Arb HYP adjustment

[Wizard]

Has PYAD ever constructed a portfolio that has not followed that approach? The only time reinvestment decisions would arise in PYAD's portfolios is if a company held in the HYP is bought out for cash.

Wizard there was an article called "HYPersavers" aimed at "builders" which addresses your question I think and suggests using the average holding value. This is the approach I use with my portfolio to counter imbalance over time. I've always been suspicious that routine top slicing (medianic or otherwise) accrues costs to the "builder" that do not need to be accrued over a 5-10+ year timeframe of reinvesting dividends. I can see the merit of top slicing for the "spender", but (imo) ... well, I won't labour the view again I've already expressed here.


https://web.archive.org/web/20071231131 ... avers.aspx

Thank you for the link to the article. To be really pedantic, this is not an example of a portfolio set up by regular savings by PYAD, but rather an article about the concept.

Notwithstanding that point the article is interesting. As far as I recall there is not a single ‘builder’ that posts on TLF that adopts the approach advocated by PYAD. Typically those that post here reinvest additional funds well before they reach mean holding value. So it seems the approach to ‘building’ practiced here is also meaningfully different to that envisaged by PYAD.

Also, I note that there is no mention anywhere in the article of ‘top slicing’ to maintain balance. Indeed if the doubling up approach is followed it would immediately introduce a degree of imbalance the ‘top slicers’ would find unacceptable.

I remain of the view that the approach practiced by many here is as close to the original HYP concept as Chop Suey is to authentic Chinese cuisine. Some of the ingredients may be the same but Chop Suey was invented elsewhere

[moorfield]

I remain of the view that the approach practiced by many here is as close to the original HYP concept as Chop Suey is to authentic Chinese cuisine. Some of the ingredients may be the same but Chop Suey was invented elsewhere

Chyp Suey?

I'll get me coat ...

[Gengulphus]

I remain of the view that the approach practiced by many here is as close to the original HYP concept as Chop Suey is to authentic Chinese cuisine. Some of the ingredients may be the same but Chop Suey was invented elsewhere

Agreed, but so what? This board has guidance that basically just specifies a few ingredients (I think individual equities, high dividend yield, at-least-sustainable-looking dividends, sector diversification, long-term holding pretty much covers it), not an exact recipe. Pyad's original HYP concept has all of those ingredients and so is welcome here, but so are many other approaches practiced by users of this board.

Gengulphus

[moorfield]

Agreed, but so what?

I think it was MDW's comment further up that has tilted this thread onto it's current direction of travel... and inevitable conclusion. Again.


viewtopic.php?p=434505#p434505

No, it doesn't -- as a matter of policy -- encourage slicing winners at all.

albeit written not wearing his "Mod" hat, so it would seem.

[idpickering]

Agreed, but so what? This board has guidance that basically just specifies a few ingredients (I think individual equities, high dividend yield, at-least-sustainable-looking dividends, sector diversification, long-term holding pretty much covers it), not an exact recipe. Pyad's original HYP concept has all of those ingredients and so is welcome here, but so are many other approaches practiced by users of this board.

Gengulphus

Well said Gengulphus. Have a rec/thanks sir!

Ian.

[MDW1954]

Agreed, but so what?

I think it was MDW's comment further up that has tilted this thread onto it's current direction of travel... and inevitable conclusion. Again.


viewtopic.php?p=434505#p434505

No, it doesn't -- as a matter of policy -- encourage slicing winners at all.

albeit written not wearing his "Mod" hat, so it would seem.

Yes, I definitely wasn't posting in moderator mode. This board is my natural "home" on TLF, and I was posting in that capacity.

And I think that what I posted was a fair observation, given Arb's original assertion. I've stayed out of the ensuing Chop Suey debate, although I vaguely remember (mis-remember?) Pyad posting a builder portfolio on TMF.

MDW1954

[Wizard]

I remain of the view that the approach practiced by many here is as close to the original HYP concept as Chop Suey is to authentic Chinese cuisine. Some of the ingredients may be the same but Chop Suey was invented elsewhere

Agreed, but so what? This board has guidance that basically just specifies a few ingredients (I think individual equities, high dividend yield, at-least-sustainable-looking dividends, sector diversification, long-term holding pretty much covers it), not an exact recipe. Pyad's original HYP concept has all of those ingredients and so is welcome here, but so are many other approaches practiced by users of this board.

Gengulphus

My bold.

I think this is all heading way off topic and along a well trodden path. But to cover the explicit question, the ‘so what’ relates to the fact that the board is entitled HYP, indeed tight HYP, which to me at least is a rather odd situation. But that is all from me, I do not want to engage in discussion that is not permitted on here.

[Gengulphus]

... I vaguely remember (mis-remember?) Pyad posting a builder portfolio on TMF.

