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lse:lloy

#21

For someone who likes to hold their shares for a period of time as opposed to trading its difficult to understand how you could have lost on FB.

I built my original position in 2013 paying round $26 avge (now valued @$22 with fx moves, posted live on the old iii boards) and still hold a couple of tranches from then with my last tranche sale c.1 yr ago @$199. Hard to characterise as a ‘gamble’ in the above, although buying once more established as I have done now is obviously more for a trade than a long-term investment. If the above graph turns into a ‘double-top’ I will have already sold and made my 10% comfortably.

Why did I buy them in the first place? Their IPO was a disaster, a bit like Uber, because just as they floated mobile advertising became all the rage and FB had none at the time of their first (?) earnings report. 3 months later they were the world leader in mobile advertising. Management execution of that quality has to be worth backing, imo.

I wish I hadn’t unloaded a good portion when they massively overpaid for Whatsapp ($19Bn) … hindsight shows us that it was a good deal. Underestimate Zuckerberg at your peril is my take-away from that experience.

As for the ‘scandals’ I believe much of it is overblown, although that may not matter in the current light of political and regulatory opinion and the internet’s enabling of ‘populism’. But then it was always only a matter of time until this sort of thing had to be addressed and I’m sure FB (and others) have been aware of that. Indeed, there are good reasons why such companies aren’t exposed to China…

Its a good job the postal service or the telephone companies were never held so responsible for what people talked about while using their infrastructure. I often wonder what people would have said if E.g. laws were passed requiring BT to listen into all telephone calls and report any content that the government/police don’t like. Yes, some ‘heavy breathers’ would have ended up behind bars, but it would have been an awfully big price to pay, wouldn’t it?


#22

Hi @eadwig, Well I managed it quite easily, had a couple of goes at FB but both in that downtrend period after July 2018 on your chart. Sold out at 5% down both times (for fear of it getting much worse). Only small sums involved but it has just confirmed my aversion to putting money into these non dividend paying, USD currency sensitive and expensive overseas stocks (due to the brokers 1% currency charges).

However its the same instincts at play in this case that saved me big numbers on getting out of Vodafone and a few other stocks, so I have no plans to change what I do. Just re-inforced my personal view that investing in ANY of these big US growth stocks is not for me.

ATB

Pref


#23

Yes I understand. I think I’ve said this to you before. I believe everyone should have some stake in these companies that look set to rule much of the global commercial future. If they don’t suit your personal style of investing then I would recommend a tranche or two in SMT Scottish Mortgage Trust which is a good way of having a small stake in each of these companies and spreading the risk.

Of course, if you’re only interested in dividends then that wont do it for you either.

Funnily enough a lot of my largest losses in recent years have come from companies like VOD (currently losses on paper only), HSBA (manged to trade my way out), FGP (took a large loss), CNA (traded my way out by the skin of my teeth gambling on a general election outcome), NG (basically gone nowhere in about 6 or 7 years), RDSB (traded my way out), BP (traded my way out ), RIO (took a large loss, moved the same cash into growth funds and made the loss back plus much more), BARC well under water and dividend slashed many years ago …

I could go on with several more examples if i even glanced at my old records. Are the big dividend payers worth it ? For me the answer is ‘only if they are volatile enough for me to be able to trade the position until it is yielding 15% or more’. Even then VOD right now is a good example of how that can go wrong.

There’s no question that the vast majority of my profits over the last 25 years have come from growth companies and on balance the high dividend payers (i.e. 4.5%+) have generally been far more trouble than they’re worth.

Take Centrica as an example, just like VOD, they lost value from the share price then have the cheek to slash the dividend and call it ‘re-balancing’ (I think VOD called it). I.e "well, we’re accepting the current market valuation and cutting our dividend to suit. I was especially sickened by companies whose earnings were unaffected by the financial crisis but whose stock price was dragged down by the whole market. There were some very greedy ‘re-balancing’ of yields back then.

