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Distinguishing between the Person, the Plan, and the Idea

General discussions about equity high-yield income strategies
TUK020
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Distinguishing between the Person, the Plan, and the Idea

#323589

Postby TUK020 » July 3rd, 2020, 7:00 pm

I realise that it is more than 35 years now since I did my MBA. It was one of the most enjoyable and stimulating years of my life. I got more than I bargained for (where I met my wife).

Some of the best pearls of wisdom cast before us had nothing to do with the curriculum, but came from the experiences of the people (other students as well as staff) involved.

One of my favourites was our marketing lecturer digressing passionately about the need to separate the person from the plan from the idea.
A total idiot might suggest a completely unworkable plan, that had at its heart a fantastic idea.
A very distinguished person might propose a very rational plan that was fundamentally flawed.

I think that the "HYP" concept of directly held portfolio of diversified and high yielding shares as a route to investing for retirement income is a fantastic idea.
I think that the plan proposed was good, but it is 20 years old, and there are a number of tweaks and improvements that could and should be incorporated.

I don't know what depresses me most:
- the automatic kowtowing to the individual who codified the idea, and treating everything he says as gospel, or
- the continual attacks on everything he says, and the attempts to find inconsistencies in his pronouncements over the last twenty years.

He had a great idea, and shared it. Let's acknowledge our debt to him, and see if we can improve on it.

Please excuse the Friday night philosophy. Now I shall get back to my cider - a very fine 'Katy' from Thatchers

Dod101
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Re: Distinguishing between the Person, the Plan, and the Idea

#323600

Postby Dod101 » July 3rd, 2020, 7:51 pm

I like your philosophy but there is nothing very brilliant about the idea and I think the completely unnecessary constraints around it are almost a fatal flaw.

Anyone (like me as it happens) who is handed his 'pension' after 26/27 years of service, as a substantial lump sum, has to decide what to do with it and I was certainly not going to hand it over to an insurance company in exchange for an annuity. After a few years of what I can only describe as 'mucking around' with my lump sum it dawned on me that I should really seek out shares paying dividends, because at least then, I would have a reasonably assured income. My HYP was born, long before I had ever heard of TMF never mind TLF. That is the Idea.

Where the pyadic HYP falls down, IMHO anyway, is the nonsense about never selling, and Strategic Ignorance. Neither of these concepts are sensible to me. Any portfolio grows stale over time and needs to be refreshed and SI as I have said many times is to me simply intellectual laziness by which I mean it saves any thought. Of course we cannot know the future but we can take a fair judgement of it and act accordingly. That is the Plan.

The Person? I do not know of course but he seems very sensitive to criticism which is never good because we can all learn and should be open to different ideas.

A Friday evening set of my thoughts for what they are worth.

Dod

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Re: Distinguishing between the Person, the Plan, and the Idea

#323604

Postby Lootman » July 3rd, 2020, 8:02 pm

Dod101 wrote: My HYP was born, long before I had ever heard of TMF never mind TLF. That is the Idea.

Where the pyadic HYP falls down, IMHO anyway, is the nonsense about never selling, and Strategic Ignorance. Neither of these concepts are sensible to me.

Certainly the idea of dividend investing is as old as the hills, especially in the UK where yields have always historically been higher. UK investors, both individual and institutional, seem to demand a higher income and so companies provide that, along with all the obviously negative implications for dividend cover, capital growth and debt levels.

As for so-called "Strategic Ignorance", that sounds to me like a simple restatement of the efficient market hypothesis (in one of its various forms), the fundamental premise of which is that an investor cannot gain any kind of edge from publicly available information. So he can only beat the market by leverage, luck or having inside information.

But of course if you believe that you'd probably be in an index fund anyway, rather than an active approach.

