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Munroman's rules of finance

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
TUK020
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Munroman's rules of finance

#192393

Postby TUK020 » January 10th, 2019, 1:51 pm

Chap used to post in the other place under the monniker 'Munroman'.
He seems to get clobbered everytime he chirps up due to a perceived conflict on interest, but he has made some useful contributions.

He came up with:

There are only a few rules in finance.
1. Markets are volatile, get used to it.
2. No one really knows what is going on, so join the club.
3. Dividends keep companies a bit more honest.
4. Compound interest works.
5. Diversification reduces risk.


I would like to suggest adding:
6. Trading costs eat into your returns
With this addition, I think this maps pretty well onto the spirit of HYP.

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Re: Munroman's rules of finance

#192397

Postby Lootman » January 10th, 2019, 1:55 pm

You realise that he is still here, right?

memberlist.php?mode=viewprofile&u=192

TUK020
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Re: Munroman's rules of finance

#192403

Postby TUK020 » January 10th, 2019, 1:59 pm

Lootman wrote:You realise that he is still here, right?

memberlist.php?mode=viewprofile&u=192


I eventually worked it out. Comments still stand.

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Re: Munroman's rules of finance

#192457

Postby colin » January 10th, 2019, 4:22 pm

Yes I remember that just before the financial crisis of 2008 hit , around 2007 Munroman was claiming that investing in shares with a high dividend yield was a safer way to invest in stock markets on the grounds that such shares had done well during the dot.com crash of 2001. I always thought that Munroman's posts were attempts at manipulation, such as trying to infer a link between high dividend yields and compounding.

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Re: Munroman's rules of finance

#192467

Postby Lootman » January 10th, 2019, 4:34 pm

TUK020 wrote:Chap used to post in the other place under the monniker 'Munroman' . . I think this maps pretty well onto the spirit of HYP.

That's not really surprising because Munro was a former writer for TMF UK, which has always had a pro-dividend bias. And of course Bland was also a former TMF UK writer, and he claims HYP as his baby. So Munro's theories and Bland's theories derive from the same source.

As Colin notes, the strategy did not hold up well in the 2007-2010 financial crisis, and there still seems to be a higher accident rate for shares that the market has conferred a high yield upon, particularly with finance, retail and support services names.

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Re: Munroman's rules of finance

#192481

Postby OhNoNotimAgain » January 10th, 2019, 4:46 pm

Be sure to understsand the difference between dividends and yield, it is important. Yield is a function of share price, dividends are not; they are directly related to the finances of the company. The value that the stock market places on them can vary enormously.

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Re: Munroman's rules of finance

#192496

Postby mc2fool » January 10th, 2019, 5:13 pm

colin wrote:Yes I remember that just before the financial crisis of 2008 hit , around 2007 Munroman was claiming that investing in shares with a high dividend yield was a safer way to invest in stock markets on the grounds that such shares had done well during the dot.com crash of 2001. I always thought that Munroman's posts were attempts at manipulation, such as trying to infer a link between high dividend yields and compounding.

Then you remember incorrectly. His fund weights by total dividend payout (£m), not yield.

It's not HYP.

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Re: Munroman's rules of finance

#192502

Postby Lootman » January 10th, 2019, 5:39 pm

mc2fool wrote:
colin wrote:Yes I remember that just before the financial crisis of 2008 hit , around 2007 Munroman was claiming that investing in shares with a high dividend yield was a safer way to invest in stock markets on the grounds that such shares had done well during the dot.com crash of 2001. I always thought that Munroman's posts were attempts at manipulation, such as trying to infer a link between high dividend yields and compounding.

Then you remember incorrectly. His fund weights by total dividend payout (£m), not yield.

His fund does, although that fund was only launched in 2011, so it's possible that Munro may have changed his mind after seeing what happened in the financial crisis. He may have morphed from being a yield junkie to being a dividend junkie.

Over 5 years it is a third quartile performer:

https://www.trustnet.com/factsheets/o/a ... a-uk-x-acc

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Re: Munroman's rules of finance

#192507

Postby richfool » January 10th, 2019, 5:57 pm

Did he (Munroman) also use to post on MF as Lord Essex?

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Re: Munroman's rules of finance

#192509

Postby PinkDalek » January 10th, 2019, 6:00 pm

Lootman wrote:Over 5 years it is a third quartile performer:

https://www.trustnet.com/factsheets/o/a ... a-uk-x-acc


... and over 6 months and 3 years, first quartile.

