Replacing LGEN with PHNX

[Dod101]

Newroad is obviously consumed by theory. Well I guess you have to start somewhere but I have never paid much attention to academics or theorizers in investing. I have no idea what he means in his explanation of 'Risk Weighting' and it is fairly obvious that we are on different planets so I will from now just read this thread with quiet amusement.

I would be prepared to bet that over a say ten year period, my outcome will be no worse than his and without the hassle. Investing is much more art than science, and I do not think it is very clever to replace good shares with poorer ones in order to follow some academic who is probably better at writing books and selling them than in investing.

Dod

[Newroad]

Morning Dealtn.

All you note is reasonable and fair - in particular dividend cover as well as dividend.

I have to admit, I started out with more noble views on the level of research and analysis I was prepared to do with share selection in context. However, part to do with ease of disentanglement (to use your word)/measure and part perhaps to do with laziness/time poverty, I'm closer to a position now where my starting premise is that the market has priced most of this in.

However, in reality, I know the market is not always perfect and in any case, when I say priced in, it actually means pricing in a spectrum of future possibilities, so no harm in doing a "double check" of sorts, which is what I am doing here. Information such as CryptoPlankton's is a useful thought provoker.

Regards, Newroad

[Arborbridge]

Newroad is obviously consumed by theory. Well I guess you have to start somewhere but I have never paid much attention to academics or theorizers in investing. I have no idea what he means in his explanation of 'Risk Weighting' and it is fairly obvious that we are on different planets so I will from now just read this thread with quiet amusement.

I would be prepared to bet that over a say ten year period, my outcome will be no worse than his and without the hassle. Investing is much more art than science, and I do not think it is very clever to replace good shares with poorer ones in order to follow some academic who is probably better at writing books and selling them than in investing.

Dod

I'm rather with Dod on this one. I've tried various methods over the years and I find fancy methods never really gain much despite their so called "analysis".
I am now rather stuck in my ways owing to this experience: HYP plus ITs do the job well enough for me. I know I'll never be a top investor: just a good enough investor to provide my pension income.
The idea of swapping in and out of shares very few months or so, does not appeal simply because I know from my own portfolio that this only works around 50% of the time - if you take a 5 year view of "what happened next". Therefore, I am never in a hurry to jump from frying pan into fire.

Each to his own: perhaps we need another board: "The Carver Method"? Maybe it'll work well for some people and they can let us know.

BTW, I have both PHNX and LGEN. I intend to hold both for the foreseeable future unless something cataclysmic happens: I'm not into "finessing" a portfolio for the reason mentioned above: it does not ensure a better result. LGEN has been the more successful and now provides around 5% of my HYP income - but I do not intend to sell PHNX even though it has performed less well. I would prefer to hedge my bets.

Arb.

[Newroad]

Hi Dod.

I do like having the discipline of a methodology - and being as honest with myself about its pluses and minuses. Further, I'm testing it out with real money rather than pontificating (unlike many) which appears a practical rather than theoretic approach to me. It seems to me that many on the forum have their own methodologies, not least TJH and those who follow him and his approach - it's not a sin!

As I've noted before, don't tar Carver with my brush. I'm taking a chunk of what he advocates and using it for my own purposes (including in my main portfolios in a different way) but that's down to me. Further, if you look at his credentials, he's run a lot more money than you likely ever have or will, so someone at some point obviously thought he had some talent. On a related note, he would probably argue investing is more science than art, so in that, you probably do fundamentally disagree.

My final point is that people may have different 10 year outcomes, but "no worse" is subjective. Most people will simply see it as a measure of gain over such a period, but risk comes into it as well - there is a survivorship bias to people who post about their performance.

Regards, Newroad

[Dod101]

Hi Dod.

I do like having the discipline of a methodology - and being as honest with myself about its pluses and minuses. Further, I'm testing it out with real money rather than pontificating (unlike many) which appears a practical rather than theoretic approach to me. It seems to me that many on the forum have their own methodologies, not least TJH and those who follow him and his approach - it's not a sin!

As I've noted before, don't tar Carver with my brush. I'm taking a chunk of what he advocates and using it for my own purposes (including in my main portfolios in a different way) but that's down to me. Further, if you look at his credentials, he's run a lot more money than you likely ever have or will, so someone at some point obviously thought he had some talent. On a related note, he would probably argue investing is more science than art, so in that, you probably do fundamentally disagree.

