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Another HYP

General discussions about equity high-yield income strategies
NotSure
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Re: Another HYP

#439491

Postby NotSure » September 3rd, 2021, 3:57 pm

Wizard wrote:I'm just trying to get input on what a further evolution of an HYP might be, beyond the version defined on HYPP. Any such discussion would be off topic for HYPP itself. No desire for another board or to create a new religion, if others think there should be other modification of any such approach that is up to them and it is their portfolio. I thought the whole idea of the two boards was that HYPP was for the discussion of specific tactical points of a specifically defined version of HYP, and HYPSS included inmits remit the discussion of other strategies to the version of HYP that is discussed on HYPP.


I'm a bit loath to butt into this lengthy discussion, but this board does not have the word portfolio in it. It is high yield shares and strategies, which I had hoped meant that to use and contribute, one needn't be 'all in' high yield, 'HYP-P' style or otherwise?

I have a very mixed (diverse) set of holdings. HY shares globally are a small slice of the pie, but I choose to be overweight global HY shares, and UK HY shares in particular, since I feel they look fairly priced in a world of rather extreme looking valuations - they are not, on the whole 'priced for perfection' such as e.g. Tesla, to pick an example.

So I'm very interested in discussion of "HYS&S", yet do not want a whole portfolio of them (or anywhere near). I've no idea what board I'm supposed to use! :)

(Not quite true - it's 'How do I invest' :oops: )

Anyway, I'll butt back out.

Itsallaguess
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Re: Another HYP

#439496

Postby Itsallaguess » September 3rd, 2021, 4:33 pm

Wizard wrote:
No desire to create a new religion.


Apologies then, as I thought that was exactly what you were looking to do when using phrases like -

'But what might the rules of this new version [of HYP] be..'

'Those shares should..'

'PIBS would be fine in principle..'

'I would therefore suggest the following revised rules...'

If what you're now actually saying alongside that is

'if others think there should be other modification of any such approach that is up to them and it is their portfolio'

then I'm still more than a little perplexed that you might be looking to draw up a set of 'new HYP' rules, and then say 'but you can actually do what you want', and given that the current High Yield Shares & Strategies guidelines more or less says that anyway already, so long as the underlying investment and discussion themes maintain what's normally considered to be 'natural yields', ie given off regularly by the underlying investments, then those HYSS guidelines are more or less already at your 'actually you can do whatever you want' level anyway, so again - why the need for any 'new HYP' rules if that's the case?

Cheers,

Itsallaguess

tjh290633
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Re: Another HYP

#439574

Postby tjh290633 » September 3rd, 2021, 11:06 pm

MDW1954 wrote:The HYPP board has been in place since November 2016, and Stephen Bland has posted on it many times. If it doesn't have his support, he has had ample time in which to say so. And so far, he hasn't.

His latest post, today, can be seen at viewtopic.php?p=439428#p439428

TJH

Itsallaguess
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Re: Another HYP

#439594

Postby Itsallaguess » September 4th, 2021, 7:00 am

Itsallaguess wrote:
Wizard wrote:
No desire to create a new religion.


I'm still more than a little perplexed that you might be looking to draw up a set of 'new HYP' rules, and then say 'but you can actually do what you want', and given that the current High Yield Shares & Strategies guidelines more or less says that anyway already, so long as the underlying investment and discussion themes maintain what's normally considered to be 'natural yields', ie given off regularly by the underlying investments, then those HYSS guidelines are more or less already at your 'actually you can do whatever you want' level anyway, so again - why the need for any 'new HYP' rules if that's the case?


One point I meant to expand on regarding the above question is related to one of your earlier 'New HYP' rule proposals, which said this -

'When bought, have a market capitalisation large enough such that if listed in London they would be a constituent of the FTSE100 index.'

The above is just one example (there are others..) of why I think trying to create a set of granular rules for 'new HYP' to follow outside of HYP Practical, is quite likely to still alienate many income-investors who are really quite happy to carry out their approach with an eye on the single, much simpler 'does it look like a good investment, and does it provide a natural yield?' question, and an example of why that's the case is to use a recent yield-based purchase of mine from last year, where I purchased Carr's Group (CARR) during the turbulent 2020 market period.

