The Lemon Fool

Lootman wrote:But more generally if someone posts a review of their portfolio, whether pyad or anyone else, real or imaginary. HY or not, then we have to be allowed to criticise it. The idea that you can say something nice about it but cannot say something critical is unhelpfully introducing a skewed perspective. How can anyone learn if their mistakes are never pointed out?

Although HYP is not a religion it has some similarities. The HYP-P board is a bit like a religion's church building, purpose built for its followers. Visitors are welcome but any trashing of the sermon, however much someone might feel the need, should be done outside as it is simply rude to do it in there, especially as the building has a polite notice on its gothic door asking for respect.

Chris

csearle wrote:

Lootman wrote:But more generally if someone posts a review of their portfolio, whether pyad or anyone else, real or imaginary. HY or not, then we have to be allowed to criticise it. The idea that you can say something nice about it but cannot say something critical is unhelpfully introducing a skewed perspective. How can anyone learn if their mistakes are never pointed out?

Although HYP is not a religion it has some similarities. The HYP-P board is a bit like a religion's church building, purpose built for its followers. Visitors are welcome but any trashing of the sermon, however much someone might feel the need, should be done outside as it is simply rude to do it in there, especially as the building has a polite notice on its gothic door asking for respect.

Chris

It is certainly interesting that HYP and only HYP gets a safe space and immunity from criticism, and no other investment strategy here gets that privilege.

Perhaps back in the TMF days, when that site was run for profit, and it deemed it as appropriate to give pyad a vehicle to market his tipsheet, that that made economic sense. But does TLF feel that same loyalty? And if so, why?

But perhaps your analogy of HYP as a faith-based form of investing makes sense. And I liked your other analogy of the sluggard-waker. I was just thinking that that reminds me of the Zen practice of a big stick to awaken us from dogmatic slumbers. And then there it was in the footnote of your citation!

Lootman wrote:It is certainly interesting that HYP and only HYP gets a safe space and immunity from criticism, and no other investment strategy here gets that privilege.

Perhaps back in the TMF days, when that site was run for profit, and it deemed it as appropriate to give pyad a vehicle to market his tipsheet, that that made economic sense. But does TLF feel that same loyalty? And if so, why?

But perhaps your analogy of HYP as a faith-based form of investing makes sense. And I liked your other analogy of the sluggard-waker. I was just thinking that that reminds me of the Zen practice of a big stick to awaken us from dogmatic slumbers. And then there it was in the footnote of your citation!

Well that immunity is only within the walls of HYP-P. You/We can criticise HYP to our heart's content almost everywhere else on this site. HYP-P gets this treatment because that is how it ended up on TMF and we initially simply mapped the TMF boards (with many omissions). The whole chaos and disgruntlement of having HYP and other high-dividend-yield investing on one board all happened on TMF, and for all its faults the splitting settled many issues. Let us not forget this.

I think TLF's loyalties lie generally with its users. Quite a few run some kind of HYP (or they have a morbid fascination with those that do) so it would seem, well to me anyway, to be counter-productive to remove the meeting place just because there is no associated tipsheet. Even the high-priest pops in from time to time. What's not to love?

As for whether HYP practitioners are being dogmatic, well I'm not convinced. If they/we were to say you are wrong, HYP is the only way, then I might agree. But they/we usually say this is what we are doing, if you don't like it move on. (Doubtless there will be odd exceptions, but in the main I feel this is accurate.) C.

Lootman wrote:

csearle wrote:Although HYP is not a religion it has some similarities. The HYP-P board is a bit like a religion's church building, purpose built for its followers. Visitors are welcome but any trashing of the sermon, however much someone might feel the need, should be done outside as it is simply rude to do it in there, especially as the building has a polite notice on its gothic door asking for respect.

Chris

It is certainly interesting that HYP and only HYP gets a safe space and immunity from criticism, and no other investment strategy here gets that privilege.

Perhaps back in the TMF days, when that site was run for profit, and it deemed it as appropriate to give pyad a vehicle to market his tipsheet, that that made economic sense. But does TLF feel that same loyalty? And if so, why?

