Questions for TJH290633

[absolutezero]

I believe TJH290633 has been constructing and maintaining his portfolio for many years - and crucially has kept very detailed records since the start.

I'm interested to know what his rules are with respect to constructing and maintaining an HYP.
John Lee's book 'How to make a million slowly' has a list of his 10-15 or so golden rules. What would yours be?

1. If you were constructing it from scratch at the very start, how would you go about it? Assume regular contributions here.

2. At what number of companies is it time to stop?

3. What maintenance do you do? I know you 'tinker'. So what processes do you follow? I see comparison with the median, but anything else? If a company is in distress, does it get the boot? If you get a feeling in the water, does it go? What about dividend cutters? Stop losses? Do you take a view on the economy? (E.g. Airlines are possibly facing an existential threat. Do they get the boot?)

4. An ISA, standard account, SIPP or certificated? Do you go above the FSCS limit?

So many questions, but I think there's a lot to learn.

[Breelander]

I believe TJH290633 has been constructing and maintaining his portfolio for many years - and crucially has kept very detailed records since the start.

I'm interested to know what his rules are with respect to constructing and maintaining an HYP.

While you wait for Terry to to reply, you might like to know that in 2012 he wrote an article for TMF entitled 'My HYP Way'. Though that article is no longer available on the web, Terry reprinted the text from it here on LMF.

viewtopic.php?p=89919#p89919

[tjh290633]

I believe TJH290633 has been constructing and maintaining his portfolio for many years - and crucially has kept very detailed records since the start.

I'm interested to know what his rules are with respect to constructing and maintaining an HYP.
John Lee's book 'How to make a million slowly' has a list of his 10-15 or so golden rules. What would yours be?

1. If you were constructing it from scratch at the very start, how would you go about it? Assume regular contributions here.

I started when PEPs were introduced. You may recall that initially subscriptions were limited to £2,400 in the first year, rising to £3,000 and then £6,000. I invested the maximum for 4 years, buying 3 or 4 shares a year, looking mostly for income. Hence in the first year I bought BOC, Cadbury Scweppes and Hanson. In the next year I bought BP., ICI, Lloyds Bank and Pilkington. The nexct year I added GEC, Marks and Spencer, BT and more Pilkington. In the fourth year I bought Prudential and added to Hanson, BP, ICI, GEC and BT. At that point, with 12 shares, I decided to stop subscribing, but reinvested income and in 1992 I added British Gas. In 1993 ICI split off Zeneca, giving me a further share. In 1996 Hanson started to demerge and I got Energy and Imperial Tobacco. In 1997 BG split off Centrica which was sold and I gained Halifax through demutualisation and Tesco. In 1999 I added Whitbread.

2. At what number of companies is it time to stop?

When you feel like it. This was before HYP was proposed, but I was roughly following the same route.

3. What maintenance do you do? I know you 'tinker'. So what processes do you follow? I see comparison with the median, but anything else? If a company is in distress, does it get the boot? If you get a feeling in the water, does it go? What about dividend cutters? Stop losses? Do you take a view on the economy? (E.g. Airlines are possibly facing an existential threat. Do they get the boot?)

If you look at the document Breelander has quoted, you should find my rules. I reinvest income to a system, I trim overweight shares, I dispose of shares where the yield has fallen below about half that of the market, but may make exceptions. I use my judgement.

4. An ISA, standard account, SIPP or certificated? Do you go above the FSCS limit?

So many questions, but I think there's a lot to learn.

It is all now in an ISA. I ran an ISA in parallel with the PEP until I could amalgamate them. I find that having it all in one basket is preferable to fretting about the FSCS limit. I use a major bank's ISA.

Hope that answers your questions. Now it's bedtime.

TJH

[absolutezero]

I believe TJH290633 has been constructing and maintaining his portfolio for many years - and crucially has kept very detailed records since the start.

I'm interested to know what his rules are with respect to constructing and maintaining an HYP.

While you wait for Terry to to reply, you might like to know that in 2012 he wrote an article for TMF entitled 'My HYP Way'. Though that article is no longer available on the web, Terry reprinted the text from it here on LMF.

viewtopic.php?p=89919#p89919

That's very useful. Thanks.