CARR has got a market cap of just £150m, and as such, would clearly not qualify to 'pass' your 'new HYP' market-cap rule above, but it was bought on a yield of, if I remember rightly, around 4.2%, and so as well as incorporating some of the types of 'value' characteristics that I sometimes like to fish for in the lower-cap area, it also fits quite nicely into my income-portfolio as a low-cap 'natural yield' provider in it's own right, and given it's subsequent share-price rise, along with a recent 'moderately ahead of market expectations' trading update in July, I expect it to remain in my income-portfolio to provide a level of income that's diversified in a quite specialised way when compared to many of my other holdings.

I suspect that I'm not the only income-investor who is really quite happy to operate primarily, and simply, with a 'natural yield' focus, first and foremost, but without the necessity of many further 'granular rules' such as the ones you've been proposing on this thread, and I really don't see any real need to look around for a 'new-HYP club' to join that might be looking to add back in just the sort of granular rule-sets that I was really quite happy to leave behind when I left the HYP Practical approach many years ago, and in your opening post, you seem to want to introduce a market-cap 'rule' that would instantly turn me off from such a 'new HYP' club....

Cheers,

Itsallaguess

Charlottesquare
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Re: Another HYP

#439647

Postby Charlottesquare » September 4th, 2021, 1:06 pm

Itsallaguess wrote:
Itsallaguess wrote:
Wizard wrote:
No desire to create a new religion.


I'm still more than a little perplexed that you might be looking to draw up a set of 'new HYP' rules, and then say 'but you can actually do what you want', and given that the current High Yield Shares & Strategies guidelines more or less says that anyway already, so long as the underlying investment and discussion themes maintain what's normally considered to be 'natural yields', ie given off regularly by the underlying investments, then those HYSS guidelines are more or less already at your 'actually you can do whatever you want' level anyway, so again - why the need for any 'new HYP' rules if that's the case?


One point I meant to expand on regarding the above question is related to one of your earlier 'New HYP' rule proposals, which said this -

'When bought, have a market capitalisation large enough such that if listed in London they would be a constituent of the FTSE100 index.'

The above is just one example (there are others..) of why I think trying to create a set of granular rules for 'new HYP' to follow outside of HYP Practical, is quite likely to still alienate many income-investors who are really quite happy to carry out their approach with an eye on the single, much simpler 'does it look like a good investment, and does it provide a natural yield?' question, and an example of why that's the case is to use a recent yield-based purchase of mine from last year, where I purchased Carr's Group (CARR) during the turbulent 2020 market period.

CARR has got a market cap of just £150m, and as such, would clearly not qualify to 'pass' your 'new HYP' market-cap rule above, but it was bought on a yield of, if I remember rightly, around 4.2%, and so as well as incorporating some of the types of 'value' characteristics that I sometimes like to fish for in the lower-cap area, it also fits quite nicely into my income-portfolio as a low-cap 'natural yield' provider in it's own right, and given it's subsequent share-price rise, along with a recent 'moderately ahead of market expectations' trading update in July, I expect it to remain in my income-portfolio to provide a level of income that's diversified in a quite specialised way when compared to many of my other holdings.

I suspect that I'm not the only income-investor who is really quite happy to operate primarily, and simply, with a 'natural yield' focus, first and foremost, but without the necessity of many further 'granular rules' such as the ones you've been proposing on this thread, and I really don't see any real need to look around for a 'new-HYP club' to join that might be looking to add back in just the sort of granular rule-sets that I was really quite happy to leave behind when I left the HYP Practical approach many years ago, and in your opening post, you seem to want to introduce a market-cap 'rule' that would instantly turn me off from such a 'new HYP' club....

Cheers,

Itsallaguess


As food for thought, given all rules based systems cause frictions, might one reduce said frictions if individual component selection was not considered at the individual investment level but looked at via criteria at an overall portfolio level. (does the portfolio fit a benchmark)?

If one benchmarked such that a targeted yield overall was say an index yield(index to be discussed) x 1.y, where y was the required uplift, this allows virtually anything within the portfolio provided the overall yield meets the target. One then needs diversity rules for eggs in baskets.

One could also consider the type of portfolio that might target different yields depending on age bands/where one was in say path to retirement. It is akin in philosophy ,but not rules, to pension schemes which have age profiling within their investment funds. (The older one gets the fewer years left to catch up mistakes so maybe the more risk averse)

I personally do not follow even this but it might be an approach that had a broader church of followers- of course that presupposes one even wants a church, I am personally happier chasing markets rather than yields these days so likely would not even be considered to hold something that fitted such a benchmarked approach, I really cannot be bothered regularly measuring what I do and I merely target 7% TR over the longer term and observe whether I make it or do not, then once a year consider what geographies and industry sectors I then favour and tweak if my views have changed.