But perhaps your analogy of HYP as a faith-based form of investing makes sense. And I liked your other analogy of the sluggard-waker. I was just thinking that that reminds me of the Zen practice of a big stick to awaken us from dogmatic slumbers. And then there it was in the footnote of your citation!

These sorts of comments usually come from people who have an interest in 100 post long threads arguing that HYP is a mug's game - which is precisely why HYPP was regulated in the way it was, and is.

We have a number of other boards where discussion can be free ranging, so I don't see this as a problem. After all, I read all the boards which interest me, so can other people. Why does there always have to be an "argument" - particularly as those arguments have just repeated endlessly down the decades - there is no new argument to be had.

As regards, protected spaces - all the boards here have there specific purpose so HYPP is not unusual. If there was a need for something similar for other types of investment, it could be set up in the same way. People wanted HYSS as a protected space where they could discuss any type of HY investment without let or hinderence, so that's what they were given.

Arb.

Lootman wrote:But perhaps your analogy of HYP as a faith-based form of investing makes sense!

The true believers can be distinctly unpleasant and sarcastic towards the sceptics, particularly when it is proposed that total return is a common measuring rod for all investment strategies whether income based or not. That helps drive controversies.

Alaric wrote:

Lootman wrote:But perhaps your analogy of HYP as a faith-based form of investing makes sense!

The true believers can be distinctly unpleasant and sarcastic towards the sceptics, particularly when it is proposed that total return is a common measuring rod for all investment strategies whether income based or not. That helps drive controversies.

There is only one person known for regularly being unpleasant and sarcastic, AFAIK. Some have even blocked that person, but mostly he is just tolerated with a shrug as we know him of old.

And if I am, it's an aberration for that moment and you should remind me not to be so beastly because that is never my intent. I would thank you for the reminder if it happens.



Arb.

It's like deja vu yet again, with the same old protagonists - how excruciatingly tedious...

Arborbridge wrote:There is only one person known for regularly being unpleasant and sarcastic,

There were two I was thinking of.

Alaric wrote:

Lootman wrote:But perhaps your analogy of HYP as a faith-based form of investing makes sense!

The true believers can be distinctly unpleasant and sarcastic towards the sceptics, particularly when it is proposed that total return is a common measuring rod for all investment strategies whether income based or not. That helps drive controversies.

Yes, but sceptics like you never seem to use Total Return to demonstrate that their favoured investment approach is superior to that of an HYP. Only that TR is a better measure of performance than is income provided.

I calculate my portfolio's performance as both income and accumulation units, the latter effectively being a measure of TR. Most portfolios go through a building phase and eventually a withdrawal phase. You have to allow for both conditions.

TJH

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I've got to say that I actually think things have improved slightly over the years here with regards to the Income vs TR debate.

I think that whilst the debate itself is likely to continue on, there's thankfully now a noticeable recognition and acceptance, by some TR-proponents at least, of the notion that income-investors are actually content to give up some level of potential-return so as to be relieved of the process of selling down investments, and to provide themselves with regular dividend income in a much more 'hands-off' manner.

That, I think, is the biggest hurdle in the debate, and it's clear that some TR-investors at least recognise and acknowledge that, and are still then able to debate their cases from that point of common acceptance.

Not in all cases though, and I'd perhaps urge any TR-proponents who think they continue to feel that their 'scepticism' is sometimes opposed in a manner that they're not comfortable with to perhaps look a little closer to home and ask themselves if their approach to the Income vs TR debate is being carried out in as fair a way as some others are able to manage it.

If we met someone in a pub who had walked there, and we'd got there in a taxi, there's only so many times we'd put up with being tapped on the shoulder and criticised for spending money when they'd saved theirs, and if they continued it all night even after they'd been given a good explanation on a number of occasions, then perhaps they'd eventually have to expect the odd poke in the eye, through which to perhaps re-consider their approach to harmonious discourse with a little more clarity...

Again though - it's clear that many TR-proponents do fully understand this point, and we should acknowledge that fact and not let the odd one that doesn't spoil things too much...

