Ever want to shout AAAARGGGHHH ?

[77ss]

This has been challenging from a psychological predictive. I've realized that I can take market gyrations in my stride and don't unduly worry about the odd share tanking. Seeing my portfolio seriously under preform the FTSE is much harder. I'm hoping that things reverse just as quickly as they've developed. I don't want to fall into the trap of panic selling.

Perhaps you need to monitor your performance less closely. Particularly if it worries you. The HYP approach is a long-term one.

A few months is irrelevant, It woud be nice to outperform the FT100 (or whatever benchmark you choose) over every period, but to expect to do that is futile.

Look at the longer term. I hold 3 of the shares (ULVR, IMB, NG) you mention, and have recently added to 2 of them (ULVR and IMB). Remembe that a fall in share price may present a buying opportunity.

I have held all three shares for over 5 years. If I feel at all concerned by a fall in share price, I can just look at the XIRR figures - 12.75%, 15.66% and 12.23%.

[Dod1010]

kempiejohn

The thread you quote from TMF covers most of the ground being discussed here I think (although it is difficult to say; these very long threads are sometimes difficult to follow as they wander around all over the place.) not least because I have imparted some of my views in an interesting exchange with the now missing ianthugh (unless of course he is now masquerading under another name)

As to grimer's post, I am not in the least concerned and in fact I think the peaks seen in August (if indeed that was a peak) were a bit of froth, to be ignored at the time and now. Mind you I was tempted to trim Imperial Brands at the time at around £40, not to harvest the gain, although that would have been nice, but because it was my biggest holding by some margin. Missed the boat. Too bad and now my biggest holding is HSBC

[StepOne]

re. underperforming. Since June, the capital value of my HYP is up 6.3% and I make the FTSE up 10.7%.

I assume that is purely capital with no new investments or dividends added?

Yes, no capital added, and dividends taken out.

Interesting about your under-performance. My HYP is all in the FTSE 100 (except S32, spun out of BHP Billiton). Big gainers since June have been the dollar earners (BHP, HSBC, BP and BAe Systems). The only big loser had been British Land. The rest are all somewhere near the middle.

StepOne

[Wizard]

Perhaps, Wizard you could post the list you came up with? A second or third eye could spot omissions.
In fact for anyone thinking of putting together a 15ish HYP - posting here could be a useful sense check.

I did have this thread on the topic previously
http://lemonfool.co.uk/viewtopic.php?f= ... 5516#p5516

Having looked back I see time flies and it is actually from a month ago But at the time I summarised as

"So after that carnage that leaves the following list; RDSA [changed to RDSB after feedback], ADN, HSBA, SSE, LGEN, ISAT, CPI, VOD, BLND, RMG, IMB, BWY, PNN, WMH, SKY amd GNK. Resulting yield c.5.0%."

Terry.

[kempiejon]

"So after that carnage that leaves the following list; RDSA [changed to RDSB after feedback], ADN, HSBA, SSE, LGEN, ISAT, CPI, VOD, BLND, RMG, IMB, BWY, PNN, WMH, SKY amd GNK. Resulting yield c.5.0%."

Terry.

Look like a good start. I hold most of them and in the past year have bought some of Aberdeen Asset Management, SSE, Capita (new) British Land, Pennon and Greene King (new). As other idea how about a quick look at TATE, one of the Pharmas, BAe or Meggit, Carillion or G4S, Britivic, N Brown or Marks&Spencer, they rank as worth investigation as possible top ups in my HYP. I have not done the background and just pulled the number from my spreadsheet - my HYP yields around 4.5%.

[Lootman]

The yield isn't defined, but it is determined - determined not by the investor, by the procedure which Kempiejon succinctly outlined:

Absolutely, pick a selection of shares, highest yield in any sector that meets safety factors and diversification, that's the jist of how we pick HYP shares isn't it?

So it's determined by the highest yielders

We're not necessarily disagreeing. You're saying buy the highest yield in a sector allowing for safety factors and diversification. And so am I. It's just that I have a broader and deeper set of safety factors than you do, and so I may find that the yield on the eventual pick ends up being lower.

However I don't accept the idea that the yield of your portfolio is determined totally by external factors. There is room for individual influence over that.

I do not agree with Lootman's suggestion, or that buying a UK tracker would fulfill the HYP brief.