My final point is that people may have different 10 year outcomes, but "no worse" is subjective. Most people will simply see it as a measure of gain over such a period, but risk comes into it as well - there is a survivorship bias to people who post about their performance.

Regards, Newroad

I have nothing against Carver as I know nothing about him, but it is no credit to have been appointed to run a lot of money; it is what he managed to achieve with it that counts, but never mind.

As I said I will add nothing more to this thread.

Good luck

Dood

[88V8]

...the main purpose of the investment is total return within certain constraints to minimise risk - the theory is that, all other things being equal, that starting with higher dividend paying stocks from a given choice is the best way to achieve that.

If Total Return is the objective ...If dividends "have" to be a component of the analysis then at a minimum that input should be caveated by the "cover" so earnings at least are an input to the decision making too.

Post-Carillion, which went bust with 2x cover, lying hounds, I don't take quite so much notice of that metric, and indeed I forgot to look at the cover, but LGEN around 2.0, PHNX 1.6. So, adequate but not brilliant.

In terms of TR, for me PHNX is well underwater, LGEN is not. It's not just what one buys, it's also when one buys it, and to an extent we're in the lap of the gods.

Do I agree with Carver? Neutral. But I think it's good to have a methodology, at least a methodology can be adjusted, better than sticking a list with a pin.

V8

[Charlottesquare]

Newroad is obviously consumed by theory. Well I guess you have to start somewhere but I have never paid much attention to academics or theorizers in investing. I have no idea what he means in his explanation of 'Risk Weighting' and it is fairly obvious that we are on different planets so I will from now just read this thread with quiet amusement.

I would be prepared to bet that over a say ten year period, my outcome will be no worse than his and without the hassle. Investing is much more art than science, and I do not think it is very clever to replace good shares with poorer ones in order to follow some academic who is probably better at writing books and selling them than in investing.

Dod

I'm rather with Dod on this one. I've tried various methods over the years and I find fancy methods never really gain much despite their so called "analysis".
I am now rather stuck in my ways owing to this experience: HYP plus ITs do the job well enough for me. I know I'll never be a top investor: just a good enough investor to provide my pension income.
The idea of swapping in and out of shares very few months or so, does not appeal simply because I know from my own portfolio that this only works around 50% of the time - if you take a 5 year view of "what happened next". Therefore, I am never in a hurry to jump from frying pan into fire.

Each to his own: perhaps we need another board: "The Carver Method"? Maybe it'll work well for some people and they can let us know.

BTW, I have both PHNX and LGEN. I intend to hold both for the foreseeable future unless something cataclysmic happens: I'm not into "finessing" a portfolio for the reason mentioned above: it does not ensure a better result. LGEN has been the more successful and now provides around 5% of my HYP income - but I do not intend to sell PHNX even though it has performed less well. I would prefer to hedge my bets.

Arb.

Me too.

I studied some models at university , like Gordon Model, and then later in life thought, lets apply to determine undervalued shares. The catch was whilst the model to me makes logical sense (A discounted stream of dividends to infinity (10-15 years often suffices) gives "worth") reality was there were too many subjective inputs for the model to, in my mind anyway, be that useful in the real world, so back to square one.

I also eventually considered that a lifetime preparing accounts for others really did not equip me to really, truly, understand listed plc accounts, perhaps if I had remained in audit but I didn't.

I also had a brief fling observing cashflow and then got sucked into the vortex of deciding what was required annual capex and what was exceptional capex, unless you are group FD you are imho merely guessing, more subjectivity

So, marching though my 60s I now embrace three approaches;

Single Companies

Start with P/E
Look at ROCE
Investigate accounts for funnies
Consider cash conversion
Look at debt profile
Ask myself do I really understand what they do
Gut instinct

Single Companies

Stuff the above, gut instinct wins, I like the company, say Shell/Unilever, I just want to have it.(tends to only happen with shares I really trust)

Investment Trusts

I want an investment in the sector, my gut feeling re world economics steers where by either geography or sector I invest, just allow a spread of div yields to say average 4-4.5%, quick look a manager.

The only other lesson was from my father, do not overtrade, whilst I am not as good at this as he was (when he died in 2012 he still owned some holdings my maternal grandfather had bought in the 30s/40s) I do try to not play around too much (though 2020 did have me out then back in to the market)

I am afraid I tend these days to look at most "systems" as awarding unjustified certainty due to inherent subjective assumptions, they may appear to make the investor appear rational but I am personally not that convinced they do.