As for never selling, as you say, figuring out what to sell and when is much harder than figuring out what and when to buy. So just sweep it under the carpet and stick to the easy stuff :D

BellaHubby
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Re: Distinguishing between the Person, the Plan, and the Idea

#323609

Postby BellaHubby » July 3rd, 2020, 8:24 pm

Let's just save ourselves some time...... ask the admins to just copy/paste one of the other 50-page To-HYP-Or-Not-To-HYP threads into this thread and get it over and done with. Until the next time.

bh

Moderator Message:
For Biscuit Bar readers, this thread (in case you didn't notice) has been moved to HYSS, a more natural home for it. Really, folks, if you want to talk about HYP, then HYSS is the best place for it -- not Biscuit Bar. -- MDW1954

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Re: Distinguishing between the Person, the Plan, and the Idea

#323611

Postby MDW1954 » July 3rd, 2020, 8:33 pm

TUK020 wrote:I realise that it is more than 35 years now since I did my MBA. It was one of the most enjoyable and stimulating years of my life. I got more than I bargained for (where I met my wife).


Me too. Although it is 42 years, and she wasn't actually on the course. Just the tightest jeans on the university's dance floor.

He had a great idea, and shared it. Let's acknowledge our debt to him, and see if we can improve on it.

Exactly! That is what we are trying to promote. And this board is the place to do it.

MDW1954

dealtn
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Re: Distinguishing between the Person, the Plan, and the Idea

#323682

Postby dealtn » July 4th, 2020, 11:18 am

TUK020 wrote:I think that the "HYP" concept of directly held portfolio of diversified and high yielding shares as a route to investing for retirement income is a fantastic idea.
I think that the plan proposed was good, but it is 20 years old, and there are a number of tweaks and improvements that could and should be incorporated.



I don't think it was particularly novel, or his idea, apart from the restrictions he placed upon it. So I agree it should be open to "tweaks", and in practice of course that is how many operate it.

Personally I think the restriction to "High", and the exclusion of a large part of the investable universe that comes with it, is one of its worst features. From a marketing point of view the "High" is easier to promote of course, but after 20 odd years many examples of over-exposure to a shrinking segment of the investable universe, and within it a large number of shares that look attractive from a "yield" perspective, that were priced by the market to reflect their high risk, demonstrate pitfalls that might not have been apparent to those who found the strategy attractive initially.

I am also perplexed by the "Gospel" and faithful "Acolyte" features of this particularly strategy, and to be fair the persistent opposing positions simply for the sake of arguing. I don't know the individual, and have never knowingly engaged directly with him, but I don't get the impression he is someone that is open to embrace criticism or change his opinions. But we all know plenty of people like that so that doesn't strike me as particularly unusual in any field. Terry Smith is probably an equally "marmite" type of person for instance.

88V8
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Re: Distinguishing between the Person, the Plan, and the Idea

#323776

Postby 88V8 » July 4th, 2020, 7:13 pm

I don't doubt that the person was sincere.
The plan was good.
And the idea was good.

It was good because it was simple.
Present most people with a complex plan and they turn the page.
Show them simplicity and they'll come aboard.

And the plan had every chance of working, back then. Good cover abounded,. CAGRs grew at a lick.

Those who came on board mostly realised that the plan eventually needed tweaking. as most HYPers do. But on the whole they stayed with it.

What really torpedoed the plan was George, with his dividend tax.
32.5% gone, pffft.

Oh well, it was good while it lasted. The idea, the plan.

V8

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Re: Distinguishing between the Person, the Plan, and the Idea

#323850

Postby TahiPanasDua » July 5th, 2020, 11:07 am

It may be the case that if you didn't get into dividend investing via Lemon Fool and HYP, you are less likely to become a gospel believer.

My approach was hybrid from the beginning. I got started around 2000 basing much of my strategy on an American book which I had to adapt to UK conditions. Imagine my surprise when, a few years later, I stumbled upon TMF and HYP.

I became an avid reader for years but was never a religious zealot. Essentially a HYP with some non-UK shares, I only ever considered my holdings as an income portfolio. Later, I readily added ETFs and ITs and rarely sell anything.

The exclusive HYP philosophy was never really for me and I now only buy ITs. However, I still think it is a reasonable investment approach. If it wasn't, there wouldn't be seemingly endless and often repetitive LMF debate on the topic. It is not a black and white case.

TP2.

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Re: Distinguishing between the Person, the Plan, and the Idea

#323874

Postby Bubblesofearth » July 5th, 2020, 1:21 pm

ReallyVeryFoolish wrote:
Myself, I think it's mostly utter tosh. But it's your money, do with it as you will. We're all grown ups here.

RVF.


