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Shell - tinkered then untinkered now thinking of retinkering

For discussion of the practicalities of setting up and operating income-portfolios which follow the HYP Group Guidelines. READ Guidelines before posting
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Gengulphus
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Re: Shell - tinkered then untinkered now thinking of retinkering

#451272

Postby Gengulphus » October 19th, 2021, 12:51 pm

Dod101 wrote:
Arborbridge wrote:One should look at the HYP criteria first which reduces the pool of shares considerably, and then look in further detail - which would include the other factors you are concerned with.
To put the "other factors" first means wasting time examining a load of non-HYP shares.

Sorry to be pendantic, but it does seem your remark puts the cart before the horse, as regards procedure.

You are speaking as a true HYPer. I am not. That is the difference. I tend to start with the business sector, then the companies within it, ...

I don't really see the difference, because the guidelines include diversification by saying that a HYP approach invests in "a diversified portfolio of shares". I filter the available companies down to a shortlist of companies I think are worth looking at more closely, and the way I filter them down includes looking at their business sector as well as the more obvious HYP criteria like high yield. For example, if I were to be looking for a HYP company to buy at present (which I am not), all miners would be filtered out, because my HYP already has a significantly higher percentage of its income being supplied by miners than I'm really comfortable with.

Basically, every investor needs a way to come up with a shortlist of companies to analyse in greater detail, because life is far too short to analyse all the companies around. How any individual HYPer chooses to do that is not laid down in the guidelines, and so HYPers end up doing it in various different ways. Those different ways are a practical aspect of running a HYP and so well worth discussing on this board - not from the point of view of deciding which of them is the 'correct' way to go about it, but from the point of view of sharing tips about the process others might find useful (*). What is laid down in the guidelines is some characteristics that the portfolio resulting from the way a HYPer selects their shares must have.

There is a tendency for people posting here to concentrate what they say on the more obvious HYP criteria rather than diversification. There's a good reason for that tendency: basically, diversification information is not usefully shareable between HYPers - for example, the information that I'm not buying miners because I'm already overweight in them is of zero use in any other HYPer's share selections, because their diversification criteria need to use data about their HYP, not about mine! So I'm not saying anything needs doing about that tendency, other than being aware that it exists and may well affect the overall impression one gets from the board about what matters to HYPers...

(*) An example of where things go wrong: I've seen many posts describing the "list the available shares in descending order of yield and work down that list until you find one that's acceptable" method of HYP share selection pretty much as if it's the one-and-only correct way for a HYPer to select their shares. But if you look back at its origins in pyad's original HYP article, what he said was:

Whatever the money available, even very large sums, no more than about 15 shares are necessary to take strip out the excessive risk of too few shares. Stick to FTSE 100 companies and spread the holdings around sectors. I would do it by ranking the shares in the index by descending yield, then work down the list choosing one from each sector, but doing a bit of research on each potential candidate. You don't want excessive debt, for example. Another useful clue is to pick only those companies that have increased dividends regularly over the last few years.

In that, most of what pyad said was about how he would choose the shares and gave a couple of "clues" about things to watch out for - he wasn't dictating that others must use that method and those clues, but making suggestions that others might find useful. (Admittedly the sentence "Stick to FTSE 100 companies and spread the holdings around sectors" is rather more imperative, though he somewhat undermined the imperative nature of the first part by saying a week later that "To obtain a little more choice, I went marginally outside the FTSE 100 index and set £1.5b as my minimum capitalisation filter." But regardless of how imperative one regards that sentence as being, it's not about the "list the available shares in descending order of yield and work down that list until you find one that's acceptable" method of HYP share selection.)

Gengulphus

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451282

Postby Dod101 » October 19th, 2021, 1:30 pm

Fluke wrote:
Maybe you should hedge your bets - hold Shell, but also buy a green energy supplier as well (SSE, or Greencoat UK Wind for example, or one of the other renewable infrastructure companies).