You're taking my words a little out of context there. What was I saying is that IF your overall yield requirement from the portfolio is at or below the market yield THEN an investor does have other options to achieve his goals, like an index fund or using IT's. These may be useful if one is reaching the point in life where it's becoming too much work to run a portfolio of individual shares. It was cited as an eventual exit strategy from HYP and not as a HYP option itself.

However, this is NOT the strategy board, so would should continue any resultant nit-picking on the HYSS board. I thought it important on this board to point out that Lootman is being disingenuous concerning HYP yield.

There are always going to be topics that straddle the two boards and perhaps this is one. But my earlier comments covered a number of very practical issues such as:

1) How to determine the target yield of a HYP
2) How to capture growth and safety of dividends
3) How much to allocate to HYP versus other strategies
4) How to ensure better diversification
5) Why capital can matter even if you decide that it doesn't

I may have wandered a little, but "disingenuous" is a harsh characterisation. And enough other commentators echoed those ideas indicating that they were of practical use for others.

[grimer]

Perhaps you need to monitor your performance less closely. Particularly if it worries you. The HYP approach is a long-term one.

I agree, but I'm currently fully invested. I just hope the current discounts continue into the New Year.

My post was more of a 'confession' made in solidarity with the OP regarding the psychology of investing. It is easy to say that capital doesn't matter and easy to go along with that maxim - so long as your portfolio is tracking up/down with the wider index. Once one starts to see a portfolio uncoupling in a negative manner from the index, then it is natural to start wondering about the merits of passive funds. I'm certainly not planning to make any rash sales, because I don't think anything has changed at the companies that have lost ground to the FTSE.

As I said earlier:

Since then, I've experienced a perfect storm of HYP shares losing capital value - SKY, ULVR, IMB, RMG, NG.

This has been challenging from a psychological predictive. I've realized that I can take market gyrations in my stride and don't unduly worry about the odd share tanking. Seeing my portfolio seriously under preform the FTSE is much harder. I'm hoping that things reverse just as quickly as they've developed.

Sky up 32% today at the time of writing...

[tjh290633]

When I started to filter the universe of shares to get to a preferred portfolio of target HYP shares it became apparent that there were actually very few shares that came even close to satisfying HYP criteria, even though my criteria were considerably relaxed versus those originally put forward in a number of Old Fool articles.

I don't seem to have any problem.

Filtering can give deceptive results. How does one deal with a company that reports in a foreign currency? The dividend may be held or raised, but the sterling payout may fall due to exchange rate variation.

Corporate activity also really muddies the waters.

I suspect that one has to dig a bit deeper.

I recall that, when I first started screening shares c.1999 or 2000, there were often shares that had high yields that failed to appear. The reason was usually that I had got a parameter wrong, and so they were cut out.

By that time I had over 20 shares and was looking for shares to go into an ISA which would complement those already in my PEP. I came to the conclusion that it was best to do a simple screening, say Capital value over £1million and Yield over 3.5% or whatever, sort by yield, and see what that threw up. Then dig further into the other parameters and see if there was any reason not to pick them. I was fairly relaxed about things like level of debt and the past dividend history. Often DigitalLook had got something wrong, like a currency conversion or ignoring quarterly dividends.

My experience is that, if you take a list of shares and sort them by yield, be it FTSE100 or FTSE350, or above a certain Market Capitalisation, there are always shares with yields above the market average which are suitable for selection. For reasons of diversity you may rule a lot of them out, like all the banks bar one, or all of the housebuilders bar one. You may make a conscious decision to double up a particular sector, but I can honestly say that I have never not found a suitable share. I have also looked at sectors and found no suitable shares, or only one, and that might have been a smaller capitalisation company. That was in the Chemicals sector, after ICI had been taken over. The only suitable share was Yule Catto, now Synthomer, but it was a low market cap share. This was April 2008 and the starting yield was 6.3% at 153p. I added some more in November 2008 at 82p, then by March 2009 they were down at 41p and had stopped paying dividends. I sold 25% in October 2009 at 147p, when they were overweight and then in August 2010 they announced a resumption of dividends, albeit at a low level and I decided to sell out in September at 240p - kerching!. The rate of return was just under 30%. Sold because of low yield, which I consider to be justificable in an HYP.

TJH