. I am down 4.76% in 2018.

But this depends how old you are doesn't it? And that was my point. If you have two people in full-time employment with 10 years or more before they retire, why on earth would you suggest they hold bonds? Has there ever been a 10 year period where bonds have beaten equities? I don't know the answer to that but I bet it's an extremely rare occurrence. I agree that buying bonds in distressed situations can work well but you really need to understand what you're doing because if a bond is at 50% of par then it is a sign of a very high risk situation and a potential 100% loss.

Anyway, well done on your performance for 2018. I haven't had time to look at my EoY yet but thanks to a few big winners I believe I was pretty much flat to very slightly down, which isn't great as I was 7% up YTD at the end of September.

All the best, Si

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Re: M&M's portfolio review December 2018

#191973

Postby everhopeful » January 8th, 2019, 3:53 pm

Well if we are going to quote Warren Buffet let's remember he recommends trackers over active management for investment in equities. His bet that a simple tracker would beat active management over ten years won handsomely!

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Re: M&M's portfolio review December 2018

#191978

Postby simoan » January 8th, 2019, 4:05 pm

everhopeful wrote:Well if we are going to quote Warren Buffet let's remember he recommends trackers over active management for investment in equities. His bet that a simple tracker would beat active management over ten years won handsomely!

That's not quite right, the bet was specifically with a US Hedge Fund manager. So it was quite a select bet. He wouldn't have won against Terry Smith, for instance. However, his (and my) point about bonds stands - I imagine even the Hedge Fund manager beat bonds over 10 years!

All the best, Si

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Re: M&M's portfolio review December 2018

#191987

Postby everhopeful » January 8th, 2019, 4:32 pm

That is reducing it to a binary choice. I was not suggesting holding bonds only but rather trying to defend the role of holding some fixed interest in a portfolio for the reasons I gave above. I didn't even mean to say that holding all equities is wrong ( I hold 60%). I was just reacting to the assertion that it is never sensible to hold fixed interest at all. Chacun a son gout.

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Re: M&M's portfolio review December 2018

#191989

Postby tjh290633 » January 8th, 2019, 4:41 pm

everhopeful wrote:I was just reacting to the assertion that it is never sensible to hold fixed interest at all.

There are clearly times when it makes sense to hold bonds, as opposed to equities. However at a time of rising interest rates it is a debateable move.

I recall a discussion in the Investors' Chronicle, many years ago. The proponent there was advocating switching between bonds and cash when interest rates were falling and going back into bonds when they were rising. That does make sense.

TJH

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Re: M&M's portfolio review December 2018

#191991

Postby simoan » January 8th, 2019, 5:08 pm

everhopeful wrote:That is reducing it to a binary choice. I was not suggesting holding bonds only but rather trying to defend the role of holding some fixed interest in a portfolio for the reasons I gave above. I didn't even mean to say that holding all equities is wrong ( I hold 60%). I was just reacting to the assertion that it is never sensible to hold fixed interest at all. Chacun a son gout.

Well there's nothing wrong with binary, it's the source of my wealth :-) The point I was trying to make by using the extreme of 100% bonds is that holding any amount will reduce your returns in the long term, and that there is no reason for a young person to hold them at all. I'm sorry if this wasn't clear. I am not trying to say you should never hold fixed interest under any circumstances. There is clearly a time and a place for some types of investors and under certain economic conditions. However, not only are the conditions for buying bonds wrong right now, but, reiterating my initial point with regard to the specific circumstances of Matt & Mel, I do not see why they are holding them at all.

All the best, Si


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