Introduction to the High Yield Portfolio

[pyad]

Unfortunately for those who don't like it, the expression High Yield Portfolio as understood on the Fool and here, bearing in mind that this new site exists only because the Fool terminated its boards and not because anyone was looking intentionally for a new start, means specifically HYPs along the lines founded by me all those years ago and close variations. As Gengulphus says, the term has a general meaning but also a specific one and it is the latter which carries precedence on this board. Why? Because people want it that way.

The obvious answer is the same as happened on the Fool and has already been instigated here. Keep the HYP board for HYPs in its specific sense and use HY strategies boards for any other versions that are not HYPs in my sense. What's wrong with that?

It appears to me that there's a certain petty jealousy over the fact that the term HYP has, through widespread usage, become proprietary in addition to its general meaning. Well tough. I'm not going to apologise either for the term HYP becoming proprietary or for delivering a successful equity income system to people. It's had more than long enough now to prove itself and would have died long ago if it was a failure or even just mediocre.

If you include all those who followed my ideas from the Fool, plus subsequently my tipsheet readership which has been going since 2008, this adds up to thousands of HYPers following the system. Only a proportion bother with message boards, whether the old Fool board or this one but I'm pretty sure that leaves quite a number who are interested in reading and posting about HYPs specifically.

And for the record this does not mean in any way that I am opposed to other income approaches like funds, non-equities like bonds or prefs or whatever. But they should be discussed on other boards, not on the HYP board and I fail to see why people who are not HYP followers wish to utilise the HYP board for their discussion or even bother to voice their discontent on it at all. Nobody is blocking them from the site, just use another board. But don't come on here and moan that you are not permitted to discuss alternatives.

[idpickering]

Well said Stephen!! Now where's that rec button?

[tjh290633]

This is a new web site, it is about the future.

Do we need to constantly go back to TMF past.

For us HYP has always been a simple thing so obvious that it is hardly worth defining, a High Yield Portfolio. It has existed for decades, and today contains individual shares, ITs, the odd fund, pref, bond. It looks for a high sustainable yield well above market yield, and overall reasonable divi increase. It works very well(both in total return and yield terms), it is dead simple, it is different from GDHYP, it does not follow HYP1 philosophy, for example, but it is a HYP run in a practical and pragmatic way. Are we to continue to be told to post on another board? By whose authority?

And it's not what the vast majority of the users of the TMF High Yield - HYP Practical board understand by the term "HYP" - and they're currently almost certainly also the vast majority of the users of this forum. The fact that it was derived as an abbreviation of "high yield portfolio" doesn't imply that it means exactly the same as that phrase - any more than "ISA" means exactly the same as "individual savings account". In each case, the acronym carries extra implications that are not in the ordinary English phrase.

The result is that if you use the term "HYP" in your preferred sense around here, you will almost certainly be repeatedly misunderstood.

Gengulphus

I agree. I have a variety of other investments but for me the "HYP" is simply my investments in equities which I put in that category. I ignore funds, ITs and AIM shares, for example, as they have no place in an HYP.

TJH

[grimer]

I can assure everybody that I'm not motivated by petty jealousy or any other negative intentions. I was under the impression that HYP was conceived as an alternative to the annuity business - you retained your capital and hopefully received a starting income greater than an annuity which would also increase at a rate greater than inflation.

The technique has evolved over time and there are probably as many variations as there are practitioners - thousands by Pyad's reckoning. I'm simply suggesting that the 'Portfolio' aspect of a HYP is something to consider. It doesn't really matter if you're buying a share, IT or ETF, so long as it passes the safety tests and pays a decent dividend. You still have a High Yield Portfolio.

It seems that some people view the 'purity' of the method in almost religious terms. Any slightly off topic discussions attract snide and arrogant remarks. Why? Just stop reading or skip to the next comment. I have received private messages from other board users that no longer post publicly because of the aggressive and insulting comments that are thrown around. I think that is terrible and I'd much prefer to read all opinions, rather than just the 'permitted' ones.

