HYP Practical - Some Changes

[seagles]

The only "Captial" comparison I usually make is the comparitive [sic] size of the 2 parts, I think last time I looked it was 65% ITs, 45% Shares

Now that is what I call really creative, or should that be "fantasy", accounting!


Ian

Well spotted that man . I read income on my portoflio thread next to value? Should be 54% ITs, HYP shares gave 65% of income (last year). Full portfolio as of 4th April

[MDW1954]

There isn't agreement on what form a benchmark should take. For a drawdown HYP there are two sources of value, namely the income withdrawn and the capital remaining. For an accumulating HYP there's the accumulated capital value after reinvestment. Or is this disputed because of the HYP mantra "capital doesn't matter"?

Yes, there's no agreement about what benchmark should be used, or even what form it should take (e.g. index, IT, inflation). Indeed, there isn't even agreement on whether to use a benchmark at all - some HYPers are perfectly happy if their HYP is simply fulfilling their needs, without feeling any need to compare against anything else. And as for "capital doesn't matter", there isn't any agreement on that either...

And as far as the HYP Practical guidance this thread is about is concerned, it's silent on benchmarks, capital and a number of other supposed HYP 'mantras' (e.g. "don't tinker" and "strategic ignorance") and details of the rules (e.g. it says that HYP shares "When bought, should reasonably be expected to sustain, and preferably grow their dividends in the future." without saying what form the reasons for that expectation should take). AFAIAA, this is deliberate, because the board is intended to cater for HYPers whose approaches vary on those things. Though discussing such differences should IMHO highly preferably be on an agree-to-differ basis, not a heated-argument one!

Gengulphus

Gengulphus,

That isn't quite correct, and as both a moderator *and* the instigator of the removal of the posts in question, I am in a position to know.

The OP of the posts being discussed here felt that the following piece of guidance prevented them from being posted on HYP-P:

For the avoidance of doubt, the practicalities of taking a HYP approach DO NOT include making decisions about whether to use such an approach, nor decisions about whether to stop using one, the effectiveness and performance of HYP strategies versus other strategies, the desirability or otherwise of investment trusts as an alternative to HYP shares, nor discussions of other types of approaches.

I myself am not so sure that he is correct, but I am concerned that the guidelines as worded might be seen as suggesting that a HYP-CTY comparison is not appropriate for HYP-P.

I would be interested in your views on this.

MDW1954

[88V8]

....I am concerned that the guidelines as worded might be seen as suggesting that a HYP-CTY comparison is not appropriate for HYP-P. I would be interested in your views on this.

It's borderline. I can see how someone might think that. And discussion could so easily tip over into a breach.
But surely it was OK - other than the arguments, which I missed anyway - on the HY Strategies Board?

V8

[Alaric]

[
But surely it was OK - other than the arguments, which I missed anyway - on the HY Strategies Board?

The argument was that the OP wanted only to compare the income generated in a demo drawdown HYP with that generated by CTY. A "Strategies" audience would have wanted to see the market values compared as well. As also suggested elsewhere, a computation of XIRR would combine income and market value into one measurement.

I believe it should be clear to everyone that in the years starting 1st March or 1st April 2020 that with all the dividend cuts, a demo HYP based on investment in high yielding FTSE 100 or FTSE 250 is going to be well down in income terms on the same period in the previous year. CTY on the other hand intends to maintain or increase its dividend even if to do so it must borrow or sell assets. In the longer run, would a demo HYP rebuild its dividends and the parallel question being for how long CTY could maintain a dividend?

[Lootman]

....I am concerned that the guidelines as worded might be seen as suggesting that a HYP-CTY comparison is not appropriate for HYP-P. I would be interested in your views on this.

It's borderline. I can see how someone might think that. And discussion could so easily tip over into a breach.
But surely it was OK - other than the arguments, which I missed anyway - on the HY Strategies Board?

Yes, of course it was fine on the HY Strategies board. I think the problem was that the OP didn't like some of the criticisms that were made about the exercise, in particular the perception of structural bias in the way it was set up. It was my understanding that the OP pulled it himself, rather than the Mods doing it for some offence. If it had been the latter then the topic could have remained with the offending posts removed. Or locked.