At the end of the day if there was a surefire system everybody would be doing it.

[Newroad]

Hi CharlotteSquare.

Completely agree with the "surefire system" comment.

That's the point, the Carver and similar methodologies don't rely on stock-picking ability or attempt to guarantee any outcome. They try (you can decide how successfully) to show how to best tilt the board statistically in one's favour taking whatever set of constraints are applicable and outcomes are desired.

I continue to recommend Carver's book, even if it only provokes thought and/or reflection. However, my questions to this forum are my own - you need to read the book if you want to critique it - but I'll do my best to answer questions about it and my own use of it when asked in good faith.

Regards, Newroad

[Cornytiv34]

I try to step back with any investment and start looking at the general background of any comparison I am making between shares. Having been in insuring unusual things for 50 years, but not life or pensions, I believe their accounts are too complex to be easily understood, too many ifs and buts in creating and interpreting them.

Lets start with the simple direct comparison. As I see it L&Gis long established running an established book of business. Phoenix a selective picker up of a number of pension funds that have become defunct or unsuited for the developing market and has lately acquiring the substantial book of an established active current pension provider.

What pressures are/will be upon Phoenix at the moment and in the future?
1. The aquisition of many companies with differing original managements and computer systems which have to be brought into line with their own one while meeting all current legal requirements.
2. With each acquisition they have acquired a huge number of pension recipients or investors who will require continuity and often amendments to pensions ie. "Service".
3. The recent large acquisition will require a lot of effort to maintain its current pension book and integrate this with all of the above.

Can they achieve these things effectively at the same time? I read an article in the Telegraph which suggests that their service to 1 and 2 above is failing and there are many complaints (particularly in the remarks below the article) that appears to show there appears to be much truth in the content. This means that the accounting is probably not up to date with reality so figures must be treated with some care There was reference to the Trust Pilot site upon the firm and while I do not believe that such reviews are totally reiable because it depends upon too many factors it gives a point of reference for investigation.

Here are the links to Telegraph
https://www.telegraph.co.uk/money/consu ... st-wishes/

and Trust Pilot
https://uk.trustpilot.com/review/phoenixlife.co.uk

I think that Phoenix Life could have a difficult time ahead.

Mike

[moorfield]

The only other lesson was from my father, do not overtrade,

Sooner or later some wag will be along to tell us:

It is stressed, however, that Pseudo-HYP investing was always intended to be a LTBH strategy.

[Newroad]

Thanks, Mike.

Your reply (and that of CryptoPlankton) have been particularly helpful. Some others have been of interest as well. At the very least, they will cause me to be a little circumspect and not rush the proposed substitution. As always, I will try to be honest, and, having asked people for their assistance, will try and remember as a courtesy to advise if and when I do the trades (as I did for UU. and SSE).

{Moorfield} Not sure I've ever said or implied that the Pseudo-HYP was an LTBH strategy, though it's more likely to be along those lines than a short term trading one. More importantly, it's an experiment which is likely to last until my retirement, so a little under 10 years all things being equal. If it appears to have legs then, I'll probably move more/all into it - if not, things will likely mostly stay as they are, which, at that time, would imply a 58%/42% Equity/Non Equity (Bonds and Cash) globally diversified portfolio.

Regards, Newroad

[Arborbridge]

My final point is that people may have different 10 year outcomes, but "no worse" is subjective. Most people will simply see it as a measure of gain over such a period, but risk comes into it as well - there is a survivorship bias to people who post about their performance.

Regards, Newroad

Difficult to argue with that one!
Any one who has been investing here for 10-20 years is a survivior and shows what has happened over that period - that does not, of course, mean the same thing would happen to anyone else. There are an almost infinite number of HYP possibilities, even starting them in the same month and downstream, it is probably fair to say they will evolve quite differently.
However, to throw "survivorship bias" into the mix only throws doubt on those who have been investing for a long time and isn't very helpful. If someone has been investing for only three or five years, people would pick holes because there isn't data over a long enough period!

At least we can say that the likes of myself, TJH and others have been operating real time portfolios with real capital - not some fantasy back testing scenario such as we have seen occasionally.

Arb.

[Arborbridge]

Me too.

I studied some models at university , like Gordon Model, and then later in life thought, lets apply to determine undervalued shares. The catch was whilst the model to me makes logical sense (A discounted stream of dividends to infinity (10-15 years often suffices) gives "worth") reality was there were too many subjective inputs for the model to, in my mind anyway, be that useful in the real world, so back to square one.