HYP4 was a builder portfolio he posted on TMF if I've understood what you mean by the phrase correctly - details linked to from here. Before it, HYP3 was constructed by a similar monthly series of articles, though I don't have links to all of them: I've posted those I do have in a new thread, along with why I don't have links to the first five of them.

And I'm pretty certain he wrote the first few of a series of posts on TMF (I think - might instead have been TMF articles, but I think that less likely) in which he bought one share for a HYP per year, using the full ISA allowance for each year to buy that year's share. Writing about that seems unlikely to have been continued after 2008, when he left TMF for over a year, and I don't think I've seen anything about it since. (If he continued actually constructing a HYP that way, and my not-necessarily-accurate memory of those posts/articles is that they said he was actually constructing his own HYP that way, it would be interesting to hear how it turned out. It will have had time to build up to his preferred stopping point of 15 or a few more shares by now, or possibly some years back if the massive increases in the ISA allowance since the early 2000s plus a wish to stick at least roughly to equal investments per holding was used to go up to two holdings selected per year.)

But none of those seem very realistic 'building' schedules to me. Saving at a rate of £5k per month is out of the reach of most potential HYPers, so the HYP3/4 schedule is either for the few who can afford that savings rate or those who are spreading out the investment of a lump sum. But at least IMHO spreading the investment of a lump sum out over 15-16 months falls between two stools: it's too short a total investment period to do all that much in the way of diversifying the risk of investing at a market peak out over time, but it still pays the price of losing out on quite a lot of investment returns due to being stuck in low-returns cash. The main advantage I see of that £5k/month investment rate is that it fits in well with writing a monthly series of articles about building a HYP, and that doesn't take many years to build up to to a worthwhile-sized HYP!

As for buying a single share per year, each using a whole year's savings, for most investors that seems to me to be a good way of creating quite a high risk of running into a company disaster and losing much (or even all) of a year's savings, too early on for the HYP's diversification to have built up far enough to mitigate that loss significantly, and so losing confidence in the strategy early on. It might be a reasonable approach for someone who has already become highly confident about using a HYP strategy or who has carboferrous alloy spherical objects, but I doubt that either of those are all that common among those building up a HYP from scratch...

Gengulphus

[MDW1954]

... I vaguely remember (mis-remember?) Pyad posting a builder portfolio on TMF.

HYP4 was a builder portfolio he posted on TMF if I've understood what you mean by the phrase correctly - details linked to from here. Before it, HYP3 was constructed by a similar monthly series of articles, though I don't have links to all of them: I've posted those I do have in a new thread, along with why I don't have links to the first five of them.

Yes, HYP4 is the HYP that I remember. Thank you. I see that I commented on it in the post to which you link!

And I'm pretty certain he wrote the first few of a series of posts on TMF (I think - might instead have been TMF articles, but I think that less likely) in which he bought one share for a HYP per year, using the full ISA allowance for each year to buy that year's share. Writing about that seems unlikely to have been continued after 2008, when he left TMF for over a year, and I don't think I've seen anything about it since. (If he continued actually constructing a HYP that way, and my not-necessarily-accurate memory of those posts/articles is that they said he was actually constructing his own HYP that way, it would be interesting to hear how it turned out. It will have had time to build up to his preferred stopping point of 15 or a few more shares by now, or possibly some years back if the massive increases in the ISA allowance since the early 2000s plus a wish to stick at least roughly to equal investments per holding was used to go up to two holdings selected per year.)

Don't remember that, but I wasn't an especial Pyad fan.

But none of those seem very realistic 'building' schedules to me. Saving at a rate of £5k per month is out of the reach of most potential HYPers, so the HYP3/4 schedule is either for the few who can afford that savings rate or those who are spreading out the investment of a lump sum. But at least IMHO spreading the investment of a lump sum out over 15-16 months falls between two stools: it's too short a total investment period to do all that much in the way of diversifying the risk of investing at a market peak out over time, but it still pays the price of losing out on quite a lot of investment returns due to being stuck in low-returns cash. The main advantage I see of that £5k/month investment rate is that it fits in well with writing a monthly series of articles about building a HYP, and that doesn't take many years to build up to to a worthwhile-sized HYP!

Agreed. As a writer, I'd have approached the problem differently.

As for buying a single share per year, each using a whole year's savings, for most investors that seems to me to be a good way of creating quite a high risk of running into a company disaster and losing much (or even all) of a year's savings, too early on for the HYP's diversification to have built up far enough to mitigate that loss significantly, and so losing confidence in the strategy early on. It might be a reasonable approach for someone who has already become highly confident about using a HYP strategy or who has carboferrous alloy spherical objects, but I doubt that either of those are all that common.

I'd need to consult my daughter's clever Oxford medic friends, but "ovoid", surely?