It obviously does not belong on HYP-P for one simple reason. If A is being compared to B and supporters of B are not allowed to comment there, then the contest will be completely one-sided. That might be fine with the OP since he clearly favours A. But it should not be fine with the community, the moderators and anyone who wants to see balanced discussion and a genuine analysis of which performs better.

[csearle]

Yes, of course it was fine on the HY Strategies board. I think the problem was that the OP didn't like some of the criticisms that were made about the exercise, in particular the perception of structural bias in the way it was set up.

Your particular (rightly deleted) contribution was deplorable. It had 10% of its emphasis on the comparison being made and 90% on trashing the poster attempting to make the comparison. As such a seasoned poster I would expect you now to apologise sincerely to the OP.

Chris

[Lootman]

Yes, of course it was fine on the HY Strategies board. I think the problem was that the OP didn't like some of the criticisms that were made about the exercise, in particular the perception of structural bias in the way it was set up.

Your particular contribution was deplorable. It had 10% of its emphasis on the comparison being made and 90% on trashing the poster attempting to make the comparison. As such a seasoned poster I would expect you to apologise sincerely to the OP.

Well, I don't think we want to repeat the entire discussion again, and we can no longer look at the content to make an assessment.

But other than one tongue-in-cheek bit of parody, which I admit was a tad mischievous, I thought that my focus was on what I saw as the flaws of the comparison.

In any event the OP can dish it out as well when he is minded to, so I feel sure his feelings were not hurt. But if they were and he wants an apology then I will give him one.

[csearle]

But if they were and he wants an apology then I will give him one.

He probably wouldn't but I think you should offer him one anyway. I will PM you your shitty post so that you can remember what you said, rather than promulgate it here.

Chris

[MDW1954]

It was my understanding that the OP pulled it himself, rather than the Mods doing it for some offence.

The post was pulled (by me) at the OP's request -- after several hours of PMs, alerts, and interventions. You guys might think you're having fun, but yesterday it consumed a fair amount of time that I could scarcely spare.

And yes, I think that an apology would be a very good idea. Going forward, you might like to bear in mind that posting "parodies" (your word, not mine) on an investment-focused website rarely furthers the discussion. Which, as we can see, duly came to an abrupt halt.

MDW1954

[MDW1954]

....I am concerned that the guidelines as worded might be seen as suggesting that a HYP-CTY comparison is not appropriate for HYP-P. I would be interested in your views on this.

It's borderline. I can see how someone might think that. And discussion could so easily tip over into a breach.
But surely it was OK - other than the arguments, which I missed anyway - on the HY Strategies Board?

V8

The problem was the arguments. And in particular, how they were conducted.

MDW1954

[88V8]

The argument was that the OP wanted only to compare the income generated in a demo drawdown HYP with that generated by CTY. A "Strategies" audience would have wanted to see the market values compared as well.

HYP is only about income. So your putative audience is watching the wrong movie.

I believe it should be clear to everyone that in the years starting 1st March or 1st April 2020 that with all the dividend cuts, a demo HYP based on investment in high yielding FTSE 100 or FTSE 250 is going to be well down in income terms on the same period in the previous year.

I believe it should be bleedin obvious, but never mind.

CTY on the other hand intends to maintain or increase its dividend even if to do so it must borrow or sell assets. In the longer run, would a demo HYP rebuild its dividends and the parallel question being for how long CTY could maintain a dividend?

Well, CTY has had decades to build its reserves, so it's hardly a fair comparison.
Perhaps the HYP would build its income reserves in time, but thanks to some selfish clots who keep sticking their ignorant oars in, we shall never know.

V8

[Alaric]

Well, CTY has had decades to build its reserves, so it's hardly a fair comparison.

It's only a set of rules.

I was musing on how a private investor in drawdown could emulate the behaviour of an IT. Assuming a lump sum investment, project the first year income and set an arbitrary percentage of it as a sacrosanct dividend. Revalue that every year with the inflation index of choice. If the actual dividend income exceeded the target, then reinvest the excess. Otherwise sell assets to make up the shortfall. If there's a long run of surplus income, then the amounts drawn can be increased, otherwise if selling assets is a regular occurrence then "rebase" the withdrawal, cut in other words.

[88V8]

I was musing on how a private investor in drawdown could emulate the behaviour of an IT. Assuming a lump sum investment, project the first year income and set an arbitrary percentage of it as a sacrosanct dividend. Revalue that every year with the inflation index of choice. If the actual dividend income exceeded the target, then reinvest the excess. Otherwise sell assets to make up the shortfall. If there's a long run of surplus income, then the amounts drawn can be increased, otherwise if selling assets is a regular occurrence then "rebase" the withdrawal, cut in other words.

