Lootman wrote: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
Equal initial weighting a collection of larger cap stocks diversified across sectors is a very old concept that generally works OK. Not adjusting versus adjusting broadly yields the same rewards, but where not adjusting tends to bias the portfolio to being tilted, often heavily, towards few stocks - concentration risk. Dividend yield as a initial valuation measure - as good a choice as any. As a alternative to a annuity for income ???
Whilst nominal yields might rise and seemingly rise at a decent rate, if the rises fall short of inflation then the real (after inflation) income can decay. If the amount you've accumulated prior to retiring is close to the wire of supporting required income then you could run into problems, and relatively quickly (within perhaps a handful of years). If you've accumulated more than enough such that dividends cover twice your spending then fine, but equally other withdrawal methods/asset allocations likely work as equally well, such as Safe Withdrawal Rate, that provides a consistent inflation adjusted regular income taken out of total returns, and in being less focused upon one class of stock (high yield) opens up a broader range of potential candidate stock holdings.