Gengulphus

I see that I hold nine of the listed HYP4 shares. The rest I avoided like the plague. But most are very, very low conviction picks. If I were to list my smallest holdings, many of these HYP shares would be in the list.

I know that a statement like that contains huge amounts of hindsight bias, but it's true, nonetheless.

I don't particularly blame Pyad. I just think that, with the financial crash around the corner, it was a particularly unlucky time in which to be picking shares.

Other picks, like BP, serve to remind (me at least) of the importance of Dod's preference for culture.

MDW1954

[tjh290633]

Has PYAD ever constructed a portfolio that has not followed that approach? The only time reinvestment decisions would arise in PYAD's portfolios is if a company held in the HYP is bought out for cash.

Wizard there was an article called "HYPersavers" aimed at "builders" which addresses your question I think and suggests using the average holding value. This is the approach I use with my portfolio to counter imbalance over time. I've always been suspicious that routine top slicing (medianic or otherwise) accrues costs to the "builder" that do not need to be accrued over a 5-10+ year timeframe of reinvesting dividends. I can see the merit of top slicing for the "spender", but (imo) ... well, I won't labour the view again I've already expressed here.


https://web.archive.org/web/20071231131 ... avers.aspx

Thank you for the link to the article. To be really pedantic, this is not an example of a portfolio set up by regular savings by PYAD, but rather an article about the concept.

Notwithstanding that point the article is interesting. As far as I recall there is not a single ‘builder’ that posts on TLF that adopts the approach advocated by PYAD. Typically those that post here reinvest additional funds well before they reach mean holding value. So it seems the approach to ‘building’ practiced here is also meaningfully different to that envisaged by PYAD.

Also, I note that there is no mention anywhere in the article of ‘top slicing’ to maintain balance. Indeed if the doubling up approach is followed it would immediately introduce a degree of imbalance the ‘top slicers’ would find unacceptable.

I remain of the view that the approach practiced by many here is as close to the original HYP concept as Chop Suey is to authentic Chinese cuisine. Some of the ingredients may be the same but Chop Suey was invented elsewhere

Thanks, Moorfield, for the link to that article. It struck me that the approach that he is advocating is not greatly different from that I used when building a PEP. You will recall that the limit in the first year was £2,400, and I chose three shares plus one unit fund. The shares were BOC Group plc, Cadbury-Schweppes plc, Hanson plc and Lloyds Bank Income UT. The UT was the only one allowed at the time, and it was there because you could invest 25% in a fund. Accumulated dividends went into Hanson. The next year the limit was raised to £3,000 and I invested in Br.Petroleum Co.plc, Imp.Chemical Ind.plc, Lloyds Bank Income UT, Lloyds Bank plc and Pilkington plc. Accumulated dividends went into GEC as a new holding and the UT. The following year the limit went up to £6,000 and I invested in Cadbury-Schweppes plc, British Telecom plc, GEC plc, Marks & Spencer plc, Pilkington plc, Lloyds Bank UKGrowth UT, British Petroleum plc, British Telecom plc again, Imperial Chem Ind plc and Lloyds Bank plc. You will see some reinvesting in shares already held, a different UT because they changed the rules, and four new holdings, three of which had been held outside the PEP already. Reinvested dividends went into Hanson and later GEC. The following year most of the money went into existing holdings plus a new share, Prudential Corp'n plc, which was bought at the average holding value. I had 12 holdings which I felt was sufficient and my "new" PEP money went into moving unit funds into PEPs for the time being. I still had British Gas outside the PEP and reinvested dividends, plus the proceeds of dumping a unit fund, were put into that while I sold the original holding and reinvested outside the PEP in Forte. ICI split off Zeneca, Hanson started emerging and BG split off Centrica, which I sold. By this time I had 15 holdings. Then Haifax demutualised and I added Tesco to the portfolio with some new money. In the final year of PEPs I added Whitbread, making 18 in total.

Reading the article, it would seem that I had followed his suggestions almost to the letter, starting 20 years earlier. I had also done my first top slicing in 1997, when Lloyds TSB and Zeneca went well overweight, and I felt that 10% was a prudent limit to set.

Come 1999 and Gordon Brown's introduction of ISAs, with no further money being allowed in PEPs, I had to start building an ISA alongside, using different shares, and building up to the then average holding value over 4 years. I chose six shares: Allied-Domecq plc, Blue Circle Ind plc, British Airways plc, Royal & Sun All Ins Gp plc, Stagecoach Hldgs plc and Tate & Lyle plc. My selections had been made from the FT30 index using the Beat the Index method, ranking by share price inversely and yield, and eliminating any shares already held in the PEP. Demergers, takeovers, crises in airlines, etc., all complicated matters, irrelevant here, but sufficient to say that I was agaian following the same routine but building holdings up to the average level in the PEP, until that happy day in 2008 when we were allowed to merge our PEPs and ISAs.