To get back to my example, say you are 66% under water (very feasible with a ‘safe’ utility such as CNA bought well off its highs) it will take years of dividends just to break even, with probably no chance of ever regaining your original capital in actual fact.

So yes, very much horses for courses. There is a world of difference, or should be, in the approach to stocks between, E.g. someone looking to preserve their capital wealth (you only need to get rich once after all) and someone who largely lives off trading profits from year to year (like me).


#24

I only pay about a tenner a year for my pay as you go … but then I’ve got no mates.


#25


#26

Hi @eadwig, Well you sound like you have been very unlucky with your dividend stocks. Especially with the likes of RDSB & BP paying ~145p and 32p per annum (with no substanial changes in living memory) on a Total Return basis holding these for 10 years would net you £14.50 and £3.20 per share, so youd have had to see an enormous drop in the share price to lose money on these stocks.

The utilities sector (NG, CNA, SSE & UU) has been far more troublesome as have housebuilders (PSN, BDEV, TW, BKG etc.) I am completely out of all these now, though am holding a few ETFs that in turn hold them in a more diversified form.

As I’m sure Ive said to you before, I start getting nervous about any holding that is between 5 and 10% down (in Total Return terms) and at 10% down I review it an either a) sell and invest elsewhere b) average down or just occasionally hold a bit longer to see what happens. But also late last year I got rid of most of my single stock holdings and am now mainly invested in Investment Trusts and ETFs (but note no OEICs or UTs.) I have a very few single stocks left (BP, RDSB, GSK, AV, LGEN & HSBA and thats it), no plans to invest in any more single stocks for the forseeable future.

ATB

Pref


#27

Soi

Bowman’s graphs shows Lloyds volatility greater than the FTSE.

Buy as long term holding but keep offloading with say 2p profit with intention to buy back cheaper.

Even better buying back cheaper than the purchase price of the previous one sold.

Do this numerous times and should make more profits than buy and hold.

Sub 60p is a good to buy.

White_Rose


#28

Easy to say about holding RDSB and Bp for 10 years, but by your own terms (laid out in 2nd quote) you almost certainly would not have done:

That is almost a 40% over a year at the beginning of the chart in 2015-16 - certainly within living memory! A BP graph will look similar.
I think RDSB were @1800 when I first bought them, assuming I held them for 10 years and made 14.50 per share, that is a mere 80% or 8% per year, which isn’t enough for me.

Contrast with PSN 800% over 8 years (inc. dividends), BDEV 600% over 5 years (other housebuilders very similar figures). US growth companies FB $700% over 6 years, BABA 180% over <3 years and obviously I could go on.

At the end of the day its the difference between making a living or preserving capital, but as I said previously it all depends on an individual’s circumstances and investment goals.

Also, I would add, I think it is much harder than it once was to buy and hold a ‘blue chip’ and be comfortable about that approach. The latest announcements from the Labour party will no doubt underline that in the markets over the next day or two.


#29

Hi @eadwig, Well a few comments on your last post:-

  1. Thats a share price chart and not a total return chart. Over 3 years at 5-6% thats a difference of say 15-18% on your chart.
  2. What you say about my approach would be true had I bought at todays prices, which of course I didnt. I bought most of my Shell at about 2000ish.
  3. I am quite happy with 8% pa !. Better than 1% in the bank :unamused:.
  4. My list of single stocks (following my 2018 cull) now contains only those stocks that I have decided that I am content to hold more or less whatever they do. And should they fall my most likely action would be to buy more.
  5. Looking at my investment spreadsheet my (total return) gains on Shell (and in fact all of my single stocks except HSBA) is in the mid 20%. Not as good as your mega gains on some of your investments but I’m quite happy with that.

You are correct in saying that my strategy is about capital preservation, but also compounding and recycling of dividends.

Well with your stellar profits plus your recent inheritance you must be doing really well then !.

ATB

Pref

PS I would agree with your comment on the Labour party and their nationalisation plans. (NG results out today btw and not good, profits down, EPS < dividend). NG, UU, SVT, SSE & RMG oh yes and VOD all down today - but nationalisation not the cause in VODs case. Glad I exited these stocks long ago myself.