Ultimately, this isn't the Pyad Appreciation Society* board. It is supposed to be a forum for the discussion of the practical implementation of a HYP. Excluding potentially rewarding techniques/asset classes just because they weren't mentioned in an article Pyad wrote fifteen years ago is bonkers.

Perhaps a new Pure HYP board could be set up? People pop in, make a lump sum investment, do a Doris and are never heard from again? Isn't that what we're 'supposed' to do?
____________

* I would like to clarify that i feel no animosity to Pyad, beyond a disapproval of his manners. I find his contributions to debates to be somewhat aggressive, arrogant and dismissive of differing opinions, which often cloud any valid point he may, or may not, have been making. This was something that I was prepared to indulge in 'his' gaffe, but we've moved to a shared space now. I think any ideas regarding 'ownership' have come to their natural conclusion and it is time for a fresh start.

[CatcheeMonkee]

It seems that some people view the 'purity' of the method in almost religious terms. Any slightly off topic discussions attract snide and arrogant remarks.

Years ago I had a post on TMF reported by somebody to the moderators and pulled because I likened HYP to a religion too ... The format here on TLF is different - if you see a thread entitled, for example, 'HYP vs ITs' and it offends, then don't click on it! Simples. No need to report it to the moderators, either IMHO!

[Lootman]

I have a variety of other investments but for me the "HYP" is simply my investments in equities which I put in that category. I ignore funds, ITs and AIM shares, for example, as they have no place in an HYP.

Yes, to me also it's more a mental bucket for part of my portfolio. I conceptualise my dividend-paying shares as my "HYP" although in reality it's not physically distinct or segregated from my other positions.

There is a legitimate discussion to be had about what allocation of total net worth to allocate to HY UK shares . They represent only about 3% of global equity market cap, and then there are of course other security types to consider.

So to my mind, it's a valid topic here to discuss not just the mechanics of HY investing, but also what part it should play in one's overall strategy. Put another way, I am not aware that it is any part of HYP that it's your only strategy or even your most important one. It's simply an allocation.

[pyad]

I can assure everybody that I'm not motivated by petty jealousy or any other negative intentions. I was under the impression that HYP was conceived as an alternative to the annuity business - you retained your capital and hopefully received a starting income greater than an annuity which would also increase at a rate greater than inflation.

The technique has evolved over time and there are probably as many variations as there are practitioners - thousands by Pyad's reckoning. I'm simply suggesting that the 'Portfolio' aspect of a HYP is something to consider. It doesn't really matter if you're buying a share, IT or ETF, so long as it passes the safety tests and pays a decent dividend. You still have a High Yield Portfolio.

It seems that some people view the 'purity' of the method in almost religious terms. Any slightly off topic discussions attract snide and arrogant remarks. Why? Just stop reading or skip to the next comment. I have received private messages from other board users that no longer post publicly because of the aggressive and insulting comments that are thrown around. I think that is terrible and I'd much prefer to read all opinions, rather than just the 'permitted' ones.

Ultimately, this isn't the Pyad Appreciation Society* board. It is supposed to be a forum for the discussion of the practical implementation of a HYP. Excluding potentially rewarding techniques/asset classes just because they weren't mentioned in an article Pyad wrote fifteen years ago is bonkers.

Perhaps a new Pure HYP board could be set up? People pop in, make a lump sum investment, do a Doris and are never heard from again? Isn't that what we're 'supposed' to do?
____________

* I would like to clarify that i feel no animosity to Pyad, beyond a disapproval of his manners. I find his contributions to debates to be somewhat aggressive, arrogant and dismissive of differing opinions, which often cloud any valid point he may, or may not, have been making. This was something that I was prepared to indulge in 'his' gaffe, but we've moved to a shared space now. I think any ideas regarding 'ownership' have come to their natural conclusion and it is time for a fresh start.

So according to you, those who wish to follow, broadly, my HYP ideas, and as I've said that must be quite a number of people, are not permitted to have this board to themselves and must be compelled to entertain messages on every possible income idea, just to please a few individuals. I seen no sense in that whatsoever. You might not like the HYP idea, that's fine, but I don't understand why you wish to force yourself on to the HYP board.

