DiamondEcho wrote:...for those who wish to move forwards can we use this as a starting point?:
[1]'cost not to exceed 5% of the total portfolio cost;
[2]income contribution not to exceed 5% of the total portfolio income;
[3]weight after top-up not to exceed 1.5 times the median holding weight.
[4]FTSE-100 AVG = 4.6% [at time of writing]
[5]Take top three highest yielding shares per sector, and sift via these criteria:
[6]prospective yield >= 4%, prospective P/E <= 10
[7]market cap >= 500m, dividend cover >= 1.2+''
Sorry, but how much buy-in do you think you're going to get for that highly-specific approach? I could go along with a few of them, but not all of them - I'm not even certain what [4] is intended to mean (the most likely reading I can think of is that the FTSE 100 average yield is 4.6% at the moment, but if that's what's intended, all I can say is that I haven't seen anything saying it's even as high as 4%).
And I don't use actually use any of [1]-[7] in GDHYP - it has criteria somewhat similar to [1]-[3], but:
* I use weight
before top-up. (I do use weights by both cost and income contribution.)
* I use limits of 5% for companies, 10% for sectors, and 20% for groups of related sectors - which being constants, neatly avoid the question of whether to use means or medians!
* I don't actually say "not to exceed" those limits - and they often do exceed them temporarily, either as a result of a top-up or because of shifts in dividends changing the income contributions. Indeed, for its first five years or so, it exceeded the 5% limits in [1] and [2] all the time - it was absolutely impossible for it not to exceed at least one 5% limit until it got up to 20 holdings, since the weights of all the holdings have to add up to 100%, and extremely unlikely that it would be perfectly enough balanced not to exceed at least one 5% limit until its number of holdings got to quite a few more than 20.
As I say, I'm not even certain what [4] is intended to mean, but it doesn't bear any relationship I can see to how I run GDHYP. And [5]-[7] don't reflect GDHYP's share selection criteria / process in principle, nor does [6] reflect the shares it selects in practice very well...
My main HYP does actually adhere to [2], and probably to [1] as well - though I'm not certain about that: I don't actually track the cost of holdings in it. I do calculate the cost of the unsheltered parts of holdings as and when needed for CGT purposes, but that's not the full holdings, is only done when I have tinkered a holding, which means I'm never up to date on the costs of more than a small fraction of its holdings, and the rules for calculating costs for CGT purposes are distinctly counterintuitive in some cases. It doesn't fully adhere to any of the others, though it comes close on [7].
Pyad's HYPs (or at least the ones I've seen any detail of) have generally contained about 15 shares, which makes it
impossible for them to adhere to [1] or [2]. And from what I've seen of his writings, my impression is that he would disagree with
all of the others as well.
I could probably go on about other HYPs not matching one or more of [1]-[7], but that would involve quite a bit of looking for information about other HYPs, with the likely problem that their owners haven't told us all the information needed to determine which they match, and would probably come across as too negative. But reversing it to try to say something positive about the way forward: a FAQ needs to be fairly inclusive of this board's users - it won't be able to please all of them about everything it says, but it does need to please most of them about most of what it says. So the aim should be that it says what's needed to capture the essence of a HYP but not to be more specific than that. In particular, making the FAQ as specific as one particular HYPer's strategy (even one as respected as TJH) is going to end up being ignored, or driving a lot of Fools away, or causing a lot of less-than-civil comments about zealots/purists/hardliners/etc, or producing never-ending disruption, or most likely all of those things!
DiamondEcho wrote:Meanwhile a final chat/consideration, and we should be done.
Done on producing one answer, to an FAQ question along the lines of "What is TJH's HYP strategy?", yes. Done on producing anything more than that small part of a full FAQ, no way!
Gengulphus
