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Investing during a time of high inflation - What are you doing?

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
kempiejon
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Re: Investing during a time of high inflation - What are you doing?

#491635

Postby kempiejon » April 4th, 2022, 8:39 pm

stevensfo wrote:Re. ADM according to my ii website, the divi is 5.9%, not 10.8%.

https://www.ii.co.uk/shares/admiral-group/LSE:ADM

Steve


Admiral pay regular special dividends (have been for 15 years) and 12 month historical is 10%. 5% is the normal dividend mind.
https://www.dividenddata.co.uk/dividend ... y?epic=ADM

stevensfo
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Re: Investing during a time of high inflation - What are you doing?

#491638

Postby stevensfo » April 4th, 2022, 8:47 pm

kempiejon wrote:
stevensfo wrote:Re. ADM according to my ii website, the divi is 5.9%, not 10.8%.

https://www.ii.co.uk/shares/admiral-group/LSE:ADM

Steve


Admiral pay regular special dividends (have been for 15 years) and 12 month historical is 10%. 5% is the normal dividend mind.
https://www.dividenddata.co.uk/dividend ... y?epic=ADM



Really? Thanks for that info!! And apologies to TJH for daring to doubt his list. 8-)

Steve

tjh290633
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Re: Investing during a time of high inflation - What are you doing?

#491743

Postby tjh290633 » April 5th, 2022, 9:31 am

stevensfo wrote:
kempiejon wrote:
stevensfo wrote:Re. ADM according to my ii website, the divi is 5.9%, not 10.8%.

https://www.ii.co.uk/shares/admiral-group/LSE:ADM

Steve


Admiral pay regular special dividends (have been for 15 years) and 12 month historical is 10%. 5% is the normal dividend mind.
https://www.dividenddata.co.uk/dividend ... y?epic=ADM



Really? Thanks for that info!! And apologies to TJH for daring to doubt his list. 8-)

Steve

Apology accepted. Admiral is a bit anomalous with its usual mix of ordinary and special dividends, with a further special dividend at the moment.

TJH

absolutezero
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Re: Investing during a time of high inflation - What are you doing?

#491807

Postby absolutezero » April 5th, 2022, 11:48 am

tjh290633 wrote: miners, oils, defence and certain others have done well.


Central banks can't print oil and minerals. I have positioned accordingly.

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Re: Investing during a time of high inflation - What are you doing?

#491810

Postby simoan » April 5th, 2022, 11:59 am

absolutezero wrote:
tjh290633 wrote: miners, oils, defence and certain others have done well.


Central banks can't print oil and minerals. I have positioned accordingly.

No. But they can employ monetary and fiscal policies that lead to stagflation or recession. In which case, the demand for oil and mineral products reduces greatly and share prices of companies that produce them go down more than everything else. Just because there is inflation, doesn't mean these companies have suddenly become non-cyclical. If we get an inflation induced recession with rising interest rates, cash will be a long way from the worst place to be.

absolutezero
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Re: Investing during a time of high inflation - What are you doing?

#491825

Postby absolutezero » April 5th, 2022, 12:30 pm

simoan wrote:
absolutezero wrote:
tjh290633 wrote: miners, oils, defence and certain others have done well.


Central banks can't print oil and minerals. I have positioned accordingly.

No. But they can employ monetary and fiscal policies that lead to stagflation or recession. In which case, the demand for oil and mineral products reduces greatly and share prices of companies that produce them go down more than everything else. Just because there is inflation, doesn't mean these companies have suddenly become non-cyclical. If we get an inflation induced recession with rising interest rates, cash will be a long way from the worst place to be.

Then I re-position accordingly.
"There's always a bull market sonewhere."

The days of buy and hold are long gone.
This is why I don't do the HYP method as my entire portfolio.

simoan
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Re: Investing during a time of high inflation - What are you doing?

#491832

Postby simoan » April 5th, 2022, 12:58 pm

absolutezero wrote:
simoan wrote:
absolutezero wrote:
tjh290633 wrote: miners, oils, defence and certain others have done well.


Central banks can't print oil and minerals. I have positioned accordingly.

No. But they can employ monetary and fiscal policies that lead to stagflation or recession. In which case, the demand for oil and mineral products reduces greatly and share prices of companies that produce them go down more than everything else. Just because there is inflation, doesn't mean these companies have suddenly become non-cyclical. If we get an inflation induced recession with rising interest rates, cash will be a long way from the worst place to be.

Then I re-position accordingly.
"There's always a bull market sonewhere."

The days of buy and hold are long gone.
This is why I don't do the HYP method as my entire portfolio.

You're talking to the completely wrong person about HYP and long term buy and hold. I don't pursue either approach at all and never have. I also don't try and be too clever and position my portfolio heavily for a future scenario that may not unfold. In particular, I think commodities are currently looking overbought and there is a lot of speculation taking place. Meantime, there are some high quality companies starting to look under priced on a medium term view.

OhNoNotimAgain
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Re: Investing during a time of high inflation - What are you doing?

#492009

Postby OhNoNotimAgain » April 5th, 2022, 9:48 pm

tjh290633 wrote:
The market has a mind of its own.