As an equity strategy, buying 15 big-cap shares from different sectors, equal weighted on purchase, and holding indefinitely seems pretty sound to me. Personally I would advocate a few more shares than that and would not be tied to high yield but I'm not sure the end result would be that different one way or the other.

Using an equity portfolio as an annuity substitute also seems like a reasonable idea IMO. As long as you are prepared to accept the inevitable volatility.

'utter tosh' seems harsh.

BoE

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Re: Distinguishing between the Person, the Plan, and the Idea

#323878

Postby jackdaww » July 5th, 2020, 2:07 pm

Bubblesofearth wrote:
ReallyVeryFoolish wrote:
Myself, I think it's mostly utter tosh. But it's your money, do with it as you will. We're all grown ups here.

RVF.


As an equity strategy, buying 15 big-cap shares from different sectors, equal weighted on purchase, and holding indefinitely seems pretty sound to me. Personally I would advocate a few more shares than that and would not be tied to high yield but I'm not sure the end result would be that different one way or the other.

Using an equity portfolio as an annuity substitute also seems like a reasonable idea IMO. As long as you are prepared to accept the inevitable volatility.

'utter tosh' seems harsh.

BoE


===================================

it absolutely is a reasonable idea .

but it doesnt have to be HYP , nor even high yield .

:idea:

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Re: Distinguishing between the Person, the Plan, and the Idea

#323886

Postby Bubblesofearth » July 5th, 2020, 3:07 pm

jackdaww wrote:
it absolutely is a reasonable idea .

but it doesnt have to be HYP , nor even high yield .

:idea:


Agreed, it is the other principles of sectoral diversification, equal weight on purchase and long term buy and hold that together make the strategy a pretty good one IMO.

If anything the restriction to high yield is the weakest leg. If taken literally it would limit sectoral diversification by prohibiting purchases in important sectors with no high yield candidates at any given time. Quite a lot of those at the moment!

BoE

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Re: Distinguishing between the Person, the Plan, and the Idea

#323888

Postby Alaric » July 5th, 2020, 3:10 pm

Bubblesofearth wrote:'utter tosh' seems harsh.


It's the baggage that seems to come with it. Ignore capital value, the time to buy is always today. Not filtering for a reason why a share has a high dividend yield. The grandiose idea that there is a "High Income Strategy" which if you follow it will lead to success.

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Re: Distinguishing between the Person, the Plan, and the Idea

#323894

Postby Dod101 » July 5th, 2020, 3:53 pm

Bubblesofearth wrote:If anything the restriction to high yield is the weakest leg. If taken literally it would limit sectoral diversification by prohibiting purchases in important sectors with no high yield candidates at any given time. Quite a lot of those at the moment!

BoE


But even the Master himself says buying a non yielder provided it has some prospects is fine (see the DS Smith thread). Just shows that the 'rules' are not immutable.

Dod

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Re: Distinguishing between the Person, the Plan, and the Idea

#323911

Postby tjh290633 » July 5th, 2020, 5:26 pm

TahiPanasDua wrote:It may be the case that if you didn't get into dividend investing via Lemon Fool and HYP, you are less likely to become a gospel believer.

I came to it long before I found TMF. I found that my approach had been similar to that of the Tablets of stone.

It was really the advent of PEPs that made me take it up seriously, because of the tax recovered principally. I had previously been mainly in UTs, later OIECs, with a few shares alongside for interest, like my employer current and previous, plus some inherited. Then privatisation came along and I added more shares. I still retain some OEICs, two dividend paying and one natural resources, which has been raided for PEP/ISA subscriptions in the past, and might be again. ITs I use for my grandchildren's trust funds, but haven't dabbled on my own account. I dabbled in AIM shares for a while but learnt the error of my ways.

I have kept the shares as a separate portfolio rather than mix everything up. I do not buy shares with a yield below that of the market, and put shares that are not currently paying a dividend on hold for the time being. If they look likely to recover, then I hold onto them. If they look like lost causes, they go, as did Indivior last year.

HYP is a broad church, but not that broad. It is tolerant of those who have their own little ways. It is intolerant of those whose main mission in life is to debunk it or to lay waste to it.