Only workable in a rising market, otherwise eventually no capital.
In that case, as a strategy I dare say one could, if one had nothing better to do.
But it's not the HYP way.

If you want to do something useful, start your own demo.

V8

[Gengulphus]

Anyway, it seems to me that the creation of that HYP Practical guidance on TMF was basically when ownership of the acronym was claimed, and the people who claimed ownership were the TMF moderators.

What would be the opinion of something referred to as "The HYP Strategy"? That's singular rather than plural. I've been accused of not understanding it, so in the view of at least one poster it exists in a tangible form. How about the use of the term "HYPer" as perhaps used in "a true HYPer would".

My own opinion is that repeatedly referring to "The HYP Strategy" on HYP Practical is just as objectionable as repeatedly trying to stretch the limits of what can be discussed on the board. One is basically trying to tighten the constraints on what can be discussed there by repeated assertion on the board and the other to loosen them by a similar technique, while at least the spirit of "Discussion of these rules is NOT permitted here, but can be raised in the Biscuit Bar." is that changes to those constraints should be proposed and discussed here on the Biscuit Bar and left for the moderators to decide. And again IMHO, "a true HYPer would" in some contexts would be a suggestion that the person being replied to is falsely representing themselves as a HYPer, which would make it discussion of that person rather than of what they're saying, in violation of the site-wide rule "Robust debate is allowed, but it must remain polite and respectful at all times. Stick to the facts and argue the points discussed, rather than criticise the poster."

For both of them, I am also of the opinion that such actions should be dealt with by ignoring them, reporting them or sending the author a PM about them (*), not by replying on the board to tell the author what they're doing wrong. That's both discussing the rules and criticising the poster! And it's highly disruptive to the original discussion because it is liable to change it to a debate about whether what the poster is doing is OK, and may well even kill it off entirely due to people losing interest and/or moderators locking it because of the number of reports...

Of course, it's not my opinion or yours that ultimately counts as far as usage of "The HYP Strategy" or "a true HYPer would" is concerned - it's the admins' and moderators'. If we disagree with them about it, and discussing it here on the Biscuit Bar and/or by PMs doesn't change that, the only options we're left with are to put up with the situation and stick around (in the hope that they might come round to our views with the passage of enough time), or to stop using the site.

(*) I have considerable doubts that sending the author a PM about them is likely to do any good, so I'm not recommending doing that. But at least it doesn't disrupt the discussion more than the original post did...

Gengulphus

[Wizard]

For what it is worth having just read most of the new content here I can not see how anyone can conclude that the now deleted threads, as initially posted could reasonably be posted on HYP-P, it conflicts with what I understand to be one of the core aspects of the new HYP-P guidelines, that the board is for discussion of the management of an HYP and not for discussion of whether to manage one or not. On that I think I agree with the OP of those threads (based on a statement by MDW about the history of the deletion).

If some people feel the way the comparison was set up was flawed or in some way biased why don't they set up a new thread using an approach they consider 'better'? Before those threads were deleted, in combination with previous posts on the demo portfolios concerned, I would expect the necessary input was available.

But then, following the flurry of discussion of the changes to the guidelines little seems to have changed. Some who initially said they could not post on HYP-P because of the "If you are not a HYP investor, then do not post here." point in the guidelines seem to be drifting back to posting there. That may have resulted from the fact that general discussion of some (potentially) high yield shares is still taking place on HYP-P even where the thread does not appear to be specific to running an HYP. It is also clear that the new guidelines have not prevented heated debate over whether HYP is a good approach or not. Sadly, my conclusion is that despite hard work and good intentions from the moderators, the new guidelines have changed nothing and were a complete waste of time and effort.

[Alaric]

If some people feel the way the comparison was set up was flawed or in some way biased why don't they set up a new thread using an approach they consider 'better'?

Nothing especially wrong with the comparison, rather the use that was to be made of the assembled data. Rather than concentrate on just one aspect of investment return, better surely to use a neutral measure, such as XIRR? Bear in mind that CTY like any Investment Trust has the capability to turn net asset value into income and may need to do so in the near future to maintain its dividend.