TJH


There is no such thing as a sapient being called "the market".

It is merely the sum total of all human perception at one particular point in time.

tjh290633
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Re: Investing during a time of high inflation - What are you doing?

#492029

Postby tjh290633 » April 5th, 2022, 10:58 pm

OhNoNotimAgain wrote:
tjh290633 wrote:
The market has a mind of its own.

TJH


There is no such thing as a sapient being called "the market".

It is merely the sum total of all human perception at one particular point in time.

And those human perceptions can vary widely. Remember that remark about the Market being a weighing machine?

TJH

OhNoNotimAgain
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Re: Investing during a time of high inflation - What are you doing?

#492071

Postby OhNoNotimAgain » April 6th, 2022, 8:28 am

tjh290633 wrote:
OhNoNotimAgain wrote:
tjh290633 wrote:
The market has a mind of its own.

TJH


There is no such thing as a sapient being called "the market".

It is merely the sum total of all human perception at one particular point in time.

And those human perceptions can vary widely. Remember that remark about the Market being a weighing machine?

TJH


Indeed, I think the quote from Charlie Munger was that in the short term the market is a voting machine and in the long term it is a weighing machine.

And, as you proved Terry, it prefers to weigh dividends.

What is intriguing is that the market suddenly focussed on the long term last autumn when inflation re-appeared.

dealtn
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Re: Investing during a time of high inflation - What are you doing?

#492114

Postby dealtn » April 6th, 2022, 10:41 am

OhNoNotimAgain wrote:
tjh290633 wrote:
OhNoNotimAgain wrote:
tjh290633 wrote:
The market has a mind of its own.

TJH


There is no such thing as a sapient being called "the market".

It is merely the sum total of all human perception at one particular point in time.

And those human perceptions can vary widely. Remember that remark about the Market being a weighing machine?

TJH


Indeed, I think the quote from Charlie Munger was that in the short term the market is a voting machine and in the long term it is a weighing machine.

And, as you proved Terry, it prefers to weigh dividends.

What is intriguing is that the market suddenly focussed on the long term last autumn when inflation re-appeared.


How does a forward looking market "weigh dividends"?

tjh290633
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Re: Investing during a time of high inflation - What are you doing?

#492135

Postby tjh290633 » April 6th, 2022, 11:45 am

dealtn wrote:How does a forward looking market "weigh dividends"?

Who said it was forward looking?

Perhaps it has learnt from the past, and recognised that dividend paying shares offer a better return most of the time than those which do not, or pay very little. Go and look at the long term record of the FTSE3550 HY and LY indices, using the TR versions, and see which has done best since inception.

TJH

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Re: Investing during a time of high inflation - What are you doing?

#492163

Postby dealtn » April 6th, 2022, 1:23 pm

tjh290633 wrote:
dealtn wrote:How does a forward looking market "weigh dividends"?

Who said it was forward looking?

Perhaps it has learnt from the past, and recognised that dividend paying shares offer a better return most of the time than those which do not, or pay very little. Go and look at the long term record of the FTSE3550 HY and LY indices, using the TR versions, and see which has done best since inception.

TJH


Can you provide any stock market model where it isn't forward looking?

I'm am not disputing the track record of any index. That is an historic fact.

mc2fool
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Re: Investing during a time of high inflation - What are you doing?

#492186

Postby mc2fool » April 6th, 2022, 2:43 pm

dealtn wrote:
OhNoNotimAgain wrote:Indeed, I think the quote from Charlie Munger was that in the short term the market is a voting machine and in the long term it is a weighing machine.

And, as you proved Terry, it prefers to weigh dividends.

What is intriguing is that the market suddenly focussed on the long term last autumn when inflation re-appeared.

How does a forward looking market "weigh dividends"?

I believe the voting vs weighing machine quote was originally from Benjamin Graham.

That aside, the Dividend Discount Model has been a standard theory that the "... present-day price is worth the sum of all of its future dividend payments when discounted back to their present value", pretty much forever. https://www.investopedia.com/terms/d/ddm.asp

It's always struck me as a, "yeah, I suppose that makes sense ... in a pure all-else-being-equal world", so I'm not championing it in any way, just saying that it is a (one) pretty standard (and basic) model for a "forward looking market" (yes, aren't they all?) to "weigh dividends".

OhNoNotimAgain
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Re: Investing during a time of high inflation - What are you doing?

#492382

Postby OhNoNotimAgain » April 7th, 2022, 8:06 am

tjh290633 wrote:
dealtn wrote:How does a forward looking market "weigh dividends"?

Who said it was forward looking?

Perhaps it has learnt from the past, and recognised that dividend paying shares offer a better return most of the time than those which do not, or pay very little. Go and look at the long term record of the FTSE3550 HY and LY indices, using the TR versions, and see which has done best since inception.

TJH


There is of course a world of difference between yield and dividends although they are often wrongly onflated. Terry is at risk of doing that in his comment.

A small dividend payer can have a big yield and a large dividend payer can have a low yield. So those indices do not correlate well to dividends.

vand
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Re: Investing during a time of high inflation - What are you doing?

