12 mistakes to avoid with your HYP

[moorfield]

A piece from the Times today, paywalled, but some have probably seen it also, the title I have shamelessly misappropriated.

https://www.thetimes.co.uk/article/12-i ... -20gp8b8jx

Several of these behaviours I read particularly regularly here, and could attach names against each, (including myself, I should add) but that might be a step too far.

Failing to set goals
Going on a buying spree
Being impatient
Checking your portfolio too often
Buying past performance
Being swayed by social media
Taking too little risk
Attempting to time the market
Tinkering with holdings
Putting off portfolio reviews
Being emotional
Assuming cheap stocks are undervalued

Buy, hold and forget. Maybe pyad was onto something, after all?

[Breelander]

...Several of these behaviours I read particularly regularly here, and could attach names against each, (including myself, I should add) but that might be a step too far.....

Checking your portfolio too often

That one I will freely put my name to, twice a week - regular as clockwork. I do like to be aware of how it's doing, but I don't let it actually push me into making any rash decisions. I am (possibly) one of the least active tinkerers here.

Buy, hold and forget. Maybe pyad was onto something, after all?

Yep, that's far more my style. I like to think of it as it 'Strategic Inertia'

[Itsallaguess]

13. Letting ex-dividend dates drive purchase decisions.

Cheers,

Itsallaguess

[moorfield]

13. Letting ex-dividend dates drive purchase decisions.

Cheers,

Itsallaguess

Arguably that falls under "Being impatient" and/or "Attempting to time the market".


Are there any takers for "Tinkering with holdings" then ?

[Arborbridge]

A piece from the Times today, paywalled, but some have probably seen it also, the title I have shamelessly misappropriated.

https://www.thetimes.co.uk/article/12-i ... -20gp8b8jx

Several of these behaviours I read particularly regularly here, and could attach names against each, (including myself, I should add) but that might be a step too far.

Failing to set goals
Going on a buying spree
Being impatient
Checking your portfolio too often
Buying past performance
Being swayed by social media
Taking too little risk
Attempting to time the market
Tinkering with holdings
Putting off portfolio reviews
Being emotional
Assuming cheap stocks are undervalued

Buy, hold and forget. Maybe pyad was onto something, after all?

I admit to most of those at various times and in various intensities .

[moorfield]

Yep, that's far more my style. I like to think of it as it 'Strategic Inertia'

Indeed. I have also called this Strategic Indolence here in the past.

[GoSeigen]

A piece from the Times today, paywalled, but some have probably seen it also, the title I have shamelessly misappropriated.

https://www.thetimes.co.uk/article/12-i ... -20gp8b8jx

Several of these behaviours I read particularly regularly here, and could attach names against each, (including myself, I should add) but that might be a step too far.

Failing to set goals
Going on a buying spree
Being impatient
Checking your portfolio too often
Buying past performance
Being swayed by social media
Taking too little risk
Attempting to time the market
Tinkering with holdings
Putting off portfolio reviews
Being emotional
Assuming cheap stocks are undervalued

Buy, hold and forget. Maybe pyad was onto something, after all?

The entire point of HYP is to break most of these, only one or two are adhered to:
Failing to set goals: it's a mechanical strategy, the goals are mostly set. But I suppose there are personal goals that could be set like total amount to be invested.
Going on a buying spree: The time to buy is now.
Being impatient: The time to buy is now.
Checking your portfolio too often: What's the harm in this? You're never going to sell.
Buying past performance: The entire point of HYP. You buy based on previous dividend performance.
Being swayed by social media: Tick. (Unless social media persuaded you to try HYP in the first place)
Taking too little risk: Tick. It's a high-risk UK-focused 100% equity strategy, no danger of too little risk!!
Attempting to time the market: Timing the market is intrinsic -- you buy when the price has fallen low enough relative to dividends.
Tinkering with holdings: Tick. Not allowed so not a problem, unless a member of the Judean People's Front which permits tinkering
Putting off portfolio reviews: Hmm, not much to review with HYP.
Being emotional: Tick, it's meant to remove most of the emotion from the process.
Assuming cheap stocks are undervalued: Ha! This is what HYP is all about with safeguards like sector diversification and checking dividend history.