[absolutezero]

I believe TJH290633 has been constructing and maintaining his portfolio for many years - and crucially has kept very detailed records since the start.

I'm interested to know what his rules are with respect to constructing and maintaining an HYP.
John Lee's book 'How to make a million slowly' has a list of his 10-15 or so golden rules. What would yours be?

1. If you were constructing it from scratch at the very start, how would you go about it? Assume regular contributions here.

I started when PEPs were introduced. You may recall that initially subscriptions were limited to £2,400 in the first year, rising to £3,000 and then £6,000. I invested the maximum for 4 years, buying 3 or 4 shares a year, looking mostly for income. Hence in the first year I bought BOC, Cadbury Scweppes and Hanson. In the next year I bought BP., ICI, Lloyds Bank and Pilkington. The nexct year I added GEC, Marks and Spencer, BT and more Pilkington. In the fourth year I bought Prudential and added to Hanson, BP, ICI, GEC and BT. At that point, with 12 shares, I decided to stop subscribing, but reinvested income and in 1992 I added British Gas. In 1993 ICI split off Zeneca, giving me a further share. In 1996 Hanson started to demerge and I got Energy and Imperial Tobacco. In 1997 BG split off Centrica which was sold and I gained Halifax through demutualisation and Tesco. In 1999 I added Whitbread.

2. At what number of companies is it time to stop?

When you feel like it. This was before HYP was proposed, but I was roughly following the same route.

3. What maintenance do you do? I know you 'tinker'. So what processes do you follow? I see comparison with the median, but anything else? If a company is in distress, does it get the boot? If you get a feeling in the water, does it go? What about dividend cutters? Stop losses? Do you take a view on the economy? (E.g. Airlines are possibly facing an existential threat. Do they get the boot?)

If you look at the document Breelander has quoted, you should find my rules. I reinvest income to a system, I trim overweight shares, I dispose of shares where the yield has fallen below about half that of the market, but may make exceptions. I use my judgement.

4. An ISA, standard account, SIPP or certificated? Do you go above the FSCS limit?

So many questions, but I think there's a lot to learn.

It is all now in an ISA. I ran an ISA in parallel with the PEP until I could amalgamate them. I find that having it all in one basket is preferable to fretting about the FSCS limit. I use a major bank's ISA.

Hope that answers your questions. Now it's bedtime.

TJH

That's really interesting. Thanks for taking the time to write this.

Several things leap out at me.

One is the exceeding the FSCS limit. I'm a bit tin foil hat over that. It would keep me awake at night.
I may be shooting myself in the foot by holding certificates for my larger holdings but that's the price of sleep!

The second is the idea of dumping shares that aren't paying their way.
I've been annoyed by a fair number of companies with decent finances using the Covid thing as an excuse for cutting their dividends. DS Smith (and to some extent Aviva) being examples of this. Also the banks being told to suspend.
The problem in the current climate is where to put the money?! The number of decent shares has dwindled somewhat.
I tend to not top up unless the yield is 4% or above. Not much of that at the moment - and what there is I already have quite enough of.

The third.
Do medium term economic considerations factor in to your thinking?
For example, I recently reviewed all my shares in relation to Covid and got rid of EasyJet (can't see that making decent profits for a while), Marstons (ditto) and British Land (because I don't think people will be renting office space or big posh shops when the brown stuff hits the air circulation device). Also trimmed back some housebuilders but do still hold.
In their places I bought National Grid, United Utilities (Corbyn threat now gone), BATS and topped up my pharma holdings.
Was tempted by oil but the medium term oil price doesn't look conducive to good profits.
Do you review your holdings with politics/economics in mind?

[Charlottesquare]

I believe TJH290633 has been constructing and maintaining his portfolio for many years - and crucially has kept very detailed records since the start.

I'm interested to know what his rules are with respect to constructing and maintaining an HYP.
John Lee's book 'How to make a million slowly' has a list of his 10-15 or so golden rules. What would yours be?

1. If you were constructing it from scratch at the very start, how would you go about it? Assume regular contributions here.