I also eventually considered that a lifetime preparing accounts for others really did not equip me to really, truly, understand listed plc accounts, perhaps if I had remained in audit but I didn't.

I also had a brief fling observing cashflow and then got sucked into the vortex of deciding what was required annual capex and what was exceptional capex, unless you are group FD you are imho merely guessing, more subjectivity

So, marching though my 60s I now embrace three approaches;

Single Companies

Start with P/E
Look at ROCE
Investigate accounts for funnies
Consider cash conversion
Look at debt profile
Ask myself do I really understand what they do
Gut instinct

Single Companies

Stuff the above, gut instinct wins, I like the company, say Shell/Unilever, I just want to have it.(tends to only happen with shares I really trust)

Investment Trusts

I want an investment in the sector, my gut feeling re world economics steers where by either geography or sector I invest, just allow a spread of div yields to say average 4-4.5%, quick look a manager.

The only other lesson was from my father, do not overtrade, whilst I am not as good at this as he was (when he died in 2012 he still owned some holdings my maternal grandfather had bought in the 30s/40s) I do try to not play around too much (though 2020 did have me out then back in to the market)

I am afraid I tend these days to look at most "systems" as awarding unjustified certainty due to inherent subjective assumptions, they may appear to make the investor appear rational but I am personally not that convinced they do.

At the end of the day if there was a surefire system everybody would be doing it.

In a way, we have both been travelling parallel courses and come to similar conclusions - though I am sure your understanding of company accounts is deeper than mine. I could always understand them, but not understand what the real meant! Yep, tried all those ideas and more, but now I've settled down to what I know - or rather knowing that I don't know and never will.
As soon as you think you may have a cunning plan, the market is capable of morphing into something else.

I also note that all the famous investors have "methods" but often do surprising things, which makes me believe they also sometimes go by "smell" as much as anything. (eg perhaps, when Warren Buffet bought railways - quite out of character).

Arb.

[Charlottesquare]

Me too.

I studied some models at university , like Gordon Model, and then later in life thought, lets apply to determine undervalued shares. The catch was whilst the model to me makes logical sense (A discounted stream of dividends to infinity (10-15 years often suffices) gives "worth") reality was there were too many subjective inputs for the model to, in my mind anyway, be that useful in the real world, so back to square one.

I also eventually considered that a lifetime preparing accounts for others really did not equip me to really, truly, understand listed plc accounts, perhaps if I had remained in audit but I didn't.

I also had a brief fling observing cashflow and then got sucked into the vortex of deciding what was required annual capex and what was exceptional capex, unless you are group FD you are imho merely guessing, more subjectivity

So, marching though my 60s I now embrace three approaches;

Single Companies

Start with P/E
Look at ROCE
Investigate accounts for funnies
Consider cash conversion
Look at debt profile
Ask myself do I really understand what they do
Gut instinct

Single Companies

Stuff the above, gut instinct wins, I like the company, say Shell/Unilever, I just want to have it.(tends to only happen with shares I really trust)

Investment Trusts

I want an investment in the sector, my gut feeling re world economics steers where by either geography or sector I invest, just allow a spread of div yields to say average 4-4.5%, quick look a manager.

The only other lesson was from my father, do not overtrade, whilst I am not as good at this as he was (when he died in 2012 he still owned some holdings my maternal grandfather had bought in the 30s/40s) I do try to not play around too much (though 2020 did have me out then back in to the market)

I am afraid I tend these days to look at most "systems" as awarding unjustified certainty due to inherent subjective assumptions, they may appear to make the investor appear rational but I am personally not that convinced they do.

At the end of the day if there was a surefire system everybody would be doing it.

In a way, we have both been travelling parallel courses and come to similar conclusions - though I am sure your understanding of company accounts is deeper than mine. I could always understand them, but not understand what the real meant! Yep, tried all those ideas and more, but now I've settled down to what I know - or rather knowing that I don't know and never will.
As soon as you think you may have a cunning plan, the market is capable of morphing into something else.

I also note that all the famous investors have "methods" but often do surprising things, which makes me believe they also sometimes go by "smell" as much as anything. (eg perhaps, when Warren Buffet bought railways - quite out of character).

Arb.

Warren ought to have been a medieval historian with a love of castles given his interest in moats.

[Newroad]

Hi Arb.