So I make that four ticks, in the other aspects it's quite heretical. Not that I disapprove entirely, to outperform you have to part from the conventional wisdom; HYP's difficulty in common with other largely mechanical strategies is that 1. it will not be suited to all market conditions and 2. it appears more attractive as a strategy when conditions are poor than when they are favourable (e.g. it can often select bull-trap stocks, LLOY, and several other disasters).

GS

GS

[idpickering]

A piece from the Times today, paywalled, but some have probably seen it also, the title I have shamelessly misappropriated.

https://www.thetimes.co.uk/article/12-i ... -20gp8b8jx

Several of these behaviours I read particularly regularly here, and could attach names against each, (including myself, I should add) but that might be a step too far.

Failing to set goals
Going on a buying spree
Being impatient
Checking your portfolio too often
Buying past performance
Being swayed by social media
Taking too little risk
Attempting to time the market
Tinkering with holdings
Putting off portfolio reviews
Being emotional
Assuming cheap stocks are undervalued

Buy, hold and forget. Maybe pyad was onto something, after all?

I admit to most of those at various times and in various intensities .

I’m with Arb on this. I’m trying to be a better HYPer nowadays, and just letting it, ie my HYP, be. The bottom line for me though, is that we’re all human and err sometimes. I’m not going to beat myself up over it though, and don’t think anyone else has the right to do so either.

Ian.

[IanTHughes]

The article does rather come across as "Teaching Grandma to suck eggs" but thankfully, following the High Yield Portfolio (HYP) strategy, ensures that one does not make such mistakes.

Failing to set goals - A high and growing income is the goal.

Going on a buying spree - 15 Holdings diversified across Business Sectors – hardly a buying spree!

Being impatient – Long term buy and hold is hardly being impatient

Checking your portfolio too often - Only checked when funds are made available to invest within the portfolio. Even then, the check is restricted to current/anticipated diversification.

Buying past performance - One can hardly buy future performance! However, HYP stresses the need to determine, as best one can, a forecast for future dividends

Being swayed by social media - One follows the HYP strategy in order to make selections, not ignorant social media cranks!

Taking too little risk - Buying high yield is not without risk.

Attempting to time the market - The time to buy is when funds are available, not because one thinks the "time is right".

Tinkering with holdings - Buy and hold for eternity can hardly be called tinkering!

Putting off portfolio reviews - Most on this board, those that follow HYP anyway, publish at least annually, warts and all

Being emotional - HYP clearly accepts that some selections will be winners while other might be losers.

Assuming cheap stocks are undervalued - HYP assumes that all prospective purchases, whether considered cheap or not, might be disasters and must therefore be investigated to ensure, as best one can, that dividends should be forthcoming.


Enjoy!


Ian

[Dod101]

I think the points made are more or less eternal and could be applied to any portfolio not just a HYP.

Dod

[naeclue]

I do tinker a little, primarily when a share has increased in value, (often correspondingly dropping in yield), to 1.5x of average value, but that doesn’t happen much (GSK this year, sold a bit, bought Close Brothers).

I do check my portfolio a lot, mostly due to a slight disbelief that the strategy is working. Some fear of theft in with that too.

Having tried lots of things over 30 years, my conclusion has been that I’m pretty rubbish when it comes to investment, the high yield method (particularly Terry’s methods) seem to be where I can do least harm.

[tjh290633]

Several of these behaviours I read particularly regularly here, and could attach names against each, (including myself, I should add) but that might be a step too far.