From the article:

What I mean by full is that you have all the sectors you want in the portfolio, you have an adequate number of shares in it and any potential new shares at that point look too weak. That's because their yields are too low or their safety fundamentals don't stack up adequately by your standards or are unacceptable to you for other reasons. The only really attractive candidates are from those you already hold. What to do?

You start again. I don't mean you start a new portfolio, you start increasing the investment in the original shares provided they are still sufficiently attractive to be worth buying.

So say your portfolio is full in the sense I use above. You have twenty shares worth £60,000, an average of £3,000 each and you have accumulated £3,000 for the next selection yet nothing you don't already hold appeals. You rank the shares in your portfolio by descending forecast yields and invest that £3,000 in the highest yielder so it become a doubled holding. Or you could split it into two and put £1,500 each into the highest and second yielders, making them 1.5x holdings or go even further.

But that's the general idea for a full portfolio, increasing the average holding value of the existing shares instead of buying a new substandard one having regard to minimising costs.

That is essentially what I did and what I continue to do.

TJH

[Gengulphus]

With quote nesting corrected to make replies quote the stuff they're replying to, rather than the other way around:

And I'm pretty certain he [Stephen Bland] wrote the first few of a series of posts on TMF (I think - might instead have been TMF articles, but I think that less likely) in which he bought one share for a HYP per year, using the full ISA allowance for each year to buy that year's share. Writing about that seems unlikely to have been continued after 2008, when he left TMF for over a year, and I don't think I've seen anything about it since. (If he continued actually constructing a HYP that way, and my not-necessarily-accurate memory of those posts/articles is that they said he was actually constructing his own HYP that way, it would be interesting to hear how it turned out. It will have had time to build up to his preferred stopping point of 15 or a few more shares by now, or possibly some years back if the massive increases in the ISA allowance since the early 2000s plus a wish to stick at least roughly to equal investments per holding was used to go up to two holdings selected per year.)

Don't remember that, but I wasn't an especial Pyad fan.

I wouldn't describe myself as an especial Pyad fan either - I certainly had a few set-tos with him back then! Those ports (or articles if that's what they were) have stuck in my memory because the idea of a diversified strategy like HYP taking 15 years to build up to its recommended level of diversification struck me as particularly bizarre, rather than for any other reason...

As for buying a single share per year, each using a whole year's savings, for most investors that seems to me to be a good way of creating quite a high risk of running into a company disaster and losing much (or even all) of a year's savings, too early on for the HYP's diversification to have built up far enough to mitigate that loss significantly, and so losing confidence in the strategy early on. It might be a reasonable approach for someone who has already become highly confident about using a HYP strategy or who has carboferrous alloy spherical objects, but I doubt that either of those are all that common.

I'd need to consult my daughter's clever Oxford medic friends, but "ovoid", surely?

I stand corrected - "ovoid" would indeed be a more accurate description than "spherical"...

I see that I hold nine of the listed HYP4 shares. The rest I avoided like the plague. But most are very, very low conviction picks. If I were to list my smallest holdings, many of these HYP shares would be in the list.

I know that a statement like that contains huge amounts of hindsight bias, but it's true, nonetheless.

I don't particularly blame Pyad. I just think that, with the financial crash around the corner, it was a particularly unlucky time in which to be picking shares.

I currently own just six of the HYP4 companies - BP, Lloyds, United Utilities, BT, Tate & Lyle and GlaxoSmithKline. I have owned another six in the past: DSGI (which has since renamed to Dixons Retail and then merged into Dixons Carphone), Aviva, RBS (which has since renamed to NatWest Group), Persimmon, Pearson and Land Securities. Of the six I still hold, I've held BP since 2005, GlaxoSmithKline since 2004 and the rest since 2003 (*). Of the other six, I owned RBS from March 2007, Persimmon from April 2007, Pearson from 2005, and the rest since 2003. All of those dates predate their selections by HYP4, usually by years but just by a few months in the cases of RBS and Persimmon, so I'm pretty certain that the HYP4 selections didn't directly influence my own selections of any of them - though my selections of RBS and Persimmon may well have been influenced by the prevailing views of them that were around when HYP4 was selected.

So I can't reasonably blame pyad for any of those selections of mine even if I wanted to!

