Morrisons (MRW)

[Itsallaguess]

I was replying to your post that said you don't understand how my trade out of MRW de-risks anything from an income point of view

But I wasn't replying to that!!! This is what you originally wrote:

1. De-risk invested capital from a single-share investment to a much broader income-related Investment Trust.

The capital is now spread around a broader sub-set of investments, and it"s also not now UK focussed, given JETI's broader, europe-market remit.

The capital is now also generating income from that broader underlying sub-set of JETI investments, rather than a single MRW source.

The income generated is also benefitting from the natural smoothing effects of the JETI "dividend cover' policy.

The chart shows a less volatile income-IT income than single-share HYP income, and over the medium term I am wanting to continue to head in that direction, and this MRW trade is one more step towards that goal....

Cheers,

Itsallaguess

[simoan]

I was replying to your post that said you don't understand how my trade out of MRW de-risks anything from an income point of view

But I wasn't replying to that!!! This is what you originally wrote:

1. De-risk invested capital from a single-share investment to a much broader income-related Investment Trust.

The capital is now spread around a broader sub-set of investments, and it"s also not now UK focussed, given JETI's broader, europe-market remit.

The capital is now also generating income from that broader underlying sub-set of JETI investments, rather than a single MRW source.

The income generated is also benefitting from the natural smoothing effects of the JETI "dividend cover' policy.

Cheers,

Itsallaguess

You are also now invested in an instrument that charges you an annual management fee of 1% (unlike MRW) and sometimes, I believe, cheats and pays its dividend from capital - this is just my recollection of seeing a thread on TLF some time ago, so could be wrong. If so, that's as bad as being invested in BP and RDSB the past 5 years! You can call it income if you want but as we have found out, it is not sustainable in the long term and now both the capital and income has decreased a lot.

As long as you are happy with your decision that's fine, but just think of the extra income you may have got if you'd waited a few months, maybe? Who knows what will happen in the future but how will you feel if MRW gets taken out for 270p? You have practiced a form of market timing by making the switch, and not really achieved what you think you have (unless MRW was a significant single company holding). Sorry, but sometimes the best thing to do in these situations is nothing.

All the best, Si

[Itsallaguess]

You are also now invested in an instrument that charges you an annual management fee of 1% (unlike MRW) and sometimes, I believe, cheats and pays its dividend from capital - this is just my recollection of seeing a thread on TLF some time ago, so could be wrong.

An income-IT paying a dividend that's captured from underlying dividends and/or underlying capital growth feels like a step towards the very TR-based approach that you prefer though, and is an approach that I'm actually quite happy to utilise for some areas of my overall income-strategy....

I take your point on the management fees, of course, and that's a concious decision as to how much hands-on work investors want to carry out over the long term....

I also take your point on this being a 'timing-based' action, but it's one that ticks a lot of personal boxes regarding the overall preferred strategy that I want to head towards, and is, for me, an opportunity to take another step along that road...of course I continue to wish good luck to all MRW holders - that goes without saying....

Aren't markets brilliant - it's almost as though there's lots of ways for us to satisfy our own individual requirements....

Cheers,

Itsallaguess

[simoan]

You are also now invested in an instrument that charges you an annual management fee of 1% (unlike MRW) and sometimes, I believe, cheats and pays its dividend from capital - this is just my recollection of seeing a thread on TLF some time ago, so could be wrong.

An income-IT paying a dividend that's captured from underlying dividends and/or underlying capital growth feels like a step towards the very TR-based approach that you prefer though, and is an approach that I'm actually quite happy to utilise for some areas of my overall income-strategy....

I take your point on the management fees, and that's a concious decision as to how much hands-on work investors want to carry out over the long term....

Cheers,

Itsallaguess

So you're making a TR investment through the back door then, not an income investment! That's fine whilst the capital is growing, but as per my comments about the big oil companies, is not a sustainable long term strategy for providing income. In that regard, MRW should do much better, particularly when you take account of the special dividends.

All the best, Si

[CryptoPlankton]

So you're making a TR investment through the back door then, not an income investment! That's fine whilst the capital is growing, but... ...is not a sustainable long term strategy for providing income.