I started when PEPs were introduced. You may recall that initially subscriptions were limited to £2,400 in the first year, rising to £3,000 and then £6,000. I invested the maximum for 4 years, buying 3 or 4 shares a year, looking mostly for income. Hence in the first year I bought BOC, Cadbury Scweppes and Hanson. In the next year I bought BP., ICI, Lloyds Bank and Pilkington. The nexct year I added GEC, Marks and Spencer, BT and more Pilkington. In the fourth year I bought Prudential and added to Hanson, BP, ICI, GEC and BT. At that point, with 12 shares, I decided to stop subscribing, but reinvested income and in 1992 I added British Gas. In 1993 ICI split off Zeneca, giving me a further share. In 1996 Hanson started to demerge and I got Energy and Imperial Tobacco. In 1997 BG split off Centrica which was sold and I gained Halifax through demutualisation and Tesco. In 1999 I added Whitbread.

2. At what number of companies is it time to stop?

When you feel like it. This was before HYP was proposed, but I was roughly following the same route.

3. What maintenance do you do? I know you 'tinker'. So what processes do you follow? I see comparison with the median, but anything else? If a company is in distress, does it get the boot? If you get a feeling in the water, does it go? What about dividend cutters? Stop losses? Do you take a view on the economy? (E.g. Airlines are possibly facing an existential threat. Do they get the boot?)

If you look at the document Breelander has quoted, you should find my rules. I reinvest income to a system, I trim overweight shares, I dispose of shares where the yield has fallen below about half that of the market, but may make exceptions. I use my judgement.

4. An ISA, standard account, SIPP or certificated? Do you go above the FSCS limit?

So many questions, but I think there's a lot to learn.

It is all now in an ISA. I ran an ISA in parallel with the PEP until I could amalgamate them. I find that having it all in one basket is preferable to fretting about the FSCS limit. I use a major bank's ISA.

Hope that answers your questions. Now it's bedtime.

TJH

Do you review your holdings with politics/economics in mind?

I do, it is possibly biggest my single driver re where I invest, but it is not scientific but seat of the pants.

Examples-

Getting out of UK utilities as feared government intervention in industry.

Recently bailing out from more traditional UK property companies and spreading my property exposure into property ITs with a more logistics/distribution focus.

UK smaller company ITs get less or more depending on my economic outlook , right now I have some, but limited ,exposure.

UK Quoted ITs currently shrunk, I sold Mercantile last week to raise cash for more shares in Begbie Traynor and a very small bounce back punt on Marks (Ocado deal ), still holding City and Edinburgh which are to my mind similar, but in effect reducing my percentage in UK FTSE 100 ITs.

Asian exposure currently ahead of recent years, EU exposure just really a smaller EAT holding (apart from a EU focused logistics property IT), US exposure limited (Berk Hath and NAIT)- so heavy Asia/China bent because my gut feel (and it is really just gut, feeling) is that this is where I will more likely see growth in prices and possibly dividends.

All the above views could change, I react to overall and sector economics.

I think about UK economy (especially with COVID/BREXIT combo), think about property industry (where I work) and feel out where I believe longer term growth will come, because at the end of the day growth in business often leads to growth in profits and growth in dividends, some shares/ ITs are for now, give me the income now, some I will defer immediate gratification for hopefully later gratification, it is not impossible I will want the income for thirty years and a lot can happen in thirty years, so targeting 4% income with some growth is roughly where I aim.

[Alaric]

One is the exceeding the FSCS limit. I'm a bit tin foil hat over that. It would keep me awake at night.
I may be shooting myself in the foot by holding certificates for my larger holdings but that's the price of sleep!

That's very definite tin foil hat stuff as the FSCS limit applies to the eventual loss, not the market value. It can be assumed that with custodians and nominees, the assets can eventually be retrieved as unlike assets backing deposits they don't form part of the assets of the Broker. Certificates have the disadvantage of being more expensive to buy or sell and also require more work when selling.

[absolutezero]

One is the exceeding the FSCS limit. I'm a bit tin foil hat over that. It would keep me awake at night.
I may be shooting myself in the foot by holding certificates for my larger holdings but that's the price of sleep!