Yes good point, I do have a 2/3 holding of SSE


As well as holding Shell I have a holding in SSE but I do not see it as hedging my bets. It is a well run company and like Shell, the management is I am sure looking to the future and repositioning itself to recognise the way things are moving.

The climate conference in Glasgow should have no effect because it has been known about for some time and they are unlikely to come up with anything that has not been well trailed.

Dod

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451371

Postby Dod101 » October 19th, 2021, 5:34 pm

Shell closed just short of £18 this afternoon.

Dod

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451402

Postby Fluke » October 19th, 2021, 7:37 pm

Dod101 wrote:Shell closed just short of £18 this afternoon.

Dod


Nearly double what it was this time last year, well done to anyone who bought/topped up around then. Well at least I'm back in the black after my ill-timed purchase.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451406

Postby Dod101 » October 19th, 2021, 7:52 pm

Fluke wrote:
Dod101 wrote:Shell closed just short of £18 this afternoon.

Dod


Nearly double what it was this time last year, well done to anyone who bought/topped up around then. Well at least I'm back in the black after my ill-timed purchase.


A good long term hold I'd say, so just hang in there!

Dod

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451463

Postby monabri » October 19th, 2021, 11:16 pm

Hope for HSBA then?

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451485

Postby idpickering » October 20th, 2021, 3:35 am

monabri wrote:Hope for HSBA then?


I’m still not tempted to buy HSBC tbh, but one can never say never I guess? As for RDSB, I know I trimmed my holdings of them recently, which I mentioned on this board, as they’d become to weighty in capital value terms in my HYP, going forward I’m going to just hold on and let them be.

Ian.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451487

Postby Dod101 » October 20th, 2021, 6:21 am

monabri wrote:Hope for HSBA then?


Somebody thinks so. They have been around £4.30 for some time now. A beneficiary of higher interest rates if they come I guess, just in the same way that Shell is benefiting from higher oil prices. Other side of that is that I am going to pay a lot more when I order domestic oil to refill my tank later today.

Dod

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451490

Postby idpickering » October 20th, 2021, 7:00 am

Fluke wrote:
Nearly double what it was this time last year, well done to anyone who bought/topped up around then. Well at least I'm back in the black after my ill-timed purchase.


As I've mentioned here before, I bought more BP. and RDSB four times each last year. The recent rise in both their share prices, although welcome of course, pushed them both way over my average capital value weighting in my HYP, hence the recent trim of both. Going forward, both are a hold for me. So thank you Fluke, although I don't claim any guru status ;) , just went for it, and got lucky.

Ian.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451505

Postby idpickering » October 20th, 2021, 8:23 am

Further to my last though. As we know here, capital gains/losses are not the name of the game here. It’s the income that counts.

Ian.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451512

Postby Dod101 » October 20th, 2021, 8:46 am

idpickering wrote:Further to my last though. As we know here, capital gains/losses are not the name of the game here. It’s the income that counts.

Ian.


Well there is an answer to Gengulphus further up this thread.

Ian, true, apparently but you have I have no doubt made much more in a few months from your capital gain on Shell than you have in dividends for probably a few years, and yet it is the income that counts.

Dod

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451524

Postby idpickering » October 20th, 2021, 9:31 am

Dod101 wrote:
idpickering wrote:Further to my last though. As we know here, capital gains/losses are not the name of the game here. It’s the income that counts.

Ian.


Well there is an answer to Gengulphus further up this thread.

Ian, true, apparently but you have I have no doubt made much more in a few months from your capital gain on Shell than you have in dividends for probably a few years, and yet it is the income that counts.

Dod


You are of course right regarding me 'making much more', but tbh, I wasn't aiming at winning on that front at least, just bought more of what I thought were, and still do, two major oil companies whilst they were cheap to buy imho. Either way, I'm still focussed on the income both are providing me, as it should be here.

Ian.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451532

Postby Arborbridge » October 20th, 2021, 9:54 am

Dod101 wrote:
Fluke wrote:
Dod101 wrote:Shell closed just short of £18 this afternoon.

