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When to Top Slice

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
tjh290633
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Re: When to Top Slice

#273822

Postby tjh290633 » December 29th, 2019, 10:02 am

Yes, Dod, that's correct. Once a share goes past my limit point, I sell 25%. Quite often a share gets near the point then falls back through profit taking. Because my limit is set in terms of median portfolio holding value, it is quite possible to trim several times, to trim and then find that that share has fallen so far as to be a candidate for topping up, and for the relative value to be affected through moving contrary to the overall trend.

It is not the share price which I use, but the holding value. Everything is relative. Somewhere recently I set out the history of my IMI holding, which has been trimmed and topped up a number of times.

TJH

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Re: When to Top Slice

#273823

Postby Dod101 » December 29th, 2019, 10:08 am

tjh290633 wrote:Yes, Dod, that's correct. Once a share goes past my limit point, I sell 25%. Quite often a share gets near the point then falls back through profit taking. Because my limit is set in terms of median portfolio holding value, it is quite possible to trim several times, to trim and then find that that share has fallen so far as to be a candidate for topping up, and for the relative value to be affected through moving contrary to the overall trend.

It is not the share price which I use, but the holding value. Everything is relative. Somewhere recently I set out the history of my IMI holding, which has been trimmed and topped up a number of times.

TJH


Thanks. Given your obvious success, I am inclined to think that any aspiring investor could do a lot worse than adopt your method. Some though would say that it must be quite a costly exercise in terms of dealing costs but there are of course ways round that.

Here's to another prosperous year for 2020. Looks like 2019 has been a good year for most of us.

Dod

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Re: When to Top Slice

#273874

Postby tjh290633 » December 29th, 2019, 5:55 pm

Dod101 wrote:
Thanks. Given your obvious success, I am inclined to think that any aspiring investor could do a lot worse than adopt your method. Some though would say that it must be quite a costly exercise in terms of dealing costs but there are of course ways round that.

Here's to another prosperous year for 2020. Looks like 2019 has been a good year for most of us.

Dod

I keep a record of my costs as regards brokerage and management fees:

.        .         Percent     Portfolio   Value    Value at    Percent  
Tax Yr Trades Brokerage Fees Total . Income
FY08-09 48 0.489% 0.080% 0.569% 05-Apr-09 6.29%
FY09-10 27 0.245% 0.060% 0.305% 05-Apr-10 10.11%
FY10-11 27 0.241% 0.052% 0.294% 05-Apr-11 8.09%
FY11-12 12 0.093% 0.050% 0.143% 05-Apr-12 3.45%
FY12-13 12 0.058% 0.042% 0.100% 05-Apr-13 2.30%
FY13-14 19 0.124% 0.029% 0.152% 05-Apr-14 3.55%
FY14-15 12 0.042% 0.033% 0.075% 05-Apr-15 1.80%
FY15-16 25 0.119% 0.034% 0.152% 05-Apr-16 3.79%
FY16-17 24 0.121% 0.016% 0.137% 05-Apr-17 3.44%
FY17-18 20 0.056% 0.007% 0.063% 05-Apr-18 1.38%
FY18-19 15 0.033% 0.008% 0.041% 05-Apr-19 0.77%

Average 22 0.147% 0.037% 0.185% 4.088%
Max 48 0.489% 0.080% 0.569% 10.105%
Min 12 0.033% 0.007% 0.041% 0.771%

Obviously cost varies depending on the number of trades, and FY08-09 was obviously an outlier, because of the financial hiatus at that time. I've given the cost in terms of portfolio value and also dividend income. Stamp duty is included in brokerage for purchases, of course.

Let's look forward to a good 2020.

TJH

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Re: When to Top Slice

#273878

Postby Bubblesofearth » December 29th, 2019, 6:29 pm

tjh290633 wrote:
Dod101 wrote:
Thanks. Given your obvious success, I am inclined to think that any aspiring investor could do a lot worse than adopt your method. Some though would say that it must be quite a costly exercise in terms of dealing costs but there are of course ways round that.

Here's to another prosperous year for 2020. Looks like 2019 has been a good year for most of us.