As for my decisions to get rid of the six I have got rid of, I greatly regret getting rid of Persimmon - I actually managed to get rid of it at an overall loss by giving up on it before its recovery from the financial crisis was visibly under way! But that's a hindsight judgement, of course. The others I don't regret getting rid of - though in the cases of Aviva and Pearson, that's because I've done so too recently to have much idea what I have or haven't missed out on. In any case, the reason I disposed of them was that I've recently decided that my HYP is a bit too 'sprawling' and complex for me to want to continue running it as it stands for all that much longer as I get older - so I've started on some simplifications, the initial step of which was reducing its number of holdings (which was 40ish a few years ago, had eroded to 35ish at the start of this year, and I've now taken it down to 30 by getting rid of some long-term poor performers). The next and more important step is to simplify its account structure: it's currently in three unsheltered broker accounts (one of which also holds most of my smallcap holdings), two ISA accounts and one SIPP account. That structure grew over the years rather than being properly designed, and I'm intending to reduce it to two unsheltered accounts (neither of them shared with my smallcaps portfolio), one ISA account and one SIPP account. (Some might still regard that as one unsheltered broker account too many, but I wouldn't be happy with such a large fraction of my overall wealth being in that single account as that would entail.)

(*) Well, actually from BT's first privatisation in the case of BT, and from the flotation of Wellcome (which later merged into GlaxoWellcome and then merged again into GlaxoSmithKline) in the case of GlaxoSmithKline, so quite a bit further back for those two companies. But 2003 and 2004 were the years when I decided that those "hold in my bottom desk drawer & largely forget" share certificates belonged in my HYP.

Gengulphus

[MDW1954]

With quote nesting corrected to make replies quote the stuff they're replying to, rather than the other way around:

I've probably committed the same faux pas again with this reply, as I'm not really sure what you're driving at. I'm working remotely, under some technology limitations at the moment, but I suspect the problem is that I'm just doing whatever it is wrongly. Please elucidate.

I see that I hold nine of the listed HYP4 shares. The rest I avoided like the plague. But most are very, very low conviction picks. If I were to list my smallest holdings, many of these HYP shares would be in the list.

I know that a statement like that contains huge amounts of hindsight bias, but it's true, nonetheless.

I don't particularly blame Pyad. I just think that, with the financial crash around the corner, it was a particularly unlucky time in which to be picking shares.

I currently own just six of the HYP4 companies - BP, Lloyds, United Utilities, BT, Tate & Lyle and GlaxoSmithKline. I have owned another six in the past: DSGI (which has since renamed to Dixons Retail and then merged into Dixons Carphone), Aviva, RBS (which has since renamed to NatWest Group), Persimmon, Pearson and Land Securities. Of the six I still hold, I've held BP since 2005, GlaxoSmithKline since 2004 and the rest since 2003 (*). Of the other six, I owned RBS from March 2007, Persimmon from April 2007, Pearson from 2005, and the rest since 2003. All of those dates predate their selections by HYP4, usually by years but just by a few months in the cases of RBS and Persimmon, so I'm pretty certain that the HYP4 selections didn't directly influence my own selections of any of them - though my selections of RBS and Persimmon may well have been influenced by the prevailing views of them that were around when HYP4 was selected.

So I can't reasonably blame pyad for any of those selections of mine even if I wanted to!

As for my decisions to get rid of the six I have got rid of, I greatly regret getting rid of Persimmon - I actually managed to get rid of it at an overall loss by giving up on it before its recovery from the financial crisis was visibly under way! But that's a hindsight judgement, of course. The others I don't regret getting rid of - though in the cases of Aviva and Pearson, that's because I've done so too recently to have much idea what I have or haven't missed out on. In any case, the reason I disposed of them was that I've recently decided that my HYP is a bit too 'sprawling' and complex for me to want to continue running it as it stands for all that much longer as I get older - so I've started on some simplifications, the initial step of which was reducing its number of holdings (which was 40ish a few years ago, had eroded to 35ish at the start of this year, and I've now taken it down to 30 by getting rid of some long-term poor performers). The next and more important step is to simplify its account structure: it's currently in three unsheltered broker accounts (one of which also holds most of my smallcap holdings), two ISA accounts and one SIPP account. That structure grew over the years rather than being properly designed, and I'm intending to reduce it to two unsheltered accounts (neither of them shared with my smallcaps portfolio), one ISA account and one SIPP account. (Some might still regard that as one unsheltered broker account too many, but I wouldn't be happy with such a large fraction of my overall wealth being in that single account as that would entail.)

Gengulphus

It's a long time since I've bothered to count the holdings that would be admissible as HYP shares on this board. 50-ish, at a guess. I do dive quite deeply into the FTSE350, mainly to hoover up REITs of interest. I'm fast approaching 67, but see no need to start simplifying things just yet. One ISA, and one SIPP. Former posters such as Valuemargin seemed to manage with many more, so I'm not especially exercised by the issue. Several other brokerages/ accounts, but not HYPable.

There is a view on this board that that 15 shares is about the "right" number of shares in terms of diversification, even though many people seem to hold more. This view is often associated with pyad, although I also recall an influential post from you which also came up with the number 15. If I trawl through my PDF archives, I may find it, but then again, I may not. To me that seems far too concentrated for a retirement income, so no thanks.

Persimmon: 2009/2010 was extraordinarily difficult to play. Most people will have got something wrong. If that's your only mistake, then "well done"!

