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HYP1 is 21

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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tjh290633
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Re: HYP1 is 21

#461726

Postby tjh290633 » November 28th, 2021, 11:13 pm

1nvest wrote:Again I suspect either way (tweaked/buy-n-hold) broadly works out much the same. On the costs front tweaking incurs higher costs/activity but could reduce risk such as if your largest non-tweaked holding was taken over for cash that induced a large capital gains tax liability.

Halfway might be a reasonable choice. When a holding had risen to 2 times the average holdings value, sell down half of those gains (rebalance it to being 1.5 times the median). Which I believe is something along the lines of what Terry does with his TJH HYP. Somewhat like a combination of both styles.

Agreed. If a share gets to 1.5 times the median, I sell 25%, which brings it down to 1.125 times the median. That usually gives me enough to top up two other holdings by 20% to nearer the median level.

TJH

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Re: HYP1 is 21

#461948

Postby 1nvest » November 29th, 2021, 11:20 pm

https://www.bogleheads.org/wiki/Small_caps
Using a new dataset of accounting information merged with share price data we find a strong value premium in the UK for the period 1955-2001. The value premium exists within the small-cap as well as the large-cap universe. We also find that dividend yield as a measure of value produces strikingly similar results. The time-series of return spreads between portfolios sorted according to dividend yields closely matches the results obtained from sorts on book-to-market. However, managers attempting to capture the value premium in the small-cap segment should pay particular attention to rebalancing-induced portfolio turnover and market illiquidity in small-value stocks. Compared to the U.S., the U.K. market for small-cap stocks is relatively illiquid. Trading costs are therefore an even more crucial determinant of overall performance. This is likely to be the case in other non-U.S. markets as well."

— Dimson, Elroy, Nagel, Stefan and Quigley, Garrett,

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Re: HYP1 is 21

#484442

Postby Itsallaguess » March 5th, 2022, 6:47 am

I've started a separate thread below, on the broader High Yield Shares & Strategies board, that continues to look at the underlying income and capital concentration of HYP1 as it develops over the years -

HYP1 is 21 - thread discussing income and capital diversification -

https://www.lemonfool.co.uk/viewtopic.php?f=31&t=33582

Cheers,

Itsallaguess

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Re: HYP1 is 21

#484929

Postby Jon277 » March 7th, 2022, 5:01 pm

Thanks very much for the annual update on HYP1.

i'm always suprised by the level of animosity these reports get.

PYAD was clear as to the purpose and why FTSE100 was chosen as the comparision - having people second guess with hindsight or suggesting different indices should have been chosen is a ...strange at best

Jon

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Re: HYP1 is 21

#484949

Postby MrFoolish » March 7th, 2022, 6:34 pm

Jon277 wrote:Thanks very much for the annual update on HYP1.

i'm always suprised by the level of animosity these reports get.

PYAD was clear as to the purpose and why FTSE100 was chosen as the comparision - having people second guess with hindsight or suggesting different indices should have been chosen is a ...strange at best

Jon


What reason was that? I would have thought an index based on total world market cap would make more sense. Or even the FTSE all-share at a push.

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Re: HYP1 is 21

#485056

Postby Arborbridge » March 8th, 2022, 7:48 am

MrFoolish wrote:
Jon277 wrote:Thanks very much for the annual update on HYP1.

i'm always suprised by the level of animosity these reports get.

PYAD was clear as to the purpose and why FTSE100 was chosen as the comparision - having people second guess with hindsight or suggesting different indices should have been chosen is a ...strange at best

Jon


What reason was that? I would have thought an index based on total world market cap would make more sense. Or even the FTSE all-share at a push.


What you or I might think, isn't relevant except to our own portfolio conduct :)

Pyad's decision at that time was that for a UK amateur investor is would be better to stick with UK shares, and that the "foreign" content to an extent would be provided by dollar earners. But the reason why the FTSE 100 is the benchmark is based on one of the safety factors: that it is safer for an amateur to invest in the biggest and best in class. The decision wasn't based on trying to find the index with the flashiest go-faster stripes, that doesn't enter the thinking at all. The requirement was for a portfolio which a UK investor could set up with minimum fuss and knowedge but with reasonably high safety, reliability and durability.

I happen to believe it works within the bounds set, and for the purpose described, but that's not to say that other schemes haven't performed better. One can always find something which performs better - particularly if one alters the purpose of the portfolio.