All the best, Si

Surely the same can be said for any "TR" investment, in which case, you seem to be saying that TR investment is not a suitable strategy for providing an income. Or are you just saying you are able to guarantee capital growth when professional investment managers aren't?

[simoan]

So you're making a TR investment through the back door then, not an income investment! That's fine whilst the capital is growing, but... ...is not a sustainable long term strategy for providing income.

All the best, Si

Surely the same can be said for any "TR" investment, in which case, you seem to be saying that TR investment is not a suitable strategy for providing an income. Or are you just saying you are able to guarantee capital growth when professional investment managers aren't?

You've taken what I wrote out of context. I am referring to Income in the sense iag originally defined, which was quite clearly income exclusively from equity dividends, and in particular iag compared the dividend yield of MRW versus an IT called JETI. It turns out, that wasn't even a particularly valid comparison to make. To be totally clear, I wasn't referring to generating "income" from selling down capital.

All the best, Si

[Itsallaguess]

So you're making a TR investment through the back door then, not an income investment! That's fine whilst the capital is growing, but... ...is not a sustainable long term strategy for providing income.

Surely the same can be said for any "TR" investment, in which case, you seem to be saying that TR investment is not a suitable strategy for providing an income. Or are you just saying you are able to guarantee capital growth when professional investment managers aren't?

I am referring to Income in the sense iag originally defined, which was quite clearly income exclusively from equity dividends, and in particular iag compared the dividend yield of MRW versus an IT called JETI.

It turns out, that wasn't even a particularly valid comparison to make.

Can you please explain why the yield comparison between MRW and JETI wasn't valid?

Cheers,

Itsallaguess

[simoan]

Surely the same can be said for any "TR" investment, in which case, you seem to be saying that TR investment is not a suitable strategy for providing an income. Or are you just saying you are able to guarantee capital growth when professional investment managers aren't?

I am referring to Income in the sense iag originally defined, which was quite clearly income exclusively from equity dividends, and in particular iag compared the dividend yield of MRW versus an IT called JETI.

It turns out, that wasn't even a particularly valid comparison to make.

Can you please explain why the yield comparison between MRW and JETI wasn't valid?

Cheers,

Itsallaguess

Because MRW has a dividend generated entirely from free cashflow, which on five occasions in the past 3 years has led to special dividends. if you like dividends, that seems a pretty good deal. And you compared it with an investment that relies on income generated from capital sales as a handout from it's fellow IT, JETG (IIRC).

I'll be honest, I tried very hard not to respond to your original email but seeing as you are such a popular and influential member of TLF, and there are quite clearly many novice investors on these boards, I felt I had to "poke a stick" at your post. Clearly, I am not trying to change your mind about anything but the fact you'd written about it, it almost felt like you were looking for confirmation. And I'm never going to give you that

Anyway, I'm out of here. I can sense the HYP crowd are starting to turn nasty...
All the best, Si

[CryptoPlankton]

So you're making a TR investment through the back door then, not an income investment! That's fine whilst the capital is growing, but... ...is not a sustainable long term strategy for providing income.

All the best, Si

Surely the same can be said for any "TR" investment, in which case, you seem to be saying that TR investment is not a suitable strategy for providing an income. Or are you just saying you are able to guarantee capital growth when professional investment managers aren't?

You've taken what I wrote out of context. I am referring to Income in the sense iag originally defined, which was quite clearly income exclusively from equity dividends, and in particular iag compared the dividend yield of MRW versus an IT called JETI. It turns out, that wasn't even a particularly valid comparison to make. To be totally clear, I wasn't referring to generating "income" from selling down capital.

All the best, Si

With respect, I'm not sure the context is relevant, I was simply curious to know how you believe an Investment Trust which generates income from both dividends and capital growth (not sure about JETI, but another European focussed one, EAT certainly does) differs from other approaches to providing income from TR? To be fair, you are the one who suggested this particular TR strategy is "not sustainable", not me. With reference to your later post, I am not a member of the "HYP crowd", and I'm certainly not "nasty", I was just just hoping to glean some knowledge from someone who is clearly a more experienced, knowledgeable and successful investor. Sorry if I have offended your sensibilities...

[Itsallaguess]

I felt I had to "poke a stick" at your post.