Dod


Nearly double what it was this time last year, well done to anyone who bought/topped up around then. Well at least I'm back in the black after my ill-timed purchase.


A good long term hold I'd say, so just hang in there!

Dod


Really? Not all that good. I've had it for ten years with a total return of 4% pa to the end of September. The rise since then has brought it up to 4.82%, so it's been on the poor side of "OK" with the dividends expensively bought. Four years of static dividend plus, latterly, a great cut. My yield on the past year to September was around 3.3% (depending how you measure it).

So all in all, this HYP stalwart is giving some anxious signs of not being so stalwart, or even currently HYPable. I shall continue to hold, but I wouldn't blame others for looking elsewhere.

A similar story at BP but with a lower TR of 4.14% to date, but a better yield of 4.37% - again expensively bought.

These things can change overnight, but my overall feeling is that big oil hasn't been particularly good both sitting on average around the bottom third of my total return table in exchange for being among the top income contributors to my pension.

Life is all swings and roundabouts 8-)

Arb.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451533

Postby Arborbridge » October 20th, 2021, 10:00 am

As regards shortlisting shares for a HYP, I wouldn't mess around with sectors. Far easier to sort the shares in order of yield - this can be done in a moment using one of the spread sheets such as Step-one. This will give a much reduced number of starting shares than the FTSE 350 in seconds. Beginning from those initial potentials cut out a lot of unecessary work - and is actually broadly the moethod Pyad described too.

Admittedly, I haven't done that lately because I haven't needed to, but I cannot see the point of sorting through 350 shares when a moment's work would cut that to, maybe, a couple of dozen. Think about the diversity then.

Arb.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451541

Postby kempiejon » October 20th, 2021, 10:14 am

Arborbridge wrote:As regards shortlisting shares for a HYP, I wouldn't mess around with sectors. Far easier to sort the shares in order of yield - this can be done in a moment using one of the spread sheets such as Step-one. This will give a much reduced number of starting shares than the FTSE 350 in seconds. Beginning from those initial potentials cut out a lot of unecessary work - and is actually broadly the moethod Pyad described too.

Admittedly, I haven't done that lately because I haven't needed to, but I cannot see the point of sorting through 350 shares when a moment's work would cut that to, maybe, a couple of dozen. Think about the diversity then.

Arb.


Applying that method of yield ranking - and like Arb I've not bothered recently as I have enough picks for diversity to top up so I'm not interested in a new holding - I'd probaby exclude both the Oilies, BP and Shell for recent cuts and even prior to covid lack of long term, income growth. I've not yet decided if companies should get a by for Covid cuts, I see good reasoning for that dispensation but I'd like to see a return to or committment to return to pre pandemic income levels. There are a few examples of my other holdings having do either or both

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451586

Postby triatharoo » October 20th, 2021, 11:54 am

kempiejon wrote:I've not bothered recently as I have enough picks for diversity to top up so I'm not interested in a new holding


Even if the new holding is better than your alternatives for topping up?

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451600

Postby kempiejon » October 20th, 2021, 12:14 pm

triatharoo wrote:
kempiejon wrote:I've not bothered recently as I have enough picks for diversity to top up so I'm not interested in a new holding


Even if the new holding is better than your alternatives for topping up?


As I've not recently searched the market by yield for a new candidate I wouldn't necessarily know if there was a higher candidate. But news, chatter and the like especially on this board might be enough to pique my interest to investigate a specific new name to the pool. And recently isn't never, come March or April with the new tax year I'm a bit more interested in what's in the pool as I'll be moving larger capital amounts from unsheltered accounts than normal monthly savings. For the rest of the time with over 30 holdings adding one more at below average weight even if it offered twice the portfolio yield wouldn't make a big change to my portfolio yield. As I top up monthly at below a median capital weight and I prefer yields above the portfolio average most new money does increase my yield by a fairly trivial amount. Of course the swings of capital can push portfolio yield around far more than topping up with monthly savings and collected dividends.