I've been investing for over 20 years, using "real capital" and my guess is that the performance would stand up pretty well against that of anyone. Until more recently, I haven't kept the records the same as TJH and others have (and don't see the merit in retrospectively producing them which would be quite an effort) but if you're willing to accept the performance of FCIT with a dash of MYI (JISA's and CTF's before them), ATST (SIPP's) and WTAN (ISA's) for the majority of that period as a proxy, you'll get an appropriate sense.

For some reason, the suggestion of doing a modest real world experiment, with real money, along a similar line to a HYP but without being exactly the same seems to antagonise some. I must admit to not understanding why this is the case - other than people perhaps only liking echo chamber type posts - but que sera.

For those who have helped me and given constructive answers, they are very much appreciated. I hope I have been able to help some in return, even if only providing discussion points of interest.

Regards, Newroad

[Arborbridge]

Hi Arb.

I've been investing for over 20 years, using "real capital" and my guess is that the performance would stand up pretty well against that of anyone. Until more recently, I haven't kept the records the same as TJH and others have (and don't see the merit in retrospectively producing them which would be quite an effort) but if you're willing to accept the performance of FCIT with a dash of MYI (JISA's and CTF's before them), ATST (SIPP's) and WTAN (ISA's) for the majority of that period as a proxy, you'll get an appropriate sense.

For some reason, the suggestion of doing a modest real world experiment, with real money, along a similar line to a HYP but without being exactly the same seems to antagonise some. I must admit to not understanding why this is the case - other than people perhaps only liking echo chamber type posts - but que sera.

For those who have helped me and given constructive answers, they are very much appreciated. I hope I have been able to help some in return, even if only providing discussion points of interest.

Regards, Newroad

It doesn't antagonise me - provided it isn't described as a HYP. But pseudo-HYP seems to fit rather well. I think it's great to experiment, particularly if you keep records and write up the results in a consistent way - but I do agree, trying to do anything retrospecively is a mug's game. Not only that, but I daresay you investment interests have changed over the 30 years.

I too have a holding in FCIT, though it isn't mentioned (or counted) in my usual portfolios - it was an investment specifically made to budget towards an expenditure coming up in some years time. MYI I also have in my normal pension investments.
My HYP is run separately from any of the ITs simply because I wanted to see how it would fare as a stand alone compared with the ITs.

Cheers,


Arb.

[Itsallaguess]

For some reason, the suggestion of doing a modest real world experiment, with real money, along a similar line to a HYP but without being exactly the same seems to antagonise some.

I must admit to not understanding why this is the case - other than people perhaps only liking echo chamber type posts - but que sera.

I think that's overplaying it a little if you don't mind me saying so.

I think the experiment that you're introducing here is a worthy one, and I'll certainly be following it with interest, but as with all new things, it's attracted quite a lot of attention from interested parties, some of whom have decided it's not something that they feel they could endorse, and people have mostly given reasons for that where they've taken that view.

I think that's to be expected in all honesty, and I don't think it's helpful to criticise people for 'only liking echo chamber type posts' when it seems from the above that a 'positive-only' echo chamber might be exactly what you'd be happier with yourself...

I'd try to just ride through what's likely to be an initial bow-wave of interest, both positive and perhaps sometimes negative, and let things settle down a little once you get into your stride. I think most people will be supportive and interested in following your progress, even if it's an approach that they'd perhaps not look to emulate themselves.

Cheers,

Itsallaguess

[Newroad]

Hi IAAG.

That was a hypothesis, as your quoting of me evidences, pertaining to those seemingly antagonised. I'm open to other hypotheses as to this behaviour.

Others have questioned or critiqued the approach constructively, which is of course fine.

Regards, Newroad

[Newroad]

Hi Arb.

Further to your comment

"I think it's great to experiment, particularly if you keep records and write up the results in a consistent way"

You can find the results here, unitised twice monthly - about as transparent as I can be.

https://www.lemonfool.co.uk/viewtopic.php?f=56&t=34988

Similarly to you, I run the family core portfolios separate from the Pseudo-HYP.

Regards, Newroad

[Arborbridge]

Hi Arb.

Further to your comment

"I think it's great to experiment, particularly if you keep records and write up the results in a consistent way"

You can find the results here, unitised twice monthly - about as transparent as I can be.

https://www.lemonfool.co.uk/viewtopic.php?f=56&t=34988

Similarly to you, I run the family core portfolios separate from the Pseudo-HYP.

Regards, Newroad

Thank you - I wasn't aware of that since I do not often knowingly ( ) visit that board.