So back to the question: why compare with the FTSE100? Because that's what HYP was based on, not the world index. For that reason, I also compare my HYP TR with the FTSE 100 TR because it is the closest comparable benchmark.

Arb.

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Re: HYP1 is 21

#485058

Postby Dod101 » March 8th, 2022, 7:57 am

I am not going to enter into this fairly pointless discussion except to say that I cannot believe that Arb intended to claim that the FTSE100 is in any sense the 'biggest and best in class'. It is neither nowadays at least.

I suspect that the FTSE100 was chosen simply because it was likely to be Doris's 'home' index; easy to buy shares on it, probably with names familiar to her and it would be easy if she had a mind to to check prices.

Dod

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Re: HYP1 is 21

#485072

Postby csearle » March 8th, 2022, 8:45 am

Dod101 wrote:I am not going to enter into this fairly pointless discussion except to say that I cannot believe that Arb intended to claim that the FTSE100 is in any sense the 'biggest and best in class'. It is neither nowadays at least.

I suspect that the FTSE100 was chosen simply because it was likely to be Doris's 'home' index; easy to buy shares on it, probably with names familiar to her and it would be easy if she had a mind to to check prices.
I suspect Arb was referring to the constituents of the FTSE-100 rather than the standing of the index itself.

As far as I know pretty much the definition of the FTSE-100 selects for the biggest companies listed in the UK. IIRC the relative safety of larger companies was indeed the point of selecting predominantly from the FTSE-100 constituents. C.

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Re: HYP1 is 21

#485075

Postby Arborbridge » March 8th, 2022, 8:52 am

Dod101 wrote:I am not going to enter into this fairly pointless discussion except to say that I cannot believe that Arb intended to claim that the FTSE100 is in any sense the 'biggest and best in class'. It is neither nowadays at least.

I suspect that the FTSE100 was chosen simply because it was likely to be Doris's 'home' index; easy to buy shares on it, probably with names familiar to her and it would be easy if she had a mind to to check prices.

Dod


You are correct: I didn't intend that, as Chris then explained.

The FTSE is the index of choice for HYP, so my remarl was in that context. HYP originally looked at the biggest and best within that index, all based on the proposition that the largest companies will not generally fail. That's proved correct in comparison with those of us tempted into the lower orders e,g, CLLN, IRV - not that there haven't been bruising encounters with RBS falling 80% etc. But as one of the safety factors, it "had legs" and probably still does.

Arb.

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Re: HYP1 is 21

#485082

Postby Dod101 » March 8th, 2022, 9:18 am

Arborbridge wrote:
Dod101 wrote:I am not going to enter into this fairly pointless discussion except to say that I cannot believe that Arb intended to claim that the FTSE100 is in any sense the 'biggest and best in class'. It is neither nowadays at least.

I suspect that the FTSE100 was chosen simply because it was likely to be Doris's 'home' index; easy to buy shares on it, probably with names familiar to her and it would be easy if she had a mind to to check prices.

Dod


You are correct: I didn't intend that, as Chris then explained.

The FTSE is the index of choice for HYP, so my remarl was in that context. HYP originally looked at the biggest and best within that index, all based on the proposition that the largest companies will not generally fail. That's proved correct in comparison with those of us tempted into the lower orders e,g, CLLN, IRV - not that there haven't been bruising encounters with RBS falling 80% etc. But as one of the safety factors, it "had legs" and probably still does.

Arb.


OK I picked that up wrongly. Will now go back to sleep (figuratively at least)

Dod

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Re: HYP1 is 21

#485086

Postby Gersemi » March 8th, 2022, 9:27 am

I think we should remember that when PYAD first proposed the HYP it was a very different investing world. Trackers weren't widely available and managed funds were generally expensive. Today it is much easier to invest in the fund tracking the index of your choice at low cost.

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Re: HYP1 is 21

#485347

Postby pyad » March 9th, 2022, 10:37 am

Gersemi wrote:I think we should remember that when PYAD first proposed the HYP it was a very different investing world. Trackers weren't widely available and managed funds were generally expensive. Today it is much easier to invest in the fund tracking the index of your choice at low cost.


Index trackers were not then and are not now rivals to HYPs because the objective of HYPs is to produce an income. The yield on trackers will be considerably less than an HYP drawn from the same index, FTSE100 in this case, so I don't think trackers would appeal much to an income seeker. Incidentally trackers were quite well known back then. So much so that the Motley Fool's frequently repeated investment advice to many investors was to just buy a tracker and hold for the long term.


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