The whole point of having dedicated boards is precisely so as not to clutter them up with extraneous material. For those who wish to discuss some alternative version of a high income portfolio, why not have the courtesy to do so elsewhere on this site. Then you too will benefit from not having your board cluttered up with extraneous material discussing HYPs.

[Lootman]

The whole point of having dedicated boards is precisely so as not to clutter them up with extraneous material.

In principle that's a fair statement. However the two sponsors of LemonFool have stated that they want far fewer individual boards here than were on TMF. And they have already combined several old TMF boards into one with that goal in mind.

So there is a legitimate discussion to be had here as to how far we need to go with granularising topics, especially when they are closely related (but not identical).

There are gains from segregation but we also lose diversity, balance and breadth that way. All I see grimer as saying is that perhaps LemonFool gives us an opportunity not to merely repeat what TMF had. And either way, nothing here is bound or restricted by what TMF was.

So let's have that debate, accept different points of view, and try and stay reasonably civil while we do. Fair?

[pyad]

Yeah, it's all getting rather boring and I've seen such arguments repeatedly on the Fool over the years.

Whilst there may be a desire for fewer boards here, this thread is purely about the HYP vs alternative HY sources and not about the myriad other boards on the Fool. So we're talking just two boards instead of one and a separation that makes sense, just as it did on the Fool where generally it worked okay I think.

The fact that this site is taking over from the Fool boards is utterly irrelevant as reason to change things. It doesn't follow that the boards have to be different here just because of the migration, where they worked satisfactorily on the Fool. If it aint broke...

I just don't understand why the alt. people want to compel their presence on the HYP board. It looks to me suspiciously like attention-seeking.

[Raptor]

Just thought you should know that tonight there should be a general update to the boards and structures. To be honest I could never understand why there were cookery and visitors to xxx forums on a financial forum, but then again ........

Raptor.

[grimer]

So according to you, those who wish to follow, broadly, my HYP ideas, and as I've said that must be quite a number of people, are not permitted to have this board to themselves and must be compelled to entertain messages on every possible income idea, just to please a few individuals. I seen no sense in that whatsoever. You might not like the HYP idea, that's fine, but I don't understand why you wish to force yourself on to the HYP board.

You have misunderstood me. I do like the HYP idea and have a HYP portfolio, which I am continually adding to. I just don't think this board should be restricted to just your HYP ideas. There wasn't an ETF market when you coined the term HYP. There is now. Some ETFs specialise in paying income. I don't see why people with HYP portfolios should be banned from discussing the potential benefits of adding specific High Yielding (dividend) ETFs and ITs to their individual HYP portfolios.

As I've previously said, it is the objective that defines the HYP - i.e. an alternative to annuity products, that retain the buyer's capital and provide a high yield in the form of dividends.

Your version of HYP is the basis for these discussions, but it is nonsensical to limit this board to just the topics that you consider suitably conformist. As I previously alluded, any discussion limited to the Pyad version of a HYP, would be so short as to be non-existent - pick some shares, buy some shares, hold for eternity, the end. This board is already 'off topic' in relation to your HYP ideas, but I think that the majority of users like it that way. If you crave a 'safe space' to bask in the glory of your 'invention' perhaps you should request a 'Pure HYP' board?

I, and a number of other regular posters, would like to be able to discuss the practical management of our HYP portfolios without limiting ourselves to the presumptions of a 15 year old article - things have changed a lot since then and new types of investment are available (e.g. ETFs). I'm sorry if that seems ungrateful, but this is my money that I'm investing and I'd like to discuss things as widely as possible, within the natural confines of this or any other board.

[CatcheeMonkee]

To be honest I could never understand why there were cookery and visitors to xxx forums on a financial forum, but then again ........

But was it ever just a financial forum? Wasn't it a forum for financial folk to be educated, amused and enriched? (The Motley Fool's strapline: To Educate, Amuse & Enrich.)

[Gengulphus]

Personally I think the broad HYP safety criteria and stock picking methods are the 'essence' of HYP. I also think that some safety criteria are missing from the original HYP - e.g. ROCE.