Which is absolutely fine, and thanks for doing so in a relatively fair and balanced way. I very much value your views Si, and I hope there's nothing in this thread that would suggest otherwise...

I also hope there's nothing fundamentally wrong in what I'm trying to achieve here with my position on this, on a number of slightly different fronts at the same time, and I don't think there's anything that you've challenged me with that stands up to enough scrutiny in relation to my own requirements that would prevent me from doing what I've done again.

I did find it funny though, that you stuck with a TR-based recommendation, and then turned your nose up when considering that some of the income being delivered from some of these types of income-IT's might well be generated from underlying, TR-based processes - that smacks a little bit of wanting it both ways to me, and on the face of it doesn't make too much sense...

The disappointment has also been that there's a tendency to lump everyone into the 'HYP' camp who ever wants to even talk about income-investing around here, and I absolutely don't think it's helpful to do that, and I do think it's a major source of friction with these types of discussions. It's done so often that one wonders if it's actually done on purpose...

Anyway, I'm out of here. I can sense the HYP crowd are starting to turn nasty...

See - there you go again....

Cheers,

Itsallaguess

[simoan]

I did find it funny though, that you stuck with a TR-based recommendation, and then turned your nose up when considering that some of the income being delivered from some of these types of income-IT's might well be generated from underlying, TR-based processes - that smacks a little bit of wanting it both ways to me, and on the face of it doesn't make too much sense...

That's because we are talking at cross purposes. When I mention TR investing I am referring to it at the portfolio level, not the individual investment level. There are two phases to TR investing:

1. Growth phase - you build portfolio value by a combination of capital growth and any re-invested dividend income. You select investments using a balanced aproach without the sole focus being whether they individually generate high income, or not. You simply NEVER SELL capital to generate income in the growth phase in the way JETI/JETG do to pay out income.

2. Drawdown phase - You take dividend income and sell capital as necessary to meet your lifetime "income" requirements. In the drawdown phase the capital only has to be sustainable enough to see out your days, pass on whatever is left to your children, or achieve any other financial goal you may have. It does not have to be long term sustainable in the way that you'd hope an Investment Trust like JETI would need to be.

There is lots of information available on Total Return investing if you and CP would like to learn more! I realise it feels a wrong-headed approach to many who believe they have to generate income only and hope they get some capital appreciation in the process. However, as someone that has run a model HY/Income portfolio alongside my real investments for several years, I know it is a high risk, low return strategy to focus purely on income, and not the total return.

I realise that won't go down well with some, but I suspect many that profess to be income only investors do not have 100% of their investments in that strategy anyhow, and so are in effect TR investors. I suspect it's only a real hardcore who state they are not interested in the capital value of their portfolio.

All the best, Si

[88V8]

...In the drawdown phase the capital only has to be sustainable enough to see out your days...

How many days is that, precisely?

I suppose I practice TR, in that I generally try to use my CGT allowance.
It is also true that there are tax advantages, at present, as regards dividend and capital gains rates. But when CGT was 40%??

And relying on TR in a bull market is no doubt viable provided that one is not selling off one's dividend stocks.
But in a bear market?

One way and another TR seems to me an unreliable way of eking out insufficient capital.

As regards Morrisons, they were a Luni 'sturdy' once.
Another example of the fallacy represented by the 'forever' share.

V8 (holds, fttb)

[Itsallaguess]

There is lots of information available on Total Return investing if you and CP would like to learn more!

I realise it feels a wrong-headed approach to many who believe they have to generate income only and hope they get some capital appreciation in the process.

But I actually think the wrong-headed approach is to assume that all income-investors really do 'believe they have to generate income only' - I'm personally quite happy that I don't actually *have to*, but I think I'm quite within my rights to actually *want to*, for whatever personal reasons are important to me...

So yet again, the debate starts out on the wrong foot, with someone on the TR side trying to insist that they're carrying out some sort of 'White Knight' mission, having to 'convert' these 'mistaken souls'....

I'm not mistaken - I completely understand where you're coming from - in the same way as you might try to convince me that running faster might burn more calories than the jogging exercises that I might prefer to do - I wouldn't dream of denying that you're *right*, but that wouldn't necessarily mean that I'd be wrong to stick with what I actually prefer to do....