#492392

Postby vand » April 7th, 2022, 8:52 am

OhNoNotimAgain wrote:
tjh290633 wrote:
dealtn wrote:How does a forward looking market "weigh dividends"?

Who said it was forward looking?

Perhaps it has learnt from the past, and recognised that dividend paying shares offer a better return most of the time than those which do not, or pay very little. Go and look at the long term record of the FTSE3550 HY and LY indices, using the TR versions, and see which has done best since inception.

TJH


There is of course a world of difference between yield and dividends although they are often wrongly onflated. Terry is at risk of doing that in his comment.

A small dividend payer can have a big yield and a large dividend payer can have a low yield. So those indices do not correlate well to dividends.


If you mean the earning yield, that is simply another expression of the price to earning multiple.

Dividends are just one way that cash is returned to shareholders.

The options that management have are:
Dividends - direct return of cash
Buybacks - increases ownership stake of all existing holders
Paying down debt - improves balance sheet
Acquisition- buys the future cashflows of another company
Invest in the company organically - grow future earnings

Most companies will do a mix of the above. Men Faber has spoken about this quite extensively in his podcasts and says that looking at dividend yield alone is silly, but there is good evidence that companies that have high total “shareholder yield” (divid+buyback+net debt reduction) tend to outperform over the long run.

More here https://mebfaber.com/2016/08/10/9774/

simoan
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Re: Investing during a time of high inflation - What are you doing?

#492445

Postby simoan » April 7th, 2022, 11:33 am

tjh290633 wrote:Go and look at the long term record of the FTSE3550 HY and LY indices, using the TR versions, and see which has done best since inception.

TJH

Actually, how do you look at these little used indices? The Low Yield index is not available to view as a chart on any of the websites I use. I think it's a shame you can only prove your point by using obscure indices. And both are an incredibly low bar to use to judge the performance of your portfolio because the FTSE350 HY index (and from what you say, the Low Yield equivalent too) is below where it was 5 years ago. That is just an awful performance. Whatever you do, don't overlay the S&P500 on a 5 year chart of the FTSE350.

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Re: Investing during a time of high inflation - What are you doing?

#492483

Postby dealtn » April 7th, 2022, 1:20 pm

simoan wrote:
tjh290633 wrote:Go and look at the long term record of the FTSE3550 HY and LY indices, using the TR versions, and see which has done best since inception.

TJH

Actually, how do you look at these little used indices? The Low Yield index is not available to view as a chart on any of the websites I use. I think it's a shame you can only prove your point by using obscure indices. And both are an incredibly low bar to use to judge the performance of your portfolio because the FTSE350 HY index (and from what you say, the Low Yield equivalent too) is below where it was 5 years ago. That is just an awful performance. Whatever you do, don't overlay the S&P500 on a 5 year chart of the FTSE350.


I also don't get the fascination with "from inception" either. We aren't at inception, and never will be. The best we can do is look at the past and use it as a guide for the likely unknown future. That inception figure can be massively influenced due to a spectacular performance in its first year, and suffer from relative under performance ever since. What might that imply about the future from here?

For what it is worth I can access the TR Indices from April 1999. They may go back further but I have no access, or information on when "inception" was. Using that data you can calculate the performance from each year to today ie. you can have 22 start dates and compare which of the Low Yield or High Yield alternatives would have been the better Total Return from those respective investment "inceptions".

High Yield "wins" for 5 of those 22, being 2021, 2020, 2019, 2000 and 1999. Low Yield "wins" for the other 17.

It doesn't sound as impressive as that "from inception" argument, but if I were to rely on past data as a guide to which index to follow going forward (and I don't to be clear), I wouldn't overly rely on those 2 words "from inception".

mc2fool
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Re: Investing during a time of high inflation - What are you doing?

#492512

Postby mc2fool » April 7th, 2022, 2:38 pm

dealtn wrote:For what it is worth I can access the TR Indices from April 1999. They may go back further but I have no access, or information on when "inception" was.

Not wishing to get into the HY vs LY argument itself, but just as a matter of information on that last point, the inception dates and base values (possibly some backdated?) can be found in:

https://web.archive.org/web/20100211143046/http://ftse.com/Research_and_Publications/Archive/FTSE_UK_Index_Series_1997.pdf

See the notes under Table H on PDF page 26 (numbered as page 410). The non-TR 350 HY/LY indices (along with the 350 cum ITs) have a base value of 682.94 on 31.12.1985. Further down the page there is:

"For the Total Return Indices, the base values were:
:
:
[List that doesn't include the 350 HY or LY]
:
1000.00 on 31.12.1992 All other Total Return Indices
"

So that's it for the FTSE 350 HY & LY TR indices (and a number of others).

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Re: Investing during a time of high inflation - What are you doing?

#493637

Postby LooseCannon101 » April 11th, 2022, 9:36 pm

I have just bought a substantial number of shares in F&C Investment Trust (FCIT) to add to my portfolio.

Steady buying of a highly diversified world equity fund and holding long-term, makes sense when markets are unsettled - rising interest rates, high inflation, .. etc. Why change course?


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