JohnnyCyclops
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Re: Another HYP

#439716

Postby JohnnyCyclops » September 4th, 2021, 7:01 pm

Wizard wrote:When initially bought, have yields greater than the yield of the FTSE 100 index.
When bought, be reasonably expected to sustain their dividends in the future.

Any further thoughts?


Why is the FTSE100 used as a minimum (I hesitate to say ‘benchmark’) when world stocks are available. Surely it would either need to be the highest yielding national stock market, or a weighted average? Perhaps one of the large cap global indices or ETF (VWRL) which tracks the FTSE100 All World index with ~3600 stocks but a current yield of 1.42%. Given the massive number of stocks in that index, perhaps set a 2x yield minimum, thus 2.84% currently, but might still have significant numbers of stocks available to pick from.

How would you assess “reasonably expected to sustain dividends”? Might some backward looking data help, say dividend record in recent years. And is ‘sustain’ sufficient or would you seek dividends that at least paced inflation (and then which nation or region’s inflation measure?)

You don’t mention diversification. There are many aspects. Geographical. Sector. Company. Would your portfolio accept say a disproportionate number of utilities or retailers if they were all high yielding.

Finally, how many individual holdings would you suggest (this also goes to the diversification question). Too few, and probably lacking diversity. Too many, and adds complexity, effort to manage, and eventually leads to ‘buying the entire market/index’.

Those to me seem like questions worth exploring in building an investment portfolio strategy.

JohnnyCyclops
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Re: Another HYP

#439725

Postby JohnnyCyclops » September 4th, 2021, 7:42 pm

Wizard wrote:This HYP approach is one that invests on a Long Term Buy and Hold (LTBH) basis in a diversified portfolio of shares and collective investments. Those investments should:

Not be limited to shares listed in London.
Be ordinary shares, preference shares, shares in investment companies, investment trusts and other collective investments.
<...>
When initially bought, have yields greater than the yield of the FTSE 100 index.

Any further thoughts?


On a practical point, how would an investor identify higher yielding stocks. I just about know how to do it for the LSE quoted firms, but am less sure say about Australian, German, Brazilian, etc. markets. Plus, given there might be 100+ national stock markets, is there a consolidated (ideally free!) source to allow an investor to sort and sift to find those higher yielding gems, or would they need to do it one market at a time.

onthemove
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Re: Another HYP

#439737

Postby onthemove » September 4th, 2021, 9:42 pm

Wizard wrote:Some very helpful input around collective investments in particular. I would therefore suggest the following revised rules...

This HYP approach is one that invests on a Long Term Buy and Hold (LTBH) basis in a diversified portfolio of shares and collective investments. Those investments should:

Not be limited to shares listed in London.
Be ordinary shares, preference shares, shares in investment companies, investment trusts and other collective investments.
Any collective investments should be largely invested in quoted equities.
When bought, shares or preference share should be issued by companies that have a market capitalisation large enough such that if listed in London they would be a constituent of the FTSE100 index.
When bought, collective investments should have a market capitalisation large enough such that if listed in London they would be a constituent of the FTSE350 index.
When initially bought, have yields greater than the yield of the FTSE 100 index.
When bought, be reasonably expected to sustain their dividends in the future.

Any further thoughts?


Maybe I've missed it... but I can see plenty of suggestions of what the rules might be, but I'm not sure I'm clear what requirements these rules are trying to achieve...

I mean, what's the purpose of this portfolio?

Total return?
Maximal income for the present?
Managed reduction of capital for a retiree not planning to leave an inheritance?
Inflation linked income?
Stablised income to smooth out ups and downs in underlying dividends?
Income to outpace inflation?
No income at all, it's all about capital building?
Minimal maintenance for somebody wanting to focus on other things?
Something that needs daily active management?
Tax efficiency?
Low upfront dealing costs?
Cheap 'top up' costs without affecting diversification?
Minimise administration? (for tax returns, etc)
Any sustainability requirements?
etc

If you don't clearly define the requirements that you're trying to achieve with your portfolio you will end up with different people making different suggestions, and judging and criticising it, each with their own personal requirements in mind, not necessarily the requirements you or others engaging with your portfolio had in mind.

Itsallaguess
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Re: Another HYP

#439739

Postby Itsallaguess » September 4th, 2021, 9:49 pm

onthemove wrote:
If you don't clearly define the requirements that you're trying to achieve with your portfolio you will end up with different people making different suggestions, and judging and criticising it, each with their own personal requirements in mind, not necessarily the requirements you or others engaging with your portfolio had in mind.