Cheers,

Itsallaguess

tjh290633 wrote: Only that TR is a better measure of performance than is income provided.

Why isn't that obvious? If you ignore capital performance, only one part of the return is being measured. That surely leads to decision making that is getting a dividend yield of 8 to 10% when it's been paid for by a loss of capital value of an equivalent or greater amount.

I would agree that given a choice between share with a dividend yield of 1%/expected capital growth of 7% and dividend yield of 8% that an income seeker would plausibly choose the 8%. But how far would they sacrifice performance to avoid the dealing costs? But with HYP methods also being used by wealth builders, it's difficult to see why they don't just measure their wealth by total portfolio value after reinvestment regardless of whether it was share value or reinvested dividends.

tjh290633 wrote:

Alaric wrote:The true believers can be distinctly unpleasant and sarcastic towards the sceptics, particularly when it is proposed that total return is a common measuring rod for all investment strategies whether income based or not. That helps drive controversies.

Yes, but sceptics like you never seem to use Total Return to demonstrate that their favoured investment approach is superior to that of an HYP. Only that TR is a better measure of performance than is income provided.

I calculate my portfolio's performance as both income and accumulation units, the latter effectively being a measure of TR. Most portfolios go through a building phase and eventually a withdrawal phase. You have to allow for both conditions.

Your record keeping is legendary and to my mind is the best evidence we have that a form of HYP can work for an individual investor. The fact that your impeccable records have a history that significantly predates the inception of HYP is also significant.

Of course your method differs from what pyad advocates, particularly in respect of your re-balancing methodology. In that sense I think HYP1 is an outlier that is less instructive than your own efforts.

I do not invest for income and I mostly avoid investing in the UK. So HYP would not work for me in any of its various forms. But your approach does serve to demonstrate that such an approach can provide decent total returns, and not just a high income without regard to growth or risk.

I will leave others to speculate whether your good results are due to the strategy itself, or whether you are just a very good stockpicker who could be successful with any strategy. Personally I suspect that your immaculate record-keeping is a factor, as that is something I have noticed with other successful investors. And is something I freely admit to being no good at.

Alaric wrote:

tjh290633 wrote: Only that TR is a better measure of performance than is income provided.

Why isn't that obvious? If you ignore capital performance, only one part of the return is being measured. That surely leads to decision making that is getting a dividend yield of 8 to 10% when it's been paid for by a loss of capital value of an equivalent or greater amount.

I would agree that given a choice between share with a dividend yield of 1%/expected capital growth of 7% and dividend yield of 8% that an income seeker would plausibly choose the 8%. But how far would they sacrifice performance to avoid the dealing costs? But with HYP methods also being used by wealth builders, it's difficult to see why they don't just measure their wealth by total portfolio value after reinvestment regardless of whether it was share value or reinvested dividends.

I am not disputing that TR is the way to compare portfolios, just that an income yielding portfolio can provide a higher TR than a "growth" portfolio, which can be shown by the way that the HIX and LIX indices diverged from inception, both in normal and TR versions.

TJH

Lootman wrote:

tjh290633 wrote:Yes, but sceptics like you never seem to use Total Return to demonstrate that their favoured investment approach is superior to that of an HYP. Only that TR is a better measure of performance than is income provided.

I calculate my portfolio's performance as both income and accumulation units, the latter effectively being a measure of TR. Most portfolios go through a building phase and eventually a withdrawal phase. You have to allow for both conditions.

Your record keeping is legendary and to my mind is the best evidence we have that a form of HYP can work for an individual investor. The fact that your impeccable records have a history that significantly predates the inception of HYP is also significant.

Of course your method differs from what pyad advocates, particularly in respect of your re-balancing methodology. In that sense I think HYP1 is an outlier that is less instructive than your own efforts.

I do not invest for income and I mostly avoid investing in the UK. So HYP would not work for me in any of its various forms. But your approach does serve to demonstrate that such an approach can provide decent total returns, and not just a high income without regard to growth or risk.