Failing to set goals
Going on a buying spree
Being impatient
Checking your portfolio too often
Buying past performance
Being swayed by social media
Taking too little risk
Attempting to time the market
Tinkering with holdings
Putting off portfolio reviews
Being emotional
Assuming cheap stocks are undervalued

Buy, hold and forget. Maybe pyad was onto something, after all?

As IanTHughes has pointed out above, most of these can be rebutted. I will admit to checking my portfolio value daily, and to checking the inflow of dividends.

Regarding Tinkering with holdings, as perhaps the arch-tinkerer round here, I think this should be qualified as "Needlessly Tinkering with Holdings". One could ally this with "Putting off portfolio reviews" which usually need the portfolio to be checked. This is, of course, determined by the goals which I have set, aimed at maintaining some semblance of balance and directing reinvested income to the best recipient.

HYP1 is the classic example of a portfolio which was allowed (deliberately) to become massively imbalanced. In my view, not rebalancing and replacing a taken-over share with another at the same weight are cardinal sins for an HYP.

TJH

[CliffEdge]

Some people say they have three portfolios. I don't understand that.

[Itsallaguess]

I think the points made are more or less eternal and could be applied to any portfolio not just a HYP.

One of the interesting aspects of the list for me was how important and influential the first point was -

Failing to set goals

Looking down the list after that, it's fairly clear that the majority of the other mistakes are likely to occur simply as a downstream consequence of that primary one...

Income-investors should have a plan, and they should stick to it over the long-term, and I strongly suspect that those who do so find themselves much less concerned with many of the other issues listed...

Cheers,

Itsallaguess

[Dod101]

I think the points made are more or less eternal and could be applied to any portfolio not just a HYP.

One of the interesting aspects of the list for me was how important and influential the first point was -

Failing to set goals

Looking down the list after that, it's fairly clear that the majority of the other mistakes are likely to occur simply as a downstream consequence of that primary one...

Income-investors should have a plan, and they should stick to it over the long-term, and I strongly suspect that those who do so find themselves much less concerned with many of the other issues listed...

Cheers,

Itsallaguess

Ah but every investor should have goals. None of this just applies to a HYP.

Dod

[moorfield]

Ah but every investor should have goals. None of this just applies to a HYP.

Dod

Indeed. So eventually it should dawn on every (income) investor with long term goals that they don't need a HYP to achieve them (as it has on me). There are alternatives.

Many HYPsters here do not have a plan, they have a hobby, just my own view.

[Dod101]

Ah but every investor should have goals. None of this just applies to a HYP.

Dod

Indeed. So eventually it should dawn on every (income) investor with long term goals that they don't need a HYP to achieve them (as it has on me). There are alternatives.

Many HYPsters here do not have a plan, they have a hobby, just my own view.

I think that is only too true. A HYP strategy is an easy one to follow with simple rules but I have never followed it, although I do pursue a broad income strategy. I am not going to get into all that again though. The original post could have been posted on a much more broadly based Board so as to benefit a wider audience, that is really the point I am trying to make.

However I did not post it so it does not matter.

Dod

[IanTHughes]

The original post could have been posted on a much more broadly based Board so as to benefit a wider audience, that is really the point I am trying to make.

So, if it matters to you, why not simply post it on a "more broadly based Board"

However I did not post it so it does not matter.

So, if it does not matter to you, do not bother to post it on a "more broadly based Board"

Make you mind up!


Ian

[Charlottesquare]

The original post could have been posted on a much more broadly based Board so as to benefit a wider audience, that is really the point I am trying to make.

So, if it matters to you, why not simply post it on a "more broadly based Board"

However I did not post it so it does not matter.

So, if it does not matter to you, do not bother to post it on a "more broadly based Board"

Make you mind up!


Ian

The point is surely that the original post is someone else's post, not Dod101's, and I believe that is the point he is making.

[tjh290633]

Some people say they have three portfolios. I don't understand that.

It seems there is much that you do not understand.

Perhaps a portfolio of shares, another of investment trusts and another of fixed interest stocks.

What is so hard to understand about that?

TJH