I assume @PrefInvestor1 that for just the calendar year 2019 that your pure pref portfolio wouldn’t have performed better than you actually achieved?
The Observer carried an economics article today suggesting that Coronavirus may seriously damage China business productivity this year with knock-on consequences for the rest of the world. Things look worrying. I don’t think it would take much now to precipitate a world recessesion.
Frog in a tree
Hi Again @J_Westlock, Well firstly please understand that I never had a 100% pref portfolio, I was 80%+ with the rest in equities. But 2019 was THE recovery year for prefs and the following charts I think serve to illustrate how they outperformed my 14.5% gain last year. I can only chart 7 instruments, but the rest follow much the same pattern.
Firstly this chart shows the whole sorry story. The peak in 2018 (from which I thought the only way forward was down), the Pref crash in March 2018, the continued fall for the rest of 2018 and the subsequent recovery.
Focusing on 2019, as per your question, you will see that they all made 18-22% in total return terms, beating my 14.5% performance.
And looking at the last month you can see that they are all positive (averaging perhaps 1-1.5% ?), contrast that with what our portfolios have achieved. This likely accounts for my observed 7% performance difference.
That said prefs have their own problems, notably:-
- As I said in March 2018 I felt they were pretty much priced to perfection and the only way they could go was down - with the inevitable capital loss. However the income would have been maintained.
- If interest rates ever rise (as was expected back in 2018) then prices might correct quite violently. I just dont see it happening ATM though.
- Right now they are still some way off the March 2018 highs. You can see that in my final price rather than total return chart below.
- Unlike equities they provide no inflation protection. They operate in a range from 100-1xx and can NEVER progress higher than that whatever happens, unlike equities which can usually be relied on to increase Year on Year.
Still at times of negative volatilty in equity markets such as the present, I still hanker for the reliable income stream and low volatility of prefs. But having replayed the arguments to myself through making this post is is clear that I cannot afford to go back to extreme position that I held prior to March 2018, but perhaps a little more exposure would be OK…
Of course, I was forgetting the Pref Recovery… I guess there’s a good case for getting in (for those who are thinking about it) sooner than later or wait for the next XD date as you mentioned.
Thanks for all that.
I not going to top up until Jack does
55p please Antonio
Set a 55p buy here now !!!
here we go
‘’ China is to pump a net 150 billion yuan ($22bn; £16.3bn) into its economy on Monday to help protect it from the impact of the coronavirus outbreak. ‘’
going to the Toby for a breakfast in morning … retirement do love it
BUY ORDER SET AT HSBC Direct invest !!!
loving this flu
Hi Again @J_Westlock, Well prefs are investments with risks and issues just like anything else, witness the unexpected events of March 2018 and its effect on pref share prices. There can be no guarantee that investing in prefs will deliver a positive return, though they have features that potentially make them attractive to income seekers.
Anyone considering investing should do their own research and not consider any of my comments and observations as any kind of recommendation.
Hi All, Well markets have just opened and the general reaction in the US, UK and Europe seems to be “Virus ?, what virus ?”… US Futures are actually up a bit and FTSE 100 and STOXX 50 down 0.2%ish. ASX 200 more like what I was expecting, down ~1.5%, Oil down 1% too. Have to wait and see what the other markets do overnight.
I confess I find it hard to believe it will stay like this, just have to wait and see…
Indices have made a good recovery from weekend levels.
DOW up near 100 pts ( managed a quick little long in and out )
FTSE100 up about 5pts and looks like it wants to head a bit higher.
China A50 only down about 1 %, not bad.
HK down 250 pts, just 1 %, better than prior level.
Hi All, Well at this instant (06:30 on 3/2) the situation that I am seeing is as follows:-
- US Futures are all UP 0.6-0.8%
- FTSE and STOXX 50 are UP 0.2-0.3%
- HK is flat
- Australia, Singapore, Taiwan and South Korea are all DOWN 1.2-1.5%
- All Chinese markets are DOWN about 8%
- Oil is DOWN ~0.5% was more than that earlier
- Chinese Yuan is down ~1.1% against the USD, which will further exacerbate the Chinese stock price falls.
Thanks, but it’s best to always follow your own guidance/research. You’ve done well enough in the past. I’m not rushing into anything for a while yet & it’s not certain I’ll even top up as I indicated in my comments on another LLOY thread. Certainly not anytime soon after recently adding at 56.78.
I also have an eye on other stocks, for eg. HSBA on further drops as it continues testing 552 support, SBRY if it revisits significantly below 200, et al. Note, none of these for expected quick profits, though I think they’ll all be higher later on. All have been traded previously with decent results. But I’ll continue to SOH for now. - Regards. - Typo corrected: “as” not “at”.
The damage so far…
Share price performance of key UK economy facing companies since the Referendum:
Tesco + 50% (partly due to recovery after the accounting scandal)
Morrisons - 4%
Sainsbury - 18%
Lloyds - 21%
RBS - 13%
British Land - 27%
ITV - 38%
Kingfisher - 44%
M & S - 49%
Centrica - 60%
BT - 62%
Royal Mail - 63%
Capita - 86%
Provident - 76%
Dixons Carphone - 68%
Pearson - 35%
National Grid - 6%
Reckitt - 88%
Land Securities - 25%
SSE - 1%
Not to mention Carillion, Debenhams, Mothercare, Thomas cook, etc,. etc.
Yes SBK… but we’ve taken back control now… we are free… we can set our own laws… terrorism is a thing of the past… England are winning at Rugby… disease and pestilence is on the decline… and we’ll soon have chips served in newspapers again.
… and we’ll soon have chips served in newspapers again.
…hopefully not the Daily Mail!
Yes, an interesting article.
I’m surprised that few in the Media have noticed the obvious links between population areas that have filthy factory farms, abattoirs, and open meat markets… and those that serve as breeding grounds for deadly diseases like the new coronavirus, SARS, bird flu, swine flu etc.
Eating animals is both appallingly unethical as well as threatening to the health of everyone.
I predict that now the RW , tax dodging owners of the Press have succeeded in their coup they won’t bother to print anymore anti - immigrant stories and mugs will think that migration has actually stopped due to Liar Johnson! But remember these:
I seem to recall that my fish & chips as a kid in the 50’s always tasted that much better when wrapped up in inside pages of the News of the World.
Will the elf and safety mob ever allow us to once again eat out of that newspaper or, indeed, any other newsaper I wonder?
Yes of course. Thanks again for your first -hand info on prefs. Obviously, I can look this stuff up… and some I knew already as they are similar to bonds in many ways… but it’s good to see what real investors in them have to say.
Frankly, prefs are at the lower end of the risk scale of what I;ve been doing to protect my wad but I am increasingly going to need to find a more secure income source as my work dries up.
I see that GBP is 4% down now against the $ since end of Jan; it would appear that market concerns over a hard Brexit are well and truly back… which is going to reflect on UK share performance for at least the rest of this year… and almost certainly for the next several years.
Those who wanted Brexit done… have been done.
FX options have been good for me thus far… but ultimately I’m well aware this is gambling… but then even doing nothing is gambling but for some… they just don’t know it.
That’s because they were probably cooked in lard and because you had some taste buds back then as well as some grey matter.