Dod

I keep a record of my costs as regards brokerage and management fees:

.        .         Percent     Portfolio   Value    Value at    Percent  
Tax Yr Trades Brokerage Fees Total . Income
FY08-09 48 0.489% 0.080% 0.569% 05-Apr-09 6.29%
FY09-10 27 0.245% 0.060% 0.305% 05-Apr-10 10.11%
FY10-11 27 0.241% 0.052% 0.294% 05-Apr-11 8.09%
FY11-12 12 0.093% 0.050% 0.143% 05-Apr-12 3.45%
FY12-13 12 0.058% 0.042% 0.100% 05-Apr-13 2.30%
FY13-14 19 0.124% 0.029% 0.152% 05-Apr-14 3.55%
FY14-15 12 0.042% 0.033% 0.075% 05-Apr-15 1.80%
FY15-16 25 0.119% 0.034% 0.152% 05-Apr-16 3.79%
FY16-17 24 0.121% 0.016% 0.137% 05-Apr-17 3.44%
FY17-18 20 0.056% 0.007% 0.063% 05-Apr-18 1.38%
FY18-19 15 0.033% 0.008% 0.041% 05-Apr-19 0.77%

Average 22 0.147% 0.037% 0.185% 4.088%
Max 48 0.489% 0.080% 0.569% 10.105%
Min 12 0.033% 0.007% 0.041% 0.771%

Obviously cost varies depending on the number of trades, and FY08-09 was obviously an outlier, because of the financial hiatus at that time. I've given the cost in terms of portfolio value and also dividend income. Stamp duty is included in brokerage for purchases, of course.

Let's look forward to a good 2020.

TJH


To be meaningful brokerage fees should be given as a % of the value of the trades, not % total portfolio value. Your portfolio will, after all, only benefit from any given trade to the value of that trade.

BoE

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Re: When to Top Slice

#273900

Postby tjh290633 » December 29th, 2019, 9:17 pm

You can take it that, for purchases, the brokerage plus stamp duty (if applicable) is under 1% of the value of the trade. For sales when trimming, it is likely to be of the order of 0.2%. A complete disposal would be rather less.

Some time ago we looked at the effect of switching from a low yielding share to a higher yield share. The dealing costs were a proportion of the extra dividend income gained by such a trade. As I recall the proportion was of the order of 25 to 50% of the first years' extra income.

TJH

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Re: When to Top Slice

#273921

Postby Bubblesofearth » December 30th, 2019, 7:05 am

tjh290633 wrote:You can take it that, for purchases, the brokerage plus stamp duty (if applicable) is under 1% of the value of the trade. For sales when trimming, it is likely to be of the order of 0.2%. A complete disposal would be rather less.

TJH


Makes sense. So a round trip of trimmed sales plus purchase with realised cash maybe around 1% in total?

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Re: When to Top Slice

#273926

Postby Dod101 » December 30th, 2019, 8:02 am

BoE seems obsessed with the cost of transactions. I have just reviewed my transactions for 2019. I made 19 in total I think it was and most sales cost me nothing, and even the buys which of course usually include Stamp Duty are mostly under 0.5% and these transactions varied in size from a few hundred pounds, to well into five figures. Thus, they are almost insignificant in the scheme of things, but that is because I am usually using Interactive Investor which provides me with several free trades per quarter.

So my round trips are around 0.5% on average.

Dod

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Re: When to Top Slice

#273935

Postby Bubblesofearth » December 30th, 2019, 9:11 am

Dod101 wrote:BoE seems obsessed with the cost of transactions. I have just reviewed my transactions for 2019. I made 19 in total I think it was and most sales cost me nothing, and even the buys which of course usually include Stamp Duty are mostly under 0.5% and these transactions varied in size from a few hundred pounds, to well into five figures. Thus, they are almost insignificant in the scheme of things, but that is because I am usually using Interactive Investor which provides me with several free trades per quarter.

So my round trips are around 0.5% on average.

Dod


haha, so if someone disagrees with you they are obsessed, eh? I put forward 1% as typical for investors and gave what I thought to be a reasonable worked example. If you trade for free then you are the exception not the rule. Think about it, brokers would go bust if they allowed anything other than a small minority of trades to be gratis.

TJH gave some useful numbers and all I am trying to get to is the round trip cost as a function of the trades. It seems to me this approximates 1% although I await clarification of that.

I don't think 1% is insignificant. If my portfolio pays me 4% then it's 25% of that income. If I only trade part of my portfolio it is still costing me 25% of the income from that part. Worth avoiding if possible IMO. And perfectly possible to avoid with wide diversification.

BoE

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Re: When to Top Slice

#273938

Postby Alaric » December 30th, 2019, 9:16 am

Bubblesofearth wrote: I put forward 1% as typical for investors and gave what I thought to be a reasonable worked example. If you trade for free then you are the exception not the rule.


Commission rates are somewhat lower than they used to be and packaged offers where custody/management charges are offset against dealing costs are a common feature of several platforms.