It' snot that you've never had arguments with PYAD and Munroman of course. It's as if you seek out such posts to have a pop.

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Re: Munroman's rules of finance

#192511

Postby PinkDalek » January 10th, 2019, 6:01 pm

richfool wrote:Did he (Munroman) also use to post on MF as Lord Essex?


https://boards.fool.com/profile/MunroMan/info.aspx

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Re: Munroman's rules of finance

#192513

Postby Lootman » January 10th, 2019, 6:05 pm

PinkDalek wrote:
Lootman wrote:Over 5 years it is a third quartile performer:

https://www.trustnet.com/factsheets/o/a ... a-uk-x-acc

... and over 6 months and 3 years, first quartil

It' snot that you've never had arguments with PYAD and Munroman of course. It's as if you seek out such posts to have a pop.

I offer criticisms of investment ideas where I believe those ideas are invalid. I always welcome refutations in those cases where I am wrong.

Most investors attach more significance to returns over longer periods of time, since they cover a greater range of market conditions and more components of the market cycle. Do you disagree?

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Re: Munroman's rules of finance

#192515

Postby PinkDalek » January 10th, 2019, 6:10 pm

Lootman wrote:Most investors attach more significance to returns over longer periods of time, since they cover a greater range of market conditions and more components of the market cycle. Do you disagre?


No, not really, but let's look in 5 years' time.

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Re: Munroman's rules of finance

#192590

Postby GoSeigen » January 10th, 2019, 10:35 pm

OhNoNotimAgain wrote:Be sure to understsand the difference between dividends and yield, it is important. Yield is a function of share price, dividends are not; they are directly related to the finances of the company. The value that the stock market places on them can vary enormously.


Which investor beside the most green newbie doesn't understand the difference between dividends and yield?

There must be some other point buried here, but I can't figure it out.


GS

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Re: Munroman's rules of finance

#192611

Postby OZYU » January 11th, 2019, 7:33 am

Not Him.. can quote ad nauseum on all sorts of investing subjects.

But I judge an investor’s quality by his returns, take a look at his fund since inception, capital destruction vs RPI for a mundane yield, easily bettered by most investors without breaking sweat, then you will see how hollow all his quotes are looking. And he has the gall to call it smart beta!

Now if you want to test his actual understanding, take a look at some threads on TMF where posters got exasperated explaining the simplest concepts to him, as Munroman.

Ozyu

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Re: Munroman's rules of finance

#192649

Postby monabri » January 11th, 2019, 9:15 am

"3. Dividends keep companies a bit more honest."

Carillion?

I'd say the opposite is true.

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Re: Munroman's rules of finance

#192659

Postby colin » January 11th, 2019, 10:11 am

GoSeigen wrote
Which investor beside the most green newbie doesn't understand the difference between dividends and yield?

I don't.
I would have thought that the companies which pay out the largest amount of dividends in absolute terms do so because they can't find anything to invest in , so there is no mechanism for the dividend to grow, I think that is so obvious that in an efficient market the share price would reflect that lack of growth potential to provide a higher yield , whether or not the underlying shares in the Munro fund do actually have a higher than market yield I have no idea, do they?

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Re: Munroman's rules of finance

#192660

Postby PinkDalek » January 11th, 2019, 10:12 am

OZYU wrote:Not Him..


Yes, him. That was a link to his Fool USA info page where the Fool UK profiles are replicated. You should be able to find your old profile over there if you take a look.

Now if you want to test his actual understanding, take a look at some threads on TMF where posters got exasperated explaining the simplest concepts to him, as Munroman.


I recall some of the threads but the Fool UK discussion boards posts no longer exist. Someone may have saved them at the WayBackMachine, of course, but I certainly haven't.

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Re: Munroman's rules of finance

#192663

Postby Alaric » January 11th, 2019, 10:23 am

PinkDalek wrote:I recall some of the threads but the Fool UK discussion boards posts no longer exist.


I seem to recall an assertion that the "Income Reserve" found on the balance sheet of IT's was held as cash. It might be if that's the investment policy, but doesn't have to be as it's an accounting device to keep track of how much of the received dividends has been distributed.

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Re: Munroman's rules of finance

#192686

Postby GoSeigen » January 11th, 2019, 11:29 am

colin wrote:
GoSeigen wrote:
Which investor beside the most green newbie doesn't understand the difference between dividends and yield?

I don't.


yield = dividend/price for a perpetual security of course...

Or if this is not what the poster meant, then what did he mean? colin chopped off my post where I said I did not understand the point being made.

GS


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