Moderator Message:
I think that I have tidied up your post. If it is wrong, blame me. You have to end a quote before you interject.

TJH

Moderator Message:
Thanks, Terry. Gengulphus has explained in a PM the difference, and your final sentence above is a handy summary. Cheers -- M

[Gengulphus]

With quote nesting corrected to make replies quote the stuff they're replying to, rather than the other way around:

I've probably committed the same faux pas again with this reply, as I'm not really sure what you're driving at. I'm working remotely, under some technology limitations at the moment, but I suspect the problem is that I'm just doing whatever it is wrongly. Please elucidate.

Just to note that I have responded to this request of MDW1954's, but by PM rather than posting as my response doesn't just 'drift' outside of this board's topic - it charges well outside that topic! In the meantime, I see that TJH has sorted out the issue in the post I'm replying to and added a brief explanation of what the problem was.

I currently own just six of the HYP4 companies - BP, Lloyds, United Utilities, BT, Tate & Lyle and GlaxoSmithKline. I have owned another six in the past: DSGI (which has since renamed to Dixons Retail and then merged into Dixons Carphone), Aviva, RBS (which has since renamed to NatWest Group), Persimmon, Pearson and Land Securities. ...

As for my decisions to get rid of the six I have got rid of, I greatly regret getting rid of Persimmon - I actually managed to get rid of it at an overall loss by giving up on it before its recovery from the financial crisis was visibly under way! But that's a hindsight judgement, of course. The others I don't regret getting rid of - though in the cases of Aviva and Pearson, that's because I've done so too recently to have much idea what I have or haven't missed out on. In any case, the reason I disposed of them was that I've recently decided that my HYP is a bit too 'sprawling' and complex for me to want to continue running it as it stands for all that much longer as I get older - so I've started on some simplifications, the initial step of which was reducing its number of holdings (which was 40ish a few years ago, had eroded to 35ish at the start of this year, and I've now taken it down to 30 by getting rid of some long-term poor performers). The next and more important step is to simplify its account structure: it's currently in three unsheltered broker accounts (one of which also holds most of my smallcap holdings), two ISA accounts and one SIPP account. That structure grew over the years rather than being properly designed, and I'm intending to reduce it to two unsheltered accounts (neither of them shared with my smallcaps portfolio), one ISA account and one SIPP account. (Some might still regard that as one unsheltered broker account too many, but I wouldn't be happy with such a large fraction of my overall wealth being in that single account as that would entail.)

It's a long time since I've bothered to count the holdings that would be admissible as HYP shares on this board. 50-ish, at a guess. I do dive quite deeply into the FTSE350, mainly to hoover up REITs of interest. ...

There are actually two numbers of shares admissible as HYP shares on this board: those that are admissible as current HYP purchase candidates, and those that are admissible for discussion on the board because they're currently in HYPs and were acceptable HYP purchase candidates when they were purchased. My guess about the first of those numbers agrees with your 50-ish, but I think the second number is quite a lot bigger - it wouldn't surprise me if it was over 100.

... I'm fast approaching 67, but see no need to start simplifying things just yet. One ISA, and one SIPP. Former posters such as Valuemargin seemed to manage with many more, so I'm not especially exercised by the issue. Several other brokerages/ accounts, but not HYPable.

I'm fast approaching 65, so a couple of years younger than you. About the amount of simplification I'm doing, I too don't see any current need to start simplifying, but if I wait for such a need to develop, actually doing the simplifying is liable to be a pretty daunting task by then. Much better to do at least some simplifying while I'm not under pressure to get it done quickly. And especially to tackle the cases where the complications are there for historical rather than any significant current reasons - the big example of that is that the vast bulk of my unsheltered investments are currently held in four accounts: currently, one has holdings in 29 of my 30 HYP shares and some of my 'smallcaps' shares; a second has holdings in 21 of the HYP shares; a third has holdings in 20 of the HYP shares; the fourth has holdings in a somewhat different set of my 'smallcaps' shares. The historical reasons why they're that way are complex, but the basics are that I started both of those strategies at a time that I only had the first account, so they had to share that account. As I gained confidence in those strategies and put more of my total wealth into them, I added the second and third accounts to distribute my wealth between different providers - an essential precaution against major broker problems IMHO when one is as financially dependent on one's investments as I am, however unlikely such problems might be, and one that isn't really solved by tax-sheltered ISA and SIPP accounts when the restrictions on contributions to them have limited me to getting only very roughly 20% of my equity investment capital into them so far. The second account is a Halifax ShareBuilder account which at one stage also held both HYP and 'smallcaps' investments, but I simplified the job of tracking the two strategies many years ago by getting Halifax to open a second ShareBuilder account and transfer the 'smallcaps' investments to it - that account is the fourth one. Apart from that bit of simplification, though, I've mostly let inertia drive things. In recent years, I've occasionally reduced the number of separate holdings of a HYP share that I've decided to top-slice by selling the entirety of one of the separate holdings of it (usually the smallest), but not done anything more active to reduce the number of number of separate holdings, like transferring them between brokers to merge them. Those are the main historical reasons why there is complexity in the way I currently hold my shares. (There are other more minor ones that I won't go into, one of which triggered my current review and bout of simplifications, but isn't actually a major factor in them - it set off a train of thought, but hasn't actually featured much in that train of thought.)