I will leave others to speculate whether your good results are due to the strategy itself, or whether you are just a very good stockpicker who could be successful with any strategy. Personally I suspect that your immaculate record-keeping is a factor, as that is something I have noticed with other successful investors. And is something I freely admit to being no good at.

I attribute it to being nominally equal weighted, within sensible limits, and following a simple top-up strategy.

TJH

tjh290633 wrote:

Alaric wrote:
Why isn't that obvious? If you ignore capital performance, only one part of the return is being measured. That surely leads to decision making that is getting a dividend yield of 8 to 10% when it's been paid for by a loss of capital value of an equivalent or greater amount.

I would agree that given a choice between share with a dividend yield of 1%/expected capital growth of 7% and dividend yield of 8% that an income seeker would plausibly choose the 8%. But how far would they sacrifice performance to avoid the dealing costs? But with HYP methods also being used by wealth builders, it's difficult to see why they don't just measure their wealth by total portfolio value after reinvestment regardless of whether it was share value or reinvested dividends.

I am not disputing that TR is the way to compare portfolios, just that an income yielding portfolio can provide a higher TR than a "growth" portfolio, which can be shown by the way that the HIX and LIX indices diverged from inception, both in normal and TR versions.

TJH

Yes it shows it "can" as you are only looking at a single point of inception. Now change the inception date to multiple others and it will also show that LIX "can" provide a higher TR too.

If anyone serious wants to seriously look at the comparison and make a relative choice between the two (or others) then they should look at multiple inception point comparisons, and judge against the likely holding period, and relative riskiness of those alternatives, in arriving at any conclusion.

Wimbledon "can" beat Liverpool in an FA Cup final. Would you take an evens bet on such a match today?

I have no issue with people investing in whatever way they like but on a site with a history of encouraging (financial) education then statements like this really need to be challenged.

dealtn wrote:

tjh290633 wrote:I am not disputing that TR is the way to compare portfolios, just that an income yielding portfolio can provide a higher TR than a "growth" portfolio, which can be shown by the way that the HIX and LIX indices diverged from inception, both in normal and TR versions.

TJH

Yes it shows it "can" as you are only looking at a single point of inception. Now change the inception date to multiple others and it will also show that LIX "can" provide a higher TR too.

If anyone serious wants to seriously look at the comparison and make a relative choice between the two (or others) then they should look at multiple inception point comparisons, and judge against the likely holding period, and relative riskiness of those alternatives, in arriving at any conclusion.

Wimbledon "can" beat Liverpool in an FA Cup final. Would you take an evens bet on such a match today?

I have no issue with people investing in whatever way they like but on a site with a history of encouraging (financial) education then statements like this really need to be challenged.

I used the word "can" because the converse is obviously true. In recent years the divergence has narrowed. That is obvious from a look at the data.

What I do find of interest is the way that last year's winners are often this year's losers, and vice versa. At the end of the year I intend to once again provide my table demonstrating this effect.

TJH

tjh290633 wrote:What I do find of interest is the way that last year's winners are often this year's losers, and vice versa.

... which induces rebalance/not-rebalance thoughts. Over a series of decade, initial equal weighted say 20 stocks 5% each, left as-is will tend to see one rise to be dominant, perhaps 45% of the total portfolio weight. Considerably relatively outperformed the others, and where on a linear measure you time averaged 25% weighting in that single stock. Maybe it total returned a 20% annualised rate, and obviously having had 25% total weighting in a stock that annualised 20% is a good thing. BUT that involves increased concentration risk. The general historic indications are that if you reduce such concentration risk - you generally end up with similar overall rewards. There is no clear/consistent winner whether you rebalance, or not.

More a factor is what you might replace one holding with, the choice of dynamics. Siegel's and Schwartz's paper is a interesting read https://rodneywhitecenter.wharton.upenn ... 4/0429.pdf

I don't have a link to Siegel's later study where he created separate buy and hold portfolios for every start year since the above study up until 1996, where it was observed that the buy-and-hold approach beat the market three-quarters of the time and it never under-performed it by more than 0.6% a year difference.