Even the 1/2% stamp duty cost is avoided with ETFs.

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Re: When to Top Slice

#273939

Postby tjh290633 » December 30th, 2019, 9:17 am

Bubblesofearth wrote:
tjh290633 wrote:You can take it that, for purchases, the brokerage plus stamp duty (if applicable) is under 1% of the value of the trade. For sales when trimming, it is likely to be of the order of 0.2%. A complete disposal would be rather less.

TJH


Makes sense. So a round trip of trimmed sales plus purchase with realised cash maybe around 1% in total?

1% of what? The value of the trimming? Maybe. Often some accumulated dividends come into play for reinvestment at the same time.

I could look at some examples, but I don't think that it will tell us much more.

TJH

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Re: When to Top Slice

#273957

Postby scrumpyjack » December 30th, 2019, 11:46 am

On any deal over 10k the market makers spread is going to be a lot more than the broker dealing fee. It's somewhat invisible but it's there nevertheless.

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Re: When to Top Slice

#273985

Postby Merkinglue » December 30th, 2019, 2:58 pm

Just a quick update on his decision.

He wants to just leave JD. alone. The logic he used is

"Dad, it's a good shop, I like it, my mates like it. They are always busy and they have a good website"

I'm not going to argue with that.

He was though really engaged with the whole process. He has given himself some homework on looking at what the Vangaurd Lifestrategy options could offer him. Not very often I spot a mature adult inside the normal teenage fog but there are glimmers of hope.

Thanks once again for all your inputs.

I'd like to take this opportunity to wish you all a healthy, wealthy and prosperous 2020.

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Re: When to Top Slice

#274194

Postby Bouleversee » December 31st, 2019, 12:33 pm

Merkinglue wrote:
monabri wrote:The concern being that you have "got lucky" with JD but the "eclectic mix" might more than cancel any gains.


The eclectic mix came about by discussing which shares he was interested in when he was only 12 years old. It was little more than sticking a pin in a list really. His knowledge of companies being limited by his exposure to life. A few of his picks(with impeccable logic annotated below)

Lloyds_________ I have a savings account there Down 14%
Barratts_______ We live in a Barratts house Up 20%
Redrow________ We are moving soon to Redrow house Up 66%
Marstons_______ We sometimes eat there Down 2%
JD Sports_______ I like their trainers Up 217%
RDSB___________ That's where dad gets petrol Down 10%
Smiths Industries Dad was contracting there Up 45%
Vodafone________That's my SIM card Down 30%

Overall he has a capital growth of around 15% and is getting a dividend return of 4.6% according to Hyptuss.

He has been lucky (Done better than me for sure Carillion anybody?) now I want to help him learn a bit more while he rides his luck.

Cheers for some great advice, it will be a battle to get his attention over Christmas, but one worth fighting.


Another one he might know by now is Greggs which I bought at 468p in Jan. 2011 and is now 2297p and seems to be still on a (vegan) roll, very much in tune with the climate theme and introducing tasty alternatives to meat as well as dishes for those who are into healthy eating, with people queuing outside the doors. The yield is only 1.56% on today's price (I can't remember whether they have done any specials) but nearly 5 times that on the price I paid and I am happy to let it run. If your son has any accumulated dividends or if Santa has brought him any dosh, he might consider having a punt on Greggs. I think they even have loyalty deals for customers, not that I have been one as yet.

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Re: When to Top Slice

#274260

Postby Dod101 » December 31st, 2019, 5:07 pm

Bubblesofearth wrote:
Dod101 wrote:BoE seems obsessed with the cost of transactions. I have just reviewed my transactions for 2019. I made 19 in total I think it was and most sales cost me nothing, and even the buys which of course usually include Stamp Duty are mostly under 0.5% and these transactions varied in size from a few hundred pounds, to well into five figures. Thus, they are almost insignificant in the scheme of things, but that is because I am usually using Interactive Investor which provides me with several free trades per quarter.

So my round trips are around 0.5% on average.

Dod


haha, so if someone disagrees with you they are obsessed, eh? I put forward 1% as typical for investors and gave what I thought to be a reasonable worked example. If you trade for free then you are the exception not the rule. Think about it, brokers would go bust if they allowed anything other than a small minority of trades to be gratis.

TJH gave some useful numbers and all I am trying to get to is the round trip cost as a function of the trades. It seems to me this approximates 1% although I await clarification of that.

I don't think 1% is insignificant. If my portfolio pays me 4% then it's 25% of that income. If I only trade part of my portfolio it is still costing me 25% of the income from that part. Worth avoiding if possible IMO. And perfectly possible to avoid with wide diversification.