However, as someone that has run a model HY/Income portfolio alongside my real investments for several years, I know it is a high risk, low return strategy to focus purely on income, and not the total return.

And again, I think the wrong-headed approach is to automatically assume that *all* income-investors automatically seek to invest in the HIGH-YIELD areas of the market, where in actual fact, many here are quite happy taking a relatively lower income-return, from investments with a good, long-term record of delivering lower, but hopefully regularly rising, but importantly *dependable* income-returns...

I think there's plenty of middle-ground that lots of TR and income-investors could agree on within these boards, and it amazes me when that middle ground is persistently, and what seems like *wantonly* ignored, with people constantly wanting to isolate themselves far off on one side or the other of this type of debate, and I hope you can perhaps see that the two common examples where you're wanting to do that in the above sections is perhaps not as helpful as it might be, and actually ends up creating exactly the types of regular arguments that you yourself have earlier condemned.....

Cheers,

Itsallaguess

[simoan]

...In the drawdown phase the capital only has to be sustainable enough to see out your days...

How many days is that, precisely?

Quite obviously, it depends how old you are at the start of the drawdown phase, but a drawdown rate of 3% per annum has proven to be safe and sustainable in long term studies. All I know for sure, is that if I had followed an income based strategy, rather than a TR growth strategy for the past 15 years, I would never have been able to retire in my mid 50's. I'd be looking at a pot of shares that have gone nowhere in capital terms whilst delivering very unreliable dividend streams in that time. I fear we're now getting very sidetracked, so I will stop as this discussion is no longer relevant to MRW.

All the best, Si

[Itsallaguess]

...In the drawdown phase the capital only has to be sustainable enough to see out your days...

How many days is that, precisely?

Quite obviously, it depends how old you are at the start of the drawdown phase, but a drawdown rate of 3% per annum has proven to be safe and sustainable in long term studies.

All I know for sure, is that if I had followed an income based strategy, rather than a TR growth strategy for the past 15 years, I would never have been able to retire in my mid 50's.

I'd be looking at a pot of shares that have gone nowhere in capital terms whilst delivering very unreliable dividend streams in that time.

But you've used a parallel-model HIGH-YIELD portfolio to convince yourself of that, and then seem to be using the results of that model to condemn income-investors who don't necessarily reach for those riskier, lumpier, higher yields....

Go and look at the chart again.....I suspect the model you've used would look like the HYP line - and we're talking about the pink one....

I'm struggling to see how you can't see the dislocation in that approach to this particular debate...

Cheers,

Itsallaguess

[Fluke]

Morrisons has accepted a £6.3bn takeover bid from a new group of funds led by affiliates of Softbank-backed Fortress, the firm announced on Saturday.

Morrisons shareholders will receive 254 pence a share, comprising 252 pence in cash and a 2 pence cash dividend

https://www.cityam.com/morrisons-accept ... -fortress/

[88V8]

I got in at 274p, back in 2013 when they were one of Luni's sturdies.
Oh well, what with the divis it's been OK.

One less exhibit in my museum of former HYP shares, and that'll be me out of supermarkets.
Hooray.

V8

[Gengulphus]

Morrisons has accepted a £6.3bn takeover bid from a new group of funds led by affiliates of Softbank-backed Fortress, the firm announced on Saturday.

Morrisons shareholders will receive 254 pence a share, comprising 252 pence in cash and a 2 pence cash dividend

https://www.cityam.com/morrisons-accept ... -fortress/

"From the horse's mouth" details can be obtained by going to https://www.morrisons-corporate.com/investor-centre/. Once there, 'hover' over the 'Investor Centre' button at the top of the page, click on the 'Offer from Fortress' item in the resulting drop-down menu, accept the resulting disclaimer and then open the '2.7 announcement' document.

Gengulphus

[Bouleversee]

Not much better than the first offer and still way too cheap i.m.o. I paid 276p ages ago so not thrilled, esp. as is in my ISA.

[BT63]

My understanding is that the board has recommended the offer and it will be put to shareholders for a vote shortly.

Meanwhile, what happened to the first bidder?
And will yet another bidder emerge?

This might not be over yet.