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Portfolio Positioning For Brexit Vote

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lse:bta
lse:hsba
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#221

Hi macbonzo and Pref,

Just to clarify a few things:-

The shares were initially allocated to us at 883.75p per share, and we sold the first block for over £10 per share.

Since then, by taking advantage of the Rights Issue and opting for some scrips, the average “cost” per share overall is very close to the current market value - which means that the average “cost” to us (for the Rights Issue and scrips) is considerably lower - just under 515p per share.

As we are far more interested in the future income stream than capital growth, we are not too concerned by fluctuations in the share price.

HSBC is currently in a transition period with the three most senior Group management positions changing hands recently / very shortly.

Hopefully, there will be significant improvements to come in due course - it would be great to see both the share price increase and the level of dividend raised from the current 51c.

Regards,

Steve


#222

Hi All,

Well a huge reaction in US markets to a 0.25% hike that was already expected by everyone (I thought) plus a promise of fewer hikes next year. Dow went from 300 pts up to 350 pts down by close of play.

Another surprising thing was the extent of the reaction in the FTSE and STOXX 50 which both dropped 1.5% likely wiping out today’s gains tomorrrow ?. Oh well got a couple of pretty optimistic limit orders in place on AV and LGEN maybe they might get filled tomorrow.

Pretty clear by the look of it that its not brexit that’s driving the market right now. Just us reacting to the US craziness. That’s my guess anyway FWIW.

ATB

Pref


#223

Well Steve,

Again if I have understood you correctly then it sounds like the “investing” that you have actually done (the Rights Issue and the Scrips) has earned you ~£1.25 a share at todays 640 figure) which from what you say has just earned you enough to make up for the losses on the holding you were given. Hardly a stellar performance over 20 years ?. But you have the income obviously, except when you are investing it in scrips.

But as they say you have to speculate to accumulate……

More “paper losses” for us all today. I bought back the other half of my AV. and LGEN on the dip and they should both now deliver a yield of over 7%.

FWIW I still think HSBA is the best bet amongst the banks and have kept my holding. One of only a few single stocks that I have kept.

Off to the shops now to support the economy……

Regards

Pref


#224

Hi Pref

Totally agree with you.

US markets have a significant influence on others including the UK.

I think trading volume fairly thin also some big funds might want to reduce their book pre. holiday.

Hope you are able to pick up some of your investment choices.

ATB

soi


#225

Hi Pref,

Hope you enjoyed your shopping trip - we had our excursion into York yesterday afternoon and early evening, including the supermarket. (where we found several good “end of day” bargains.

With quite an extensive (and expensive) Christmas market in one of the main city centre streets, it certainly looked and felt very festive, and plenty of money (both cash and card transactions) was changing hands.

With the shares having recovered a bit since the stock market opened today, our gain per share (on what we have “invested”) is currently more like £1-35, or just over 26%.

What is more important to us, is that we have already more than doubled the number of shares we held - after selling the first 20%.

That was our initial long-term target, but when the Rights Issue came along, we decided to aim to double the total number of shares we were left (i.e. before selling any).

We are still not quite there, but it is just possible we could achieve that by the end of 2019 - depending on scrip price, exchange rates and how much cash dividend we would like to receive.

You recently mentioned that you had a break from investing in the stock market - “having retired hurt after 2008”, so how big (in percentage terms) was your loss, where did you put (what was left of) your money in the meantime, and have your “new” investments more than made up for those previous losses?

We certainly have no regrets of continuing to hold and gradually accumulate, even if the progress to date (in terms of capital growth)is not as good as could have been obtained elsewhere, but our current yield (on what we have “invested”) is now over 7%.

The yield on the Rights Issue investment is over 14%, and the shares have more than doubled in value since then, and we have also replenished the other funds we raided at the time (plus interest lost) by taking cash dividends.

Apart from buying our first house when we did (and subsequent moves), the Rights Issue is probably the best serious long-term “investment” we have ever made.

Dabbling in “collectibles” is fun, and I posted something earlier today which made (net) just over seven times what I paid for it earlier this year - but the initial outlay was only a couple of quid!!!

One would certainly need to source and sell a huge quantity of such items to turn it into a business venture, and, as with other investments, the value of “collectibles” fluctuates quite considerably, because “anything is only worth what someone else is willing to pay for it”.

I did, however, manage to acquire something fairly unusual while I was out yesterday, which would most likely sell (on-line) for considerably more than I paid for it, but I have no plans to list it until after Christmas / New Year.

Regards,

Steve


#226

Hi @StevesShares,

Well we went in Reading and bought a few things and had a coffee. Often combine that with a walk to get a bit of exercise, wasn’t a bad day. Shops weren’t that busy which I’m sure they weren’t happy about.