Is that like the bit in Empire Strikes Back, where Darth strikes Luke and cuts his hand off, and Luke looks at his arm, and suddenly realises he's destined to turn into his father, Darth Vader?

And Pyad is Darth, and Wizard is Luke?

I may have had too much wine, but it's got some interesting parallels from where I'm sitting from....

Cheers,

Itsallaguess

moorfield
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Re: Another HYP

#439742

Postby moorfield » September 4th, 2021, 10:39 pm

Itsallaguess wrote:
onthemove wrote:
If you don't clearly define the requirements that you're trying to achieve with your portfolio you will end up with different people making different suggestions, and judging and criticising it, each with their own personal requirements in mind, not necessarily the requirements you or others engaging with your portfolio had in mind.


Is that like the bit in Empire Strikes Back, where Darth strikes Luke and cuts his hand off, and Luke looks at his arm, and suddenly realises he's destined to turn into his father, Darth Vader?

And Pyad is Darth, and Wizard is Luke?

I may have had too much wine, but it's got some interesting parallels from where I'm sitting from....

Cheers,

Itsallaguess




As far as recent discussions across the two boards go, I have in mind Spartacus, and that famous scene.

"I do HYP".

"No he doesn't, I do HYP".

"No they don't, I do HYP".

And so on.

And in the end the Mods crucify everyone, because they don't know who really does.

It was ever thus.

MDW1954
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Re: Another HYP

#439743

Postby MDW1954 » September 4th, 2021, 10:40 pm

Itsallaguess wrote:
I may have had too much wine, but it's got some interesting parallels from where I'm sitting from....

Cheers,

Itsallaguess


I think that the superfluous terminal "from" in the above allows us to pronounce that the "may" in the phrase "may have had too much wine" is similarly superfluous.

MDW1954

Itsallaguess
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Re: Another HYP

#439745

Postby Itsallaguess » September 4th, 2021, 10:46 pm

moorfield wrote:
I have in mind Spartacus, and that famous scene.


Monty Python, and 'The People's Front of Judea', surely....

https://www.youtube.com/watch?v=WboggjN_G-4

Cheers,

Itsallaguess

hiriskpaul
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Re: Another HYP

#440264

Postby hiriskpaul » September 7th, 2021, 11:38 am

onthemove wrote:
Wizard wrote:Some very helpful input around collective investments in particular. I would therefore suggest the following revised rules...

This HYP approach is one that invests on a Long Term Buy and Hold (LTBH) basis in a diversified portfolio of shares and collective investments. Those investments should:

Not be limited to shares listed in London.
Be ordinary shares, preference shares, shares in investment companies, investment trusts and other collective investments.
Any collective investments should be largely invested in quoted equities.
When bought, shares or preference share should be issued by companies that have a market capitalisation large enough such that if listed in London they would be a constituent of the FTSE100 index.
When bought, collective investments should have a market capitalisation large enough such that if listed in London they would be a constituent of the FTSE350 index.
When initially bought, have yields greater than the yield of the FTSE 100 index.
When bought, be reasonably expected to sustain their dividends in the future.

Any further thoughts?


Maybe I've missed it... but I can see plenty of suggestions of what the rules might be, but I'm not sure I'm clear what requirements these rules are trying to achieve...

I mean, what's the purpose of this portfolio?

Total return?
Maximal income for the present?
Managed reduction of capital for a retiree not planning to leave an inheritance?
Inflation linked income?
Stablised income to smooth out ups and downs in underlying dividends?
Income to outpace inflation?
No income at all, it's all about capital building?
Minimal maintenance for somebody wanting to focus on other things?
Something that needs daily active management?
Tax efficiency?
Low upfront dealing costs?
Cheap 'top up' costs without affecting diversification?
Minimise administration? (for tax returns, etc)
Any sustainability requirements?
etc

If you don't clearly define the requirements that you're trying to achieve with your portfolio you will end up with different people making different suggestions, and judging and criticising it, each with their own personal requirements in mind, not necessarily the requirements you or others engaging with your portfolio had in mind.

That is a really good point. What is the OP looking for? From what I have read, I think the goal of the original HYP as discussed on the TMF board was for an annuity replacement, but without giving up capital and with very little trading. Because little trading (by the investor) was done, that necessitated a fairly high running yield (distribution yield). I think the OP has the same goal, but wishes to widen the scope of the investments to incorprate foreign shares, collectives, prefs, etc.


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