#30

The trouble with my recent inheritance is a) I still haven’t been given control of the stocks in it by the executors and b) it is a buy and holder’s portfolio full of the likes of CNA, SSE, NG - all of which needed to be sold by the executors as soon as they had control, but haven’t been. Also PSN, BDEV, and other builders, which should have been sold at the end of the cycle.

40% IHT was paid on all these at their value well over a year ago. TCG has been particularly painful. Buy and hold forever worked very well for my dad over 35 years or so, but mostly on the giveaway privatisations. Unfortunately, he didn’t think ahead to IHT, or possibly wasn’t really bothered. As he said, “it wont be my problem”, when I tried to give him sound investment advice about not keeping all his savings in a volatile stock market despite being over 80. He said the same past 90 too. His cash though, so what can you do?

The profit figures I stated can be misleading. E.g. I built my housing position in RDW, PSN, BDEV between 2010 and 2012 ready for the next cycle. I take profits as they become available. You never know, E.g. some idiot might call a referendum on the Eu and slaughter the housing market just when you think your sitting pretty.

So in the example above where all 3 will tend to move pretty much together with the sector, I would take back 100% once seen in BDEV. If you think about it that has halved potential returns in that stock already, so its debatable if it is a good move but it is the disciplined move.

Then, if I remember correctly, RDW were taken-over, so I took the offer price (as opposed to waiting 6 months for it all to go through) which was around 166% profit from memory.

Next tranche sold was BDEV for around 250%. I always hold PSN longer because they pay divis earlier in the cycle and at a greater yield throughout the cycle.

I think I sold another tranche of BDEV @350% and the final one at 450%

PSN was then sold as the market was still rising with the first sale probably around 400%. I’m not sure, but it was all posted live at the time and RDW T/O complicated matters. I can easily check on my final PSN sales because they are is posted elsewhere (not just on the old iii boards). I include this because anyone can talk about multi-baggers but its pretty meaningless if you din’t post your original purchases ‘live’.

“Post by Eadwig on 5 Oct 2017 at 14:51
Sold half my remaining PSN holding @2699p today. Approx 780% profit inc. divs over 6-7 years. Will buy back in my ISA when the big correction finally arrives …” [still waiting for that]

Post by Eadwig on 24 May 2018 at 12:11
Sold the remainder of my PSN this morning for just over @2800p. I built up this holding in 2010/11 at an average of @407p.

Averaging UP on this holding, something I am usually loathe to do, was possibly the best investment decision I ever made.

Of this last tranche I received @610p per share in dividends (so total 3410pps return or approx 833% over 7 years), and if I’d waited another three weeks there is another @110p due per share. That same payment is also timetabled for 2019, 2020 and 2021 (plus interim divs which were @125pps this year, up from 25pps last year). "

There you are you see, we’re polar opposites as investors. The profits taken over a total of 4 tax years illustrated in the housebuilder example above are taken from my account (as will ALL profits) at the end of each tax year. That is pretty much what I live on these days.

Dividends (there aren’t many usually given my preferred investments) are taken at the end of each month as pocket money.

A little dig there for some reason. I’m 25% down in VOD but it is only in my SIPP which is pretty irrelevant. If I lose everything in my SIPP it doesn’t really matter, its about worthless so I will either double/quadruple it in very quick time or lose it. The irony is VOD was the steady dividend paying base, supposedly, and once again I’ve been let down by same.

I’ve been retired over 20 years now and done very well without a pension - if such a thing still exists when I get to that age all well and good, but I’m not in anyway reliant on it.

8% p.a. is fine if you can live off 5% above inflation. I need my capital to work harder than that - that was the point of making it, so it could work for me rather than spend the best years of my life working.


#31

Excellent post. These US growth companies consistently beat on top and bottom line quarter after quarter which is why their share prices are in the $100s


#32

I do think all serious investors should have some exposure to them. I had early on and then took profits and they just kept going. rather than think I’d missed the boat I went back and bought more when the market gave a discount - as has just happened.