So the situation I'm currently facing with regard to my HYP shares is that I've got 30 of them, but distributed among 70 separate unsheltered holdings with three different brokers (plus a total of 55 ISA and SIPP holdings, but that will only be reduced by 1 when I merge the two ISA accounts). And I've decided to shake off my inertia and do some merging of the unsheltered accounts, specifically by transferring the HYP holdings I've got in the first account to the second and third (about half of them going to each) and transferring the 'smallcaps' holdings in the fourth account to the first account (followed by closing the fourth account). It will cost me a few hundred in transfer charges, but otherwise have no effect on my overall investments, and I'll recoup those charges within a few years in terms of less time spent on tracking my investments, ensuring that the totals in my tax return are correct, etc, even if I value my time only at minimum-wage rates - which I most certainly don't! ;-) And of course, there's a chance that it will be recouped faster than that, if something happens to me that forces my financial affairs to be placed in someone else's hands - charges for that are at far more than minimum-wage rates...

To sum up, the simplifications I'm doing now to how I hold my HYP (as opposed to the reduction in my number of holdings - see below) are basically to get rid of some complexities that were there for historical reasons but are no longer necessary or even mildly desirable in my view. Getting rid of them has a trivial cost in the context of the size of my HYP and the admin work I tend to end up doing on it, and importantly no effect on which shares my HYP selects or their weightings. I.e. they're basically much more a matter of practical efficiency than investment strategy.

There is a view on this board that that 15 shares is about the "right" number of shares in terms of diversification, even though many people seem to hold more. This view is often associated with pyad, although I also recall an influential post from you which also came up with the number 15. If I trawl through my PDF archives, I may find it, but then again, I may not. To me that seems far too concentrated for a retirement income, so no thanks.

I've made a number of posts over the years that essentially say that - but in particular contexts, and they do generally also say other things. From memory, typical main points that they've made are:

* Various academic studies have concluded that numbers in the region of 15 are good numbers of shares for a portfolio from the point of view of getting most of the diversification benefit available - one does get further bits of it for each further share held (provided one sizes the added holdings appropriately) but they're increasingly small bits, so that it quite quickly ceases to be worth bothering.

* Those academic studies need to be taken by HYPers with at least a pinch of salt, due to mismatches with practical realities and HYP preferences. The ones I've seen tend to recommend a portfolio that changes quite a lot from year to year, so their rates of return need to be downgraded by a good fraction of the 0.5%+ charges cost of moving to other shareholdings - and the 'optimality' of those portfolios compared with others is generally a matter of a tiny fraction of a percentage point in return rate. It seems entirely plausible to me that a more diversified portfolio that is reasonably close to all of them would lose less to its 'non-optimality' than it would gain due to lower trading costs.

* In practice, I've found that if one tries to select a "lump sum all at once" HYP from the FTSE350, the process of finding good candidates (i.e. with high yield and safe-looking dividends, and in different sectors from all the already-selected candidates) tends to run out of steam at around 15 shares. But of course, many HYPs are built up over many years, and experience shows that many more than 15 shares will turn up as 'good candidates' at one point or another over periods of many years. (Of course, many of those will cease to still be 'good candidates' after being bought - if they didn't, there would be a steadily-increasing number of 'good candidates' over the years. But ceasing to be a 'good candidate' can happen for good reasons as well as bad - and picking all of one's shares at once doesn't magically protect one from the risk of picking 'good candidates' that turn out badly: HYP1 can be seen to have chosen such shares.)

* Even if a lower level of diversification is in principle better due to the increased diversification benefit being outweighed by the increased costs (probably mostly in time rather than money), it won't be by much, and the HYPer may well regard their own peace of mind as more important than the slightly worse returns. Having over 10% of one's HYP income coming from a single share is a level of income imbalance that can very easily develop in a 15-share HYP, and the possibility of a single-company disaster causing a loss of that much of one's HYP income can be very worrying if the HYP is one's main income source. As a result, a HYPer's circumstances and preferences can push their preferred number of holdings above a theoretical 'optimum', even if the latter is genuinely an optimum on purely financial considerations.

As far as I'm concerned, my recent reduction to 30 holdings from 35ish is a deliberate reconsideration of what I need for my own peace of mind, and the earlier slow reduction over a period of several years from 40ish is more just a drifting down due to takeovers outnumbering the number of new candidates I've considered sufficiently good. I don't see myself reducing it much more in future, because that would run into my own "so no thanks" point.

