Kenny wrote:If any investor cannot understand a company's accounts, they should not invest in that company. That is a basic of investing that most investors abide by. A person should certainly not be expressing an opinion of the merits or not of investing in any company they do not understand, because they are misleading people who know even less.
I am constantly surprised by "investors" lack of knowledge of what they invest in. Does no one these days make an effort to understand what they are investing in or conduct any research? I can see why Warren Buffett recommends that most investors should only invest in a low cost index fund.
If you wanted to profile me I'm one of those investors in the early stages of retirement who is looking for an income stream for the base of my portfolio so that even in extreme market circumstances me and my family will live happily ever after. I'm not adverse to a bit of risk but only in measured doses.
I spent 90 minutes reading RAV's accounts the other night and have spent more time reading Bulletin Boards over the last 3 years and gained what information I can. I'm pretty sure this is far more time than most people spend but I have the luxury of being retired/making a living from my portfolio and can do that.
At the end of the 90 minute process I'd got far enough to know RAV was not for me and not worth doing any more research. Imho the share price is not carrying a sufficient premia for the risk compared with other pref shares or fixed income bonds or equities.
Then we have the Woodford effect which has yet to unwind. It is his stated position in his video that WEIF will only contain FTSE100 and bit of FTSE250 going forward. Now, he mght find a buyer next week or he might take 5 years to sell off his RAV, or in 5 years he might have sold nothing and argue he wants to include some stuff outside the FTSE250 again. Or he might be forced to sell it due to redemptions. What I think I can interpret though is that if today he was offered market prices less 5% for a sizeable quanitity of his RAVs
he would be foolish not to take that since he is letting other stuff go at 10% less than it was a few weeks ago.
So, in refference to your point made some of us do alot of research, we just don't like what we see and having decided I'm not interested there's not much point in writing up on a BB why it's not for me. That takes time and I've moved onto the next stock. I've found it also tends to annoy people who naturally tend to defend their stock picks. I've often found myself doing the same and I'm grateful as some challenge has sometimes saved me money despite my tendancy not to cut my losers sufficiently fast.
I'll come back to the RAVs if they drop another 10% and do some further research. Until then out of the whole universe of available products and even smaller universe of "fixed income type" products I think there is far better value out there, certainly in terms of my risk profile.