BoE


I have just checked on my transactions for 2019. There were 25 in total (more than I had guessed above), mostly around the £10/12,000 mark although the average trade was around £8,000. The total costs were 0.31% of the total traded (aggregate of sells and buys) Many were free of any brokerage. I have not included the spread because that will vary with the share, and anyway is not hard cash leaving your pocket.

I think a number of platforms provide some credits per quarter, or have free days. Stamp Duty is the only ad valorem charge I think. Otherwise clearly, dealing in larger amounts helps.

Dod

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Re: When to Top Slice

#274329

Postby 77ss » January 1st, 2020, 12:00 am

Bubblesofearth wrote:......
I don't think 1% is insignificant. If my portfolio pays me 4% then it's 25% of that income. If I only trade part of my portfolio it is still costing me 25% of the income from that part......
BoE


Even assuming that your 1% figure is correct, it is utterly trivial! Unless you are a day trader.

It may be 1% of your dividend income on the capital involved in year 1. But what about subsequent years, when your dividends roll in - without you having to spend a penny more on dealing costs?

Do your trade, pay the costs and sit on your purchase for 10-20 years. What does this mythical 1% amount to in the end?

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Re: When to Top Slice

#274340

Postby Bubblesofearth » January 1st, 2020, 7:11 am

77ss wrote:
Bubblesofearth wrote:......
I don't think 1% is insignificant. If my portfolio pays me 4% then it's 25% of that income. If I only trade part of my portfolio it is still costing me 25% of the income from that part......
BoE


Even assuming that your 1% figure is correct, it is utterly trivial! Unless you are a day trader.

It may be 1% of your dividend income on the capital involved in year 1. But what about subsequent years, when your dividends roll in - without you having to spend a penny more on dealing costs?

Do your trade, pay the costs and sit on your purchase for 10-20 years. What does this mythical 1% amount to in the end?


Very little if that's what you do. Although I'm not sure I would consign the cost to mythology. Beware, children, the grisly tale of commission!

Obviously the less you trade the less you pay. At the extreme if you never trade you pay nothing, although corporate actions will occasionally make this impossible.

Dod has confessed to 25 trades last year. 5 hail meerkat and 6 months trading abstinence for him/her.

BoE

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Re: When to Top Slice

#274342

Postby Dod101 » January 1st, 2020, 7:22 am

One of my trades was forced on me by the takeover of Mucklow. The proceeds were spread over three other shares I think to top them up rather than at that point to introduce a direct replacement, so that was one corporate action and four trades because I sold Mucklow and did not wait for the takeover to grind out by itself.

Anyway much more important than trading costs I think are the ongoing platform charges. These are continuing year on year and will eat into your returns, especially the sort of charges by the likes of HL. Flat fees per month seem to me to be the way to go, especially if you have a sizeable portfoilio. There is a decent choice but that is another story.

Dod

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Re: When to Top Slice

#274353

Postby Bubblesofearth » January 1st, 2020, 8:40 am

Dod101 wrote:One of my trades was forced on me by the takeover of Mucklow. The proceeds were spread over three other shares I think to top them up rather than at that point to introduce a direct replacement, so that was one corporate action and four trades because I sold Mucklow and did not wait for the takeover to grind out by itself.

Anyway much more important than trading costs I think are the ongoing platform charges. These are continuing year on year and will eat into your returns, especially the sort of charges by the likes of HL. Flat fees per month seem to me to be the way to go, especially if you have a sizeable portfoilio. There is a decent choice but that is another story.

Dod


I currently have an ISA with Youinvest and pay a flat charge of £30/year.

They have a ready reckoner here which illustrates how this cost goes up with trades;

https://www.youinvest.co.uk/charges-and-rates

This doesn't include stamp and spread. I cannot agree with a previous poster who dismisses spreads because they are not 'hard cash'. But then I seem to be disagreeing with most people on here!

BoE

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Re: When to Top Slice

#274379

Postby JuanDB » January 1st, 2020, 10:19 am

Presumably spreads only matter when you sell? Investing for the long term, as opposed to speculating for the short term, with an assumed holding period of forever makes spreads largely irrelevant. If you’re cycling in and out of stocks then perhaps it has an effect. Though presumably you wouldn’t play price arbitrage games on a stock with a wide spread?

Juan

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Re: When to Top Slice

#274720

Postby MickR » January 2nd, 2020, 11:36 pm

if its lessons in investing, I would (I am) ride(ing) out the bull run and teach him about stop sells.

Mick


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