Not some safety criteria - lots of them are missing!

But there are far more possible dividend safety criteria than anyone can sensibly use, so people generally restrict themselves to a relatively small set of them - e.g. for HYP1, pyad chose market cap, a growing dividend record and gearing. And also far more than anyone can sensibly list, especially in anything designed to be an introduction rather than a comprehensive reference list.

So reasonable safety criteria get left out of lists, for sensible reasons. Don't attack the fact that they've been left out, because the reasons are sensible. But use the safety criteria that make sense to you - and if someone attacks your use of them, fall back on a dividend safety criterion being anything that boosts your confidence in the dividend being maintained and hopefully growing.

I don't see why buying a high yield investment trust is 'not HYP'. I'd argue that potentially the dividend (CTY) is potentially 'safer' than that provided by a single company (Deep Water Horizon?).

It's an issue of not keeping a dog and barking yourself - if you're going to be diversifying between megacap UK companies yourself, why employ an IT manager to do the same thing? Especially when the end result will be that you're less diversified than you appear to be. E.g. buy 20 holdings in equal amounts, including RDSB, and you have 5% in RDSB - except that if two of them are ITs and a tenth of those ITs' portfolios are in RDSB, then you actually have 5% + (2/20)(1/10) = 6% in RDSB, so you appear more diversified than you actually are...

The same problem doesn't exist with regard to ITs that diversify in ways you're not going to yourself, and I think they're an excellent way of getting such diversification. E.g. having three holdings in that 20-share HYP that are specialist ITs in European, US and Asian equities would be an excellent way of making it more internationally diversified, if that's what you want.

I think this board should focus on the outcome - high sustainable yield that can be taken as income or reinvested. That might allow the purchase of a variety of products and shares outside of Pyad's original criteria, but no less successful in delivering the goods. If there are ways to refine my tactics to make more money, I'd like to hear them!

For example, highly active trading of shares might be a way for you to make more money, so you'd like to hear about it? Fine, but I wouldn't - I know that I wouldn't want to spend the required amount of my time watching the markets even if I were good at it and could make a lot of money that way: I've got other things I'd prefer to do with my life!

The solution is simple: if you want to see major areas of discussion that go outside the scope of this board, use other boards as well! If a board doesn't exist for what you're interested in discussing, take a look at the old TMF boards to see whether there is one and whether it had much traffic: if there was and it did, ask for it to be added to this site's boards. (If there wasn't, or there was but it got little traffic, that probably indicates that few Fools are interested in discussing it and so you're unlikely to get much discussion on this site either, at least for the time being. So you'll probably need to find a more suitable site in that case.)

That way, you get the discussion you want, using both this board and others, and I get the discussion I want, using this board alone. (Well, not really - I will be reading other boards, but they'll probably not be the same ones as yours.) Basically, the split of discussions between different boards provides a way for users to tailor what they read, getting the discussions they want and not getting too much of the discussions they don't want in the process - obviously everybody will get some, as the number of boards needed to allow precise tailoring to everyone's individual wishes would be astronomical, but the aim is to make it reasonably easy for everyone to get the amount of material they encounter that they're not interested in down to a tolerable level.

Gengulphus

[moorfield]

I think this board should focus on the outcome - high sustainable yield that can be taken as income or reinvested.

Spot on grimer, I agree with you completely on this hence my deliberate question on the other thread, and thankyou for your reply there.

M

[Lootman]

Spot on grimer, I agree with you completely on this hence my deliberate question on the other thread, and thankyou for your reply there.M

One other factor to bear in mind. It looks like there will be no "personal" boards here, judging my Clariman's recent post on the topic. So the boards that used to exist for Bert and Paulypilot (sp?), for instance, are being merged into other broader boards. To the extent that HYPP is perceived as Pyad's board, then that is not in sync with the more personality-neutral approach being taken by our leaders here.

Same with index funds being merged with ETFs and many other examples. So it seems that it is becoming a standard for this site to have broader forums where, inevitably, disparate topics may arise.

