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HYP1 versus the baskets: 2000-19

General discussions about equity high-yield income strategies
Gengulphus
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Re: HYP1 versus the baskets: 2000-19

#266998

Postby Gengulphus » November 25th, 2019, 12:39 pm

ReallyVeryFoolish wrote:Very interesting indeed. If you'rea non-HYPer you are subject to confirmation bias. ...

No, if you are either a HYPer or a non-HYPer and you uncritically accept evidence in favour of your viewpoint, you are subject to confirmation bias.

ReallyVeryFoolish wrote:... Yet - It seems one isn't taking on board confirmation bias when following a pyadic HYP strategy. Then that's because there's not enough people*** following that path to actually provide the confirmation bias? Or is there another reason that's not so obvious to a non-HYPer?

*** Three people here at LMF, it would seem from the recent poll.

Giving you the benefit of the doubt, that's a good example of accepting evidence uncritically. You're taking that recent poll as evidence about the number of people here who follow a "pyadic HYP strategy", but your poll question was "Have you owned HYP1 since it was developed and it is still untinkered with?", not "Do you follow a pyadic HYP strategy?". There are potentially lots of people who would answer "No" to the first and "Yes" to the second. For instance, anyone who chose and started running their HYP according to HYP1's strategy later than November 13th, 2000 ought to answer the first question "No" if they interpret the question pedantically, even if they ended up with exactly the same choice of shares as HYP1, since they won't have owned HYP1 all the time since it was developed. And someone with a less pedantic interpretation would still answer "No" if they chose and started running their HYP later than August 8th, 2002, when RSA announced its interim dividend was 4p (cut 55% from 8.8p the previous year) and thus made itself ineligible for selection under HYP1's strategy. Of course, one can take an even less pedantic interpretation that it's not actually about owning HYP1 at all (as the poll thread indicates at least one person did), but the poll thread does make it clear that people varied quite widely in their interpretations of the question: it seems very unlikely to me that many used that broad an interpretation (I certainly didn't).

By the way, I don't recommend "Do you follow a pyadic HYP strategy?" as a poll question either. The trouble is that "pyadic HYP strategy" is ambiguous and different people will interpret it differently. In particular, I know of at least the following four interpretations with regard to trading:

* Strictly no voluntary trading of any kind. (I am fairly certain that this does not actually lead to a viable HYP strategy at all, due to cash takeover proceeds not being reinvested - but as it happens, HYP1 has not had a cash takeover since Scottish & Newcastle in April 2008, so anyone who's only looked at HYP1's last 11 years or less won't see the problem.)

* Strictly no voluntary selling of any kind. (This is what HYP1's strategy is often presented as, but isn't.)

* Strictly no voluntary selling for reasons to do with the company's prospects, but voluntary selling for 'admin' reasons is allowed. (This is the strategy that HYP1 has actually followed, with its rare voluntary sales having been done to avoid having foreign holdings, to avoid having tiny demerged holdings, to avoid having holdings of investments other than shares and/or to shortcut dealing with near-inevitable takeovers and other corporate actions.)

* Following HYP strategies that pyad has used for his public HYPs, which include some that allowed small amounts of voluntary selling for reasons to do with the company's prospects as well as HYP1, which doesn't. (In particular, both HYP3 and HYP4 allowed that sort of limited amount of 'tinkering', and I know of one instance for each of them where they actually did so before pyad abandoned HYP2, HYP3 and HYP4 in 2008.)

And there are numerous other aspects of the HYP strategy pyad used for HYP1 that people might or might not regard as part of a "pyadic HYP strategy' - e.g. his exact choice of dividend safety criteria (high market cap, low gearing and 5-year growing dividend record), whether foreign shares are even considered, whether his "strategic ignorance" is used, etc. Considering all of those together, there are large numbers of situations in which people will answer "Yes" to "Do you follow a pyadic HYP strategy?" when you would consider their strategy not to be a pyadic HYP strategy, or answer "No" to it when you would consider their strategy to be a pyadic HYP strategy, or both (probably both, but I don't know exactly what you would consider to be a pyadic HYP strategy, so cannot be certain about that!).

I do realise that this sort of worrying about the exact wording of a poll question will probably strike many as excessive pedantry. And it can be if the poll is just intended to judge general sentiment on a question - but if a poll is intended to gather evidence about facts such as what type of strategy people run, every ambiguity left in the question makes it more doubtful how well the responses reflect those facts...

Gengulphus

Gengulphus
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Re: HYP1 versus the baskets: 2000-19

#267061

Postby Gengulphus » November 25th, 2019, 4:16 pm

ReallyVeryFoolish wrote:I'm sorry, but that's an outstanding set of verbal gymnastics right there.

Whether it's that or not, it demolishes your proposition that your recent poll asking about those who own HYP1 means that very few here are "following a pyadic HYP strategy".

Gengulphus

MDW1954
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Re: HYP1 versus the baskets: 2000-19

#267381

Postby MDW1954 » November 26th, 2019, 3:10 pm

And I'd just like to place on record, as usual, my thanks to Luni for once again publishing this. Luni, thank you.

MDW1954

mrbrightside
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Re: HYP1 versus the baskets: 2000-19

#267391

Postby mrbrightside » November 26th, 2019, 3:28 pm

ReallyVeryFoolish wrote:Fascinating. Having considered and rejected the whole high yield portfolio pyadic/Dorisian philosophy a longtime ago in the ancient TMF days, I have no particular affinity towards it. I find the proposition that chasing excessive yield opens one up to a higher risk of disappointing outcomes to be highly likely. In fact, it's so blindingly obvious it seems to me that to deny such a proposition is rather odd. Away from here, I think you'd find it quite hard to come across anyone who'd disagree. I am foolishly being lulled into a false sense of warm fuzziness by confirmation bias too?


I think you're mixing up HYP (diversification, debt, rising dividends) with 'Dogs of The Footsie'.

https://web.archive.org/web/20140219210 ... 01106c.htm


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