That's very definite tin foil hat stuff as the FSCS limit applies to the eventual loss, not the market value. It can be assumed that with custodians and nominees, the assets can eventually be retrieved as unlike assets backing deposits they don't form part of the assets of the Broker. Certificates have the disadvantage of being more expensive to buy or sell and also require more work when selling.

Indeed, though filling in a form and sticking the certificate in the post isn't really a hassle as far as I am concerned.

But I do remember that fairly recent case (the name evades me) where it was ruled the administrators of a failed broker could plunder the investments of the customers to fund their fees. They eventually backed off so that only the "super rich" customers lost out, but even so.

[absolutezero]

I started when PEPs were introduced. You may recall that initially subscriptions were limited to £2,400 in the first year, rising to £3,000 and then £6,000. I invested the maximum for 4 years, buying 3 or 4 shares a year, looking mostly for income. Hence in the first year I bought BOC, Cadbury Scweppes and Hanson. In the next year I bought BP., ICI, Lloyds Bank and Pilkington. The nexct year I added GEC, Marks and Spencer, BT and more Pilkington. In the fourth year I bought Prudential and added to Hanson, BP, ICI, GEC and BT. At that point, with 12 shares, I decided to stop subscribing, but reinvested income and in 1992 I added British Gas. In 1993 ICI split off Zeneca, giving me a further share. In 1996 Hanson started to demerge and I got Energy and Imperial Tobacco. In 1997 BG split off Centrica which was sold and I gained Halifax through demutualisation and Tesco. In 1999 I added Whitbread.

When you feel like it. This was before HYP was proposed, but I was roughly following the same route.

If you look at the document Breelander has quoted, you should find my rules. I reinvest income to a system, I trim overweight shares, I dispose of shares where the yield has fallen below about half that of the market, but may make exceptions. I use my judgement.

It is all now in an ISA. I ran an ISA in parallel with the PEP until I could amalgamate them. I find that having it all in one basket is preferable to fretting about the FSCS limit. I use a major bank's ISA.

Hope that answers your questions. Now it's bedtime.

TJH

Do you review your holdings with politics/economics in mind?

I do, it is possibly biggest my single driver re where I invest, but it is not scientific but seat of the pants.

Examples-

Getting out of UK utilities as feared government intervention in industry.

Recently bailing out from more traditional UK property companies and spreading my property exposure into property ITs with a more logistics/distribution focus.

UK smaller company ITs get less or more depending on my economic outlook , right now I have some, but limited ,exposure.

UK Quoted ITs currently shrunk, I sold Mercantile last week to raise cash for more shares in Begbie Traynor and a very small bounce back punt on Marks (Ocado deal ), still holding City and Edinburgh which are to my mind similar, but in effect reducing my percentage in UK FTSE 100 ITs.

Asian exposure currently ahead of recent years, EU exposure just really a smaller EAT holding (apart from a EU focused logistics property IT), US exposure limited (Berk Hath and NAIT)- so heavy Asia/China bent because my gut feel (and it is really just gut, feeling) is that this is where I will more likely see growth in prices and possibly dividends.

All the above views could change, I react to overall and sector economics.

I think about UK economy (especially with COVID/BREXIT combo), think about property industry (where I work) and feel out where I believe longer term growth will come, because at the end of the day growth in business often leads to growth in profits and growth in dividends, some shares/ ITs are for now, give me the income now, some I will defer immediate gratification for hopefully later gratification, it is not impossible I will want the income for thirty years and a lot can happen in thirty years, so targeting 4% income with some growth is roughly where I aim.

I got my fingers burnt with Carillion. Only about £4,000 but it was a lesson. If it doesn't smell right then get out. Also best to avoid any Government contractors. Though I do have PHP as my REIT share.

I've also got shut of HSBC because of their approval for Beijing's handling wrt Hong Kong.
1. I don't approve of what Beijing are doing there.
2. I can see things going pear shaped for HSBC so best off out.