My two recent buys in the last few days on FB @182 and @179 are for trades only though. There is a point where you start to get a nose bleed with the valuations, plus I still have more stock bought in 2013 in FB than the tranches I just bought. (average on the 2013 holding is about @$26, but the GBP bought a lot more back then. The recent tranches were paid for in USD, which is good given what happened to GBP since I bought on Tuesday).


#33

Hi Again @eadwig,

Sorry if you took my VOD being down as a dig that really wasn’t my intent - I was just trying to be topical in respect of significant events on the day.

My view on investing in US growth stocks (AAPL, AMZN, FB, GOOG, TSLA etc) is never going to change, they just aren’t for me. Clearly they have done well for you, and I’m pleased to hear that. But I have had about three different attempts at investing there and always come away with a loss.

I just might consider putting some money into Microsoft who seem to have been a far more stable and consistent performer, and who pay a quarterly dividend I believe. I’d be even more likely to invest in the likes of dominion energy given their dividend performance or Brookfield property REIT (BPR) if their SP comes down a bit more. But at the end of the day investing directly in overseas currency stocks carries a cost at my broker so I am disinclined to do it. And there are plenty of good performing ITs to choose from, more than enough to satisfy my investing needs.

ATB

Pref

PS I guess I feel most comfortable with steady performance and confident that compounding via reinvestment of dividends will be a successful strategy. Whereas going after outperformance and investing in things that give you nothing if the market falls just seems to me to be risky. It can result in stellar gains I’m sure (as you have demonstrated) but if one was unlucky it could produce stellar losses too.


#34

I did a piece on Dominion Energy recently a stock I have been in and out of for perhaps 15 years or more now. Its on the BARC+ board but I can copy it over if you like. There is a single caveat you need to know about if you’re considering them.

Microsoft do pay a good dividend by U.S. standards. They’re not really a growth stock though and when I bang on about my thesis of tech/media companies ruling the world in a few year’s time, I always hesitate to include them as a possibility.

Like I said before SMT is a pretty good proxy for growth stocks that spreads your risk and has a very good track record and part of the FTSE 100 so easily tradable to build a position over time if you so wish (we’ve had so much growth in markets for so long I’ve been wary about buying into existing stocks for a couple of years now … but then we’ve never had such low interest rates for so long so who really knows at what point we’re at in the business cycle?

TSLA was too wild for me, I was happy to get out with a reasonable profit even though I believe in Elon Musk, but the volatility was madness. Much happier holding it in SMT, spreading the risk, where that volatility is someone else’s problem.

Buying international stocks with the new ii set up is actually much cheaper if you have the currency in hand (the 1% exchange rate is worse than before but you only pay it twice, up front at first then whenever you cash out into GBP, if ever). The new charging regime at ii, starting June 1st I think, is going to lower the charges further, including international.

Holding the foreign currencies is a comfortable hedge against GBP being slaughtered (more) by a No Deal Brexit.

I’ve had mixed results with REITs (also used as a dividend base in my accounts). I never invested in one until maybe 2015 and then I had a go at a few with mixed results. My experience has been that continued IPOs tend to hold capital appreciation down and once all money is in play with no new IPO planned, managements can sometimes start messing about and screw it all up, instead of just banging out the quarterly divi they promised in the prospectus.

My most recent dip into a REIt was LXi which looks very reasonable with long term commercial contracts with ‘raise only’ rent reviews etc etc. Supposed to pay 5.5pps once established, which is what it is doing now, with a promise to raise the divi by a minimum of RPI each year.

I bought @100p in the first IPO and then added in the second to average @10425p. The draw back of getting in on an early REIT IPO is it takes a while to get the cash in play so you don’t get a full return straight away.

