Gengulphus wrote:Itsallaguess wrote:
As an income-investor, I would hope to see an initial income that's 'good-enough' from a broadly diversified portfolio of investments, and after that I want to see that income generally rise, reliably and predictably, over long periods of time...
The pink ARBIT line (IT-income-portfolio) on Arb's chart clearly delivers on those expectations, and the dark blue ARBHYP line (HYP) clearly doesn't, or at least doesn't to my eyes - others may have different views, of course...
I don't agree that they indicate anything useful about your first expectation..
....
However, I entirely agree that the lines on Arb's chart indicate delivery on your second expectation, and that what they indicate is that the IT portfolio has delivered on it and that the HYP hasn't, which I think is the main point you are making.
Yes, thanks Gengulphus - I perhaps didn't make the distinction clear enough that what I meant by "
I would hope to see an initial income that's 'good-enough'" would be a separate
earlier consideration taken with no reliance on any '
subsequent-performance charts' like the ARBIT/ARBHYP comparison (
https://i.imgur.com/IG10Ai3.jpg), so basically a '
Well, that's my starting income sorted, where I can manage on the initial yield - now does the subsequent long-term performance of any given income-strategy then deliver on my 'income generally rising, reliably and predictably, over long periods of time' requirements?', which is where these types of performance charts really do start to deliver some of those answers, for me at least...
On the subject of 'risk' in the initial HYP strategy articles, or the absence of that subject in any real and useful detail, I just don't think it was covered and explained clearly enough, that's all. A casual observer with little investment experience reading words such as
'[The HYP approach] is for those who can ignore the fluctuations in capital value and accept that there is a risk that the income will not, in fact, rise. But I consider that latter risk quite small.' could clearly be forgiven for thinking that risk was being undersold, especially given the subsequent
near-50% drop in dividend-income seen from HYP1 recently..
A few mentions of the word 'risk' here and there, with no further details covering just what those long-term risks might be when looking to start a long-term income-strategy, and what processes can be used to mitigate against them (
cash-buffers, revenue-reserves, spare income-capacity etc..), doesn't seem appropriate for an income-strategy that the man-on-the-street with little investment experience might be looking to pick up, and I really can't fathom why a couple of additional paragraphs, or even just a single extra 'risk-based article' covering those aspects wasn't considered, as I think doing so would have both clearly raised awareness
of those more detailed long-term risks, and also at a stroke removed much of the criticism that the HYP strategy has subsequently attracted over the years due to that lack of 'risk-covering' detail...
Cheers,
Itsallaguess