So somebody said they wanted a distinct "cars and driving" board but were told that (for now anyway) they should use the transport board, which includes cars, trains, buses, cycling. Football is lumped in with "Sports" and so on.

With that in mind, it does argue for a similar broader approach here. The key to that really is how good you are at simply ignoring topics and comments that do not interest you. Personally I find that trivially easy, and I never used "Ignore" features and the like.

It also means that if I want to see all recent posts related to HY and HYP, I don't have to look in two places, just one. Usually the topic heading will tell me if it interests me,

[grimer]

For example, highly active trading of shares might be a way for you to make more money, so you'd like to hear about it? Fine, but I wouldn't

That clearly has nothing to do with HYP, though. Your point about the addition of a few ITs to add diversification is exactly what I would consider to be fair game for conversation on this board - e.g. Would HFEL add something positive to my HYP?

The same could be said for some of the income ETFs. That is where I think this board needs to be less rigid. Nobody, as far as I'm aware is advocating discussions relating to harvesting DIY dividends from accumulation trackers. Politely pointing new visitors to more appropriate boards, rather than missing about off topic discussions is more my style.

As I previously stated, I know for a fact that some people won't even post here because of the rudeness they've encountered from people that think they own the boards. I strongly object to people being hounded away to protect the cozy group think.

[Gersemi]

OK, just a suggestion, but couldn't we rename HYP? We could call it something like 'Doris's High Yield Share Strategy'. That would make it clear that it is a specific strategy not a general type of investing.
While we have all got used to the term HYP and used it extensively on the TMF, it is confusing and understandable that new posters think it refers to any portfolio built with high yield as an objective.
You will see that I think there should still be a separate board for the specific strategy - it was one of the most popular boards on TMF (another reason why posters were attracted to it) and a lot of people do stick pretty closely to the original guidelines (yep, there really are a lot of lurkers out there, you only need to see how many people are signed up here compared to the number of regular posters).
If the phrase high yield portfolio could be used more generally then perhaps a board for it could be more popular so that those who don't wish to follow Pyad's method can have worthwhile discussions.

Gersemi

[genou]

I strongly object to people being hounded away to protect the cozy group think.

But there's the rub. The people you object to think they are defending the level of signal to noise. Which goes to heart of it - "cozy" and "noise". These characterisations are not helpful. There has to be a boundary somewhere. I would, personally, find it by posting and seeing what gets a response. I'd cheerfully discuss ETFs / ITs that are not focused on the UK, but UK ITs strike me as clearly off-topic ( on the Gengulphus argument about costs and weighting ). But I am one participant, as are we all. Collectively we will determine what is on-topic by how we respond to posts.

Let's suck it and see rather than have an endless meta-discussion about the board.

[melonfool]

For us HYP has always been a simple thing so obvious that it is hardly worth defining, a High Yield Portfolio.

Jon

It does need defining generally though.

Don't forget there will be new people to the boards. Or new people to this topic coming from other boards (as I did once I graduated from DWD [I never had any debt btw], through LBYM onto stoozing and then to investing).

If we don't want new people, we just want to be a little club that talks in code, well that's fine, but it really won't last very long.

A strategy needs definition and it needs structure. If it doesn't have those then it's not a strategy, it's just 'doing things'.

I don't think anyone is going to tell people they *can't* post somewhere, but it would make sense if people could at least acknowledge there is an 'original' strategy and 'other approaches'.

It bewilders me why this causes so much controversy really.

Mel

[moorfield]

While we have all got used to the term HYP and used it extensively on the TMF, it is confusing and understandable that new posters think it refers to any portfolio built with high yield as an objective.

It does need defining generally though.

Thinking laterally and going back to basics perhaps a "pure" HYP as originally intended by pyad should be defined on here by the constituency of shares from which it is constructed? ie FTSE100 or probably more pragmatically FTSE350 (personally I use the Sunday Times "Top 200" companies) ie. anything containing shares outside of that pool - preference shares, VCTs, ITs, foreign listed etc. - be automatically deemed "impure" non-HYP. That should be clear and simple for all to follow, no?

M