I recently hit a situation where I could sell half LXI @128p (I think it was - again all live on BARC+ board ) which represented 4 year’s of dividends immediately (on top of 8.25p already collected) and then on Friday I sold the other half @133.x for roughly 5 years of dividends banked now. That avoids anything going wrong and delivers the divis early, effectively. This is what I often do with higher divi paying stocks if the capital profit is large enough to cover the divi for the next 4 or 5 years .

If there is no great growth expected it seems like a good way of de-risking to me. You need somewhere to put the cash though or it is a bit pointless.

I only retain one REIT (having taken a premium in BBOX a few months ago) and that is PRS, a build to rent REIT which has hit some problems establishing itself. It is underwater by about 1 year of dividends which is very annoying because most REITs don’t have a lot of volatility in the share price so its a case of taking the loss and moving on or leaving the cash for a relatively low yield and hope it comes good slowly over time.

On the whole, this idea of a ‘sound, dividend paying base’ for my accounts is not really cutting it for me. I’m much better at picking growth stocks with plenty of upside potential than buying, for example GSK (I noted you are holding that) when it had 3 new potential stage III ‘block-busters’ in its pipeline. All of them failed (very unusual for a drug in expensive stage III trials) and left me underwater with nothing much in the pipeline to come so that was another one I exited with a small loss, even including dividends gained (which I don’t usually include in my posted figures unless mentioning them specifically).

Perhaps I’m a bit touchy on the subject. I bought a tranche on Friday (knowing it was a gamble) and when the divi cut was announced and the stock fell, I managed to be at my screen when it bounced back to @135p I tried to unload all and got an error, but didn’t realise it was only because the last tranche hadn’t cleared.

I could have sold the bulk of the holding and then put them into FB later that day (on top of the two tranches I did buy). I’d now be 5% up (with fx rate changes - they would have been bought with GBP proceeds from VOD) instead of a further 6% down with a VOD holding which is going nowhere (I believe).

Of course the opportunity to take VOD at that price disappeared by the time I realised what had happened, and the generous market discount being given on FB at the time has gone too now.

I needlessly missed the opportunity. So bit of a sore point!

Anyway - off to look for another !

Good luck


#35

That does happen of course, or more often something just doesn’t play out and you withdraw with a small profit or loss. You don’t need many multi-baggers to cover a lot of chances at finding another though, including affording a more or less 100% loss or two.

For me, the UK housing cycle I’ve ridden through 2 booms now, and I can’t understand people not playing it really. Lots of people avoid it, including professionals (funds etc) after the credit crunch, but I think its a gift so long as you take profits as you go and don’t get too greedy holding too long.

The real stellar growth only lasts about 3 or 4 years, if you look at the past cycles, including before I was invested, so there’s plenty of warning to get out in time. Just don’t be lulled by the high divis towards the end …


#36

Hi Again @eadwig,

Not enamoured by SMT much either, for the same reasons as the growth stocks (though it is at least priced in GBP so doesnt suffer from my brokers currency charges). I see that they are likely to increase their stake in TSLA, see link:-

Not impressed with TSLAs prospects myself, so another reason to keep out of SMT.

Personally I am far more interested in buying into the upcoming offers on UKW & SEQI, both of which I hold already. Far more my style…!!

ATB

Pref


#37

@PrefInvestor1 That piece on Dominion Energy - I already posted it here and you have seen it. Bit worrying I had forgotten that!


#38

Yes @eadwig, It was following up in your post about D that got me interested, well maybe…!

ATB

Pref


#39

Yeah, thought it was a coincidence you had brought them up!


#40

Yes @eadwig, I did pay attention to what you said about D, and did some research of my own and have it (and their prefs) on an investing.com watchlist.

But as to putting money on it, thats another matter…!. As Ive said to many people many times if I could stick all of the cash in an old fashioned savings account and collect 5% pa interest then Id give up the stock market in an instant. So I am drawn to boring, reliable, steady investments that pay a good dividend, rising annually with RPI is nice too (which you tend to get with renewable energy investments). Hence I find UKW and SEQI and SWEF and the like very much to my liking !.

ATB

Pref