Anyhow Shell has been ruled out for new money by its dividend history for years by me.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451647

Postby Gengulphus » October 20th, 2021, 1:20 pm

Dod101 wrote:
idpickering wrote:Further to my last though. As we know here, capital gains/losses are not the name of the game here. It’s the income that counts.

Well there is an answer to Gengulphus further up this thread.

Ian, true, apparently but you have I have no doubt made much more in a few months from your capital gain on Shell than you have in dividends for probably a few years, and yet it is the income that counts.

Well, I'm mystified about how you think that is an answer to me in my one and only previous contribution to this thread, considering that I said nothing whatsoever in that post about whether capital gains/losses or income count.

But you're quite right that when looking at a single share, the effects of capital gains/losses frequently far outweigh those of dividend income, and indeed that can quite easily be the case after more than just a few months or even quite a few years. Some fairly extreme examples from my HYP are Lloyds and Halma, both of which I've held since 2003 (though with various top-ups and top-slices along the way, so I haven't held all my shares of either that long). Even after that 18-year holding period, my capital gains/losses (including both realised and unrealised ones) net out at losses that are about 50% greater than the total dividends I've received to date in the case of Lloyds and gains that are over 10 times the total dividends I've received to date in the case of Halma.

However, as has been observed many times before, HYP is a portfolio approach - so to judge its success at achieving its aims, one needs to look at the totals for the entire portfolio. And on that, my HYP's net total dividends received to date are a bit over twice its net capital gains/losses to date. Seen from that whole-portfolio perspective, the dividends tortoise doesn't move quickly and it occasionally slows down substantially, but it has never stopped to date or even come close to doing so, and it's guaranteed never to go backwards - whereas the capital gains/losses hare has frequently dashed both backwards and forwards at higher speeds (sometimes much higher speeds), so that the tortoise has been convincingly outstripping it over the long term...

Could I do better overall by focussing more on the prospects for net capital gains/losses of the companies I invest in and less on the dividend prospects? Maybe, maybe not - I do have other share investments, and my record on them is too mixed to be convincing either way. About the only thing I'm certain of is that they're much more of a rollercoaster ride than my HYP - and I wouldn't be at all happy running them without the HYP providing reasonably reliable income (with a substantial safety margin to cater for the fact that it's by no means totally reliable).

Looked at another way, what that says is that my HYP's aims aren't by any means just maximising investment returns, nor even just maximising dividend income - they also include my own peace of mind and not using too much of my time that I would prefer to be using for other things. As for anything with multiple aims, sometimes one has to accept compromises between them that result in individual aims not being achieved as well as they might be. But my HYP has been achieving its aims well enough - i.e. without those compromises having any major effect.

Gengulphus

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451658

Postby Gengulphus » October 20th, 2021, 1:34 pm

Arborbridge wrote:As regards shortlisting shares for a HYP, I wouldn't mess around with sectors. Far easier to sort the shares in order of yield - this can be done in a moment using one of the spread sheets such as Step-one. This will give a much reduced number of starting shares than the FTSE 350 in seconds. Beginning from those initial potentials cut out a lot of unecessary work - and is actually broadly the moethod Pyad described too.

Except that eliminating shares in sectors you don't want any more of is also a moment's work in a spreadsheet... And for two moments' work, you can do both!

Gengulphus

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451693

Postby Arborbridge » October 20th, 2021, 3:08 pm

Gengulphus wrote:
Arborbridge wrote:As regards shortlisting shares for a HYP, I wouldn't mess around with sectors. Far easier to sort the shares in order of yield - this can be done in a moment using one of the spread sheets such as Step-one. This will give a much reduced number of starting shares than the FTSE 350 in seconds. Beginning from those initial potentials cut out a lot of unecessary work - and is actually broadly the moethod Pyad described too.

Except that eliminating shares in sectors you don't want any more of is also a moment's work in a spreadsheet... And for two moments' work, you can do both!

Gengulphus


Well, I won't be drawn into having the last word in the argument :) ;)


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