Persimmon: 2009/2010 was extraordinarily difficult to play. Most people will have got something wrong. If that's your only mistake, then "well done"!

I'm afraid that it isn't my only mistake - not by a long way! It's just the result of looking at the six HYP4 shares I have owned and no longer do, and with the benefit of hindsight identifying the one where my decision to no longer own it is clearly a matter of regret. RBS is also clearly a matter of regret - but regret that I held it as long as I did, not that I eventually decided to longer to own it. And more generally, I've held a lot more HYP shares than six over the years, and it isn't really worth spending any real time on deciding whether one regrets a decision - it's just a feeling that sometimes strikes one when looking back on things one has done in the past. Whether things one has done in the past were a mistake is a different matter, and both one that can be worth spending some time on if one can learn from the mistakes, and also one that can be a lot more difficult to determine than whether one feels regret.

Gengulphus

[moorfield]

I'm fast approaching 65, so a couple of years younger than you.

One learns something new etc...! I had you down as much younger than that. Interesting how folk come across on here isn't it.

(For the record, I am still the right side of 50, or should that be the wrong side of 50 here !)

[MDW1954]

There are actually two numbers of shares admissible as HYP shares on this board: those that are admissible as current HYP purchase candidates, and those that are admissible for discussion on the board because they're currently in HYPs and were acceptable HYP purchase candidates when they were purchased. My guess about the first of those numbers agrees with your 50-ish, but I think the second number is quite a lot bigger - it wouldn't surprise me if it was over 100.
Gengulphus

A preliminary reply, while also trying to be quote-compliant -- feedback welcome!

In my original remark, the quote-quoting complexities of which proved to be beyond me, I may have been too succinct. I was referring to my OWN holdings. That is, 50-ish of my holdings that are compliant re: this board.

For the FTSE 350 as a whole, I've no idea. Granted, that number maps onto neither of your two numbers above, but I'd hope that it was larger than your reply indicates.

Longer reply follows. but I thought that I'd tidy this up first.

MDW1954

[tjh290633]

There are actually two numbers of shares admissible as HYP shares on this board: those that are admissible as current HYP purchase candidates, and those that are admissible for discussion on the board because they're currently in HYPs and were acceptable HYP purchase candidates when they were purchased. My guess about the first of those numbers agrees with your 50-ish, but I think the second number is quite a lot bigger - it wouldn't surprise me if it was over 100.

I have just loooked at my own records. 36 existing holdings and 44 disposals. Of the disposals 21 were taken over or dissolved. The remainder still exist in one form or another, so that is 59 holdings.

TJH

[Gengulphus]

(For the record, I am still the right side of 50, or should that be the wrong side of 50 here !)

Or you could go for the politically correct option: the other side of 50. ;-)

Gengulphus

[Gengulphus]

There are actually two numbers of shares admissible as HYP shares on this board: those that are admissible as current HYP purchase candidates, and those that are admissible for discussion on the board because they're currently in HYPs and were acceptable HYP purchase candidates when they were purchased. My guess about the first of those numbers agrees with your 50-ish, but I think the second number is quite a lot bigger - it wouldn't surprise me if it was over 100.

In my original remark, the quote-quoting complexities of which proved to be beyond me, I may have been too succinct. I was referring to my OWN holdings. That is, 50-ish of my holdings that are compliant re: this board.

Ah, I can see that interpretation now, and yes, it's perfectly reasonable. I clearly gave up too soon after seeing just two such interpretations... :-(

Gengulphus

[Arborbridge]

I've had a niggle about Admiral for a while, and today I've trimmed it a little. It had reached 2.22x median value and over 8% by income. After the adjustment it is still very large at 1.77x median and providing 6.5% of my income. According to my own "guidelines", I should have trimmed this more, but ADM has be clearly one of my winners, so I relented.

As for where to topup, I'm limited by what is in this broker account. HYP-wise it'll be Chesnara and/or Abrdn. If it's non HYP, that's something I'll keep quiet about

When deals are complete, I will post the state of play.

[Arborbridge]

Here's the state of play for my HYP after trimming Admiral, and for a change I have posted the whole HYP so one can see it entire:-



NB: the table is in topup ranking order described by TJH's method and determined by HYPTUSS. I haven't checked for any yield anomalies for this exercise.
Discussion of which share to topup is slightly limited since there are only four shares in the top group which are available in the broker with Admiral cash. These are RIO,ABDN,BHP,CSN. Rio and Bhp are probably ruled out due to income contribution being over 5%.
That leaves only Abdrn as a valid choice plus CSN in 14th place (already over median weight). Time to ponder my other options outside the HYP too, but it seems that abdrn will be the next topup.

Arb.