It is also clear that the new guidelines have not prevented heated debate over whether HYP is a good approach or not.

I thought the idea was only to prevent such discussions taking place in HYP-P. But I agree that discussions of the attractiveness or avoidance of individual shares that take place on HYP-P could be better elsewhere. There's one at present on the demerits or otherwise of SSE.

[Wizard]

For what it is worth having just read most of the new content here I can not see how anyone can conclude that the now deleted threads, as initially posted could reasonably be posted on HYP-P, it conflicts with what I understand to be one of the core aspects of the new HYP-P guidelines, that the board is for discussion of the management of an HYP and not for discussion of whether to manage one or not. On that I think I agree with the OP of those threads (based on a statement by MDW about the history of the deletion).

If some people feel the way the comparison was set up was flawed or in some way biased why don't they set up a new thread using an approach they consider 'better'? Before those threads were deleted, in combination with previous posts on the demo portfolios concerned, I would expect the necessary input was available.

But then, following the flurry of discussion of the changes to the guidelines little seems to have changed. Some who initially said they could not post on HYP-P because of the "If you are not a HYP investor, then do not post here." point in the guidelines seem to be drifting back to posting there. That may have resulted from the fact that general discussion of some (potentially) high yield shares is still taking place on HYP-P even where the thread does not appear to be specific to running an HYP*. It is also clear that the new guidelines have not prevented heated debate over whether HYP is a good approach or not. Sadly, my conclusion is that despite hard work and good intentions from the moderators, the new guidelines have changed nothing and were a complete waste of time and effort.

I tried to edit this post, but missed the time 'window', so I would add...

* I have just read the guidelines again, a few times. It is clear that the guidelines do not preclude the discussion of a share in a wider context than I would perceive to be the practical management of an HYP. However, IMHO, this creates a problem. An HYP investor may want to talk about the financial results of SSE, as is currently taking place, because there are views on the sustainability of that dividend which would be of interest to an HYP investor. But an interest in the sustainability of the SSE dividend is not of interest to only an HYP investor, that discussion is not unique to how an HYP investor manages their investments. When a thread on HYP-P starts to engage in a discussion of the sustainability of SSE's dividend, as far as I can see those who are not HYP investors have only three choices: withhold any contribution they may have; quote the thread in HYP-P in a new thread somewhere else, such as HYS&S; or, ignore the fact the guidelines say they should not post on HYP-P and post there anyway.

[Wizard]

...

It is also clear that the new guidelines have not prevented heated debate over whether HYP is a good approach or not.

I thought the idea was only to prevent such discussions taking place in HYP-P. But I agree that discussions of the attractiveness or avoidance of individual shares that take place on HYP-P could be better elsewhere. There's one at present on the demerits or otherwise of SSE.

I used the words "heated debate" to be polite, rather than what I really meant which is pointless circular arguments where it is clear neither side will concede any point to the other and it just becomes some form of trench warfare. I do not think they are helpful on any board. You use the words "discussion of the attractiveness or avoidance", that would be fine but I am really not sure what can be said that is new, but maybe I am wrong on that and new and insightful points are stil to be made.

[Arborbridge]

But I agree that discussions of the attractiveness or avoidance of individual shares that take place on HYP-P could be better elsewhere. There's one at present on the demerits or otherwise of SSE.

Depends what you mean by better - better for who?
Personally, I think the discussion now on HYP-P concerning SSE is just the sort of discussion which should be held on that particularly board. It's about a HYP share and whether it can sustain the dividend - all good HYP relevant stuff.

As I understand it, the idea behind the new guidelines was to make the HYP-P board more exclusively concerned with running a HYP, and to cut out contentious deabte from troll-like interventions, not to close down debate on shares or to emasculate the board.

There's nothing to prevent SSE being discussed on other board - just go ahead and do it!

And another poster commenting about the new rules not working amused me, since it was he who said let's see how it settles down when I was arguing for a change in wording - and that was only last week. Hardly time to settle down.

Arb.

[Alaric]

Personally, I think the discussion now on HYP-P concerning SSE is just the sort of discussion which should be held on that particularly board. It's about a HYP share and whether it can sustain the dividend - all good HYP relevant stuff.

There's an inference that it is supporting the dividend by borrowing. That has become a feature of at least some of the stocks that inhabit the HYP universe, but not one that can be expressed on the HYP-P board.