TJH

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Re: Distinguishing between the Person, the Plan, and the Idea

#323920

Postby jackdaww » July 5th, 2020, 6:32 pm

tjh290633 wrote:
TahiPanasDua wrote:It may be the case that if you didn't get into dividend investing via Lemon Fool and HYP, you are less likely to become a gospel believer.


HYP is a broad church, but not that broad. It is tolerant of those who have their own little ways. It is intolerant of those whose main mission in life is to debunk it or to lay waste to it.

TJH


==================================

it (?) is intolerant of critical appraisal .

:roll:

Bagger46

Re: Distinguishing between the Person, the Plan, and the Idea

#323986

Postby Bagger46 » July 6th, 2020, 7:37 am

jackdaww wrote:
tjh290633 wrote:
TahiPanasDua wrote:It may be the case that if you didn't get into dividend investing via Lemon Fool and HYP, you are less likely to become a gospel believer.


HYP is a broad church, but not that broad. It is tolerant of those who have their own little ways. It is intolerant of those whose main mission in life is to debunk it or to lay waste to it.

TJH


==================================

it (?) is intolerant of critical appraisal .

:roll:


Quite. Yet for young pot builders in particular and retirees on tighter means(ie not in a position to hold reserves), it is totally unsuitable imho. I also cannot see that it is a sound strategy with the tired FTSE100 as its central plank ( plus a set of grotesque precepts, none of which a single experienced investor of my acquaintance believes in, and I know quite a few) essentially missing out on the heart of dynamic businesses embracing current developments in trading, tech, etc...There is a whole world of better investments out there.

Bagger

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Re: Distinguishing between the Person, the Plan, and the Idea

#324002

Postby 88V8 » July 6th, 2020, 9:11 am

Bagger46 wrote:.... essentially missing out on the heart of dynamic businesses embracing current developments in trading, tech, etc

You're talking about a dynamic strategy, which may work for some people some of the time.
HYP is a passive strategy. Which used to work, and may again.

V8

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Re: Distinguishing between the Person, the Plan, and the Idea

#324006

Postby Arborbridge » July 6th, 2020, 9:25 am

Dod101 wrote:
Bubblesofearth wrote:If anything the restriction to high yield is the weakest leg. If taken literally it would limit sectoral diversification by prohibiting purchases in important sectors with no high yield candidates at any given time. Quite a lot of those at the moment!

BoE


But even the Master himself says buying a non yielder provided it has some prospects is fine (see the DS Smith thread). Just shows that the 'rules' are not immutable.

Dod


A major qualification there, for this gives the impression that Pyad condones buying non-yielders in general regardless of history. Not so, and this should be stamped on right away before it becomes embedded as fake reality. I don't think pyad ever referred to rules, but guidelines, by the way. It tends to be HYP-knockers who speak of tablets of stone, religious fervour etc, whereas pyad and HYPers tend to look rather more broadly and in practical terms.

His Smith comment was for a very specific circumstance: i.e. a company which had a healthy dividend history and which has now paused that payment due to its applying a "prudence brake" which it implied was until the dust has settled on Covid 19. This is very different to saying he condones buying non-yielders "willy-nilly". There is a further important qualification: the view was expressed only in the context of my topup, not to someone buying a new holding

This context alters what Pyad wrote quite considerably from the impression you've given. Unfortunately, without the context, this is likely to be re-itereated by pyad-knockers as "pyad said....", which is different to what pyad actually meant taking into account that context.

Arb.

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Re: Distinguishing between the Person, the Plan, and the Idea

#324014

Postby G3lc » July 6th, 2020, 9:43 am

The HY strategy works well enough, especially if it is unwise believe everything that is said or written.

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Re: Distinguishing between the Person, the Plan, and the Idea

#324025

Postby dealtn » July 6th, 2020, 10:22 am

Arborbridge wrote:There is a further important qualification: the view was expressed only in the context of my topup, not to someone buying a new holding



Well seeing as we are "nipping things in the bud" let's see his exact words which were "I don't regard it as unHYP to buy or top-up suspenders in the current rather extraordinary climate." (my bold). So let's not have selective interpretations.

I think it is pretty clear he isn't restricting his words to just top-ups.

the post is here viewtopic.php?f=15&t=24208


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