[Alaric]

But I do remember that fairly recent case (the name evades me) where it was ruled the administrators of a failed broker could plunder the investments of the customers to fund their fees. They eventually backed off so that only the "super rich" customers lost out, but even so.

The FSCS agreed to pay most of the liquidator's bill. The assets were (eventually) recovered in full and returned to the control of the owners. Beaufort Securities was the name.

[absolutezero]

But I do remember that fairly recent case (the name evades me) where it was ruled the administrators of a failed broker could plunder the investments of the customers to fund their fees. They eventually backed off so that only the "super rich" customers lost out, but even so.

The FSCS agreed to pay most of the liquidator's bill. The assets were (eventually) recovered in full and returned to the control of the owners. Beaufort Securities was the name.

That was the one.

[tjh290633]

Do you review your holdings with politics/economics in mind?

Not to any great extent. I tend to use the relative share price movements as an indicator. That plus the dividend yield. Politics is a funny thing. It often has the opposite result to what you might expect. Economics is a black art. I prefer the entrails of a chicken.

TJH

[absolutezero]

Do you review your holdings with politics/economics in mind?

Not to any great extent. I tend to use the relative share price movements as an indicator. That plus the dividend yield. Politics is a funny thing. It often has the opposite result to what you might expect. Economics is a black art. I prefer the entrails of a chicken.

TJH

I've said for years (and many disagree) that economics is not a science.
They would like it to be and they try by making it look mathematical to give it a veneer of respectability. But a science it ain't!

[kempiejon]

The only function of economic forecasting is to make astrology look respectable.

[absolutezero]

The only function of economic forecasting is to make astrology look respectable.

Quite!

[Charlottesquare]

Do you review your holdings with politics/economics in mind?

Not to any great extent. I tend to use the relative share price movements as an indicator. That plus the dividend yield. Politics is a funny thing. It often has the opposite result to what you might expect. Economics is a black art. I prefer the entrails of a chicken.

TJH

I've said for years (and many disagree) that economics is not a science.
They would like it to be and they try by making it look mathematical to give it a veneer of respectability. But a science it ain't!

Just because it is not a science does not mean one cannot detect traits, read signs or make rough predictions, one just has to treat these with a degree of caution; they may be incorrect in the particular but roughly correct re the direction of travel and trend.

[Adamski]

I started when PEPs were introduced. You may recall that initially subscriptions were limited to £2,400 in the first year, rising to £3,000 and then £6,000. I invested the maximum for 4 years, buying 3 or 4 shares a year, looking mostly for income. Hence in the first year I bought BOC, Cadbury Scweppes and Hanson.

Thanks for sharing your story TJH. This sounds similar to my Dad's investing history. He told me he started when PEPs were introduced in 1986. He built up a big portfolio of mainly UK shares but also unit trusts and some US/Canada shares. And over the years moved them across into ISAs as well. Sadly he passed away last year. I am trying to carry on his legacy / hobby with my own investment portfolio. I have to stop tinkering and making beginner mistakes, but the big lesson I've learned (with recent events) is it's a long term game. Investors with the perseverance of yourself staying invested for ~ 40 years through life events will (likely) do extremely well.

[Bouleversee]

Terry -

Do you have a record of what one would have contributed if one had put the max. each year into PEPs and their successors (wasn't there something between PEPs and ISAs?) up to the present day? If so, could you please share on here.

[CryptoPlankton]

Terry -

Do you have a record of what one would have contributed if one had put the max. each year into PEPs and their successors (wasn't there something between PEPs and ISAs?) up to the present day? If so, could you please share on here.

Sorry, not Terry, but that made me curious! According to the FT, the maximum possible subscription to the end of the 2017/18 tax year was £280000 - so £340000 including the current tax year:

https://www.ft.com/content/3b8e19e8-3c1 ... 04d3811663

(If you can't access that it was the 8th result for Google search "how much total contribution to PEPS and ISAS")

[kempiejon]

Terry -

Do you have a record of what one would have contributed if one had put the max. each year into PEPs and their successors (wasn't there something between PEPs and ISAs?) up to the present day? If so, could you please share on here.

TESSAs tax exempt special savings accounts predated the ISAs.