I am sitting in bed typing this in my iPad right now so I don’t have access to my investment spreadsheet to be able to give you exact answers to your questions. But in outline terms we lost about half of what we had invested in funds in the 2008 financial crisis. We just took the money out and put it in high rate savings accounts, you could still get over 5% then. In fact we had a number of those with 5 year durations which only came to an end 2-3 years ago, after which we have had to endure the low rate savings rates of today. As I recall when we went back into the market in 2011 it took about 2 years to regain the 2008 losses. But as I say that’s all just from memory.

While we are talking you have told me previously that all your shares are held in certificated form. If true I believe that you can’t hold those in an ISA so you will have to pay tax on your HSBA dividends. I’m not sure about what happens when you take the dividends as scrip, as you haven’t received any income perhaps it’s not subject to tax I don’t know. But I guess you have george osbornes dividend tax allowance as some cover but only £2,000 these days which isn’t a whole lot. And outside an ISA you also have capital gains tax to worry about. Nightmare !.

We are fully ISAd up and have been for years. Every penny invested is in an ISA so no such worries and no tax returns to do.

Regards

Pref


#227

Hi Soi - Just reading your post there, here’s a para from a fairly long article in the WSJ this a.m.
“In another potentially troubling sign, trading volumes picked up significantly Thursday, with 11.79 billion shares changing hands on exchanges operated by the New York Stock Exchange and Nasdaq. That is the third-highest-volume day of the year and marks a reversal from earlier in the month when some investors argued low volumes suggested a lack of conviction in the selloff.
“We’re seeing all types of selling; it’s not necessarily panic selling, but it’s steady,” said R.J. Grant, director of equity trading at KBW Inc.”
Just thought I would share that!


#228

Hi All,

Well Im probably paranoid but this just looks too much like what happened in 2008 to me. Continuous US selling mirrored all around the world a few percent per day, you think its going to stop sometime and it just doesnt. In 2008 I just held and held and asked myself afterwards, why didnt I just sell ?. So today I have sold all my ETFs which takes one third of my portfolio off the table. Of the remaining 2/3 half of that is invested in things that dont tend to move with the market eg prefs, debt, renewables. I havent sold those - so I am left with my single stocks and some ITs, the remaining 1/3 which can take its chance.

Its the last day before the Xmas holiday for many and I figure that many investors, institutional, traders will likely want to take their money off the table today so its not in play when they are out of the office - so I am expecting to see significant selling this afternoon especially near the close. Pure guesswork obviously but thats what Im thinking, hence selling now. And of course after Xmas we will have the brexit vote to look forward to, another reason to be out of the market.

Again if this all goes wrong it may cost me ~1% ?, but if the selling goes on it could cost me a lot more.

GLA, Merry Xmas

Pref


#229

I often wonder if there are year end trades that effect the market near the end of the year, sometimes after the year end and the new year begins you get a reversal of trend.
We will see I suppose.
Personally I feel MPs will want an end to Brexit, the EU will give one more small concession, and all of a sudden MPs will all back the deal and sign it off, no more democracy demolition talks of another referendum etc, and maybe it will be to cold to provoke a yellow vest protest.
I’m staying in.
But I always do so that’s not really a surprise. I have some powder dry and a few investments that don’t seem to go down much.
On another note, it’s a shame BM has been booted out, without him I believe you lot will have the group thinking disadvantage of believing you are correct on Brexit.
Merry Christmas everyone!
May you all get the Brexit you want for Christmas!


#230

Hi Pref,

Although markets may well be depressed for a while - for many different reasons - the problems which caused the financial crisis in 2008 certainly do not exist to the same extent.

Although today is the last full trading day before Christmas, the London Stock Exchange will be open on Monday morning (Christmas Eve), which is also a standard settlement day - the same situation applies the following Monday (i.e. New Year’s Eve).

With reference to your earlier post, capital gains tax only applies when things are actually sold, and “top-slicing” has often been used to ensure the threshold is not breached in any given tax year.

As we have no intention to sell any of our shares CGT does not affect us.

At one time, scrip dividends were treated separately for tax purposes, but I believe that they are now subject to income tax in the normal way.

As our shares were left jointly to us both, the solicitor acting on behalf of the estate, in his “wisdom” suggested that they be split equally and held in sole names, so we both now qualify for the dividend tax allowance, and we certainly don’t receive over £4000 (£2000 each) of dividends each tax year.


#231

Treated as if you bought them at zero for CGT purposes.
Unless you have a foreign scrip divi… ie. a bonus issue of shares from a non-UK company (whether quoted on LSE or a foreign exchange doesn’t matter it’s where it resides) has zero UK income tax liability… you just need to ensure that you don’t have to pay tax in the foreign country and if they operate a scrip divi scheme then you usually won’t have to… in which case you pay not a penny in tax.
Unfortunately, foreign companies offering those are thin on the ground… but was good whilst it lasted.


#232

That is absolutely correct. There is nothing seasonal about this. The manner in which underlying instruments are taking turns puking has the stench of credit squeeze and deleveraging all over it.


#233

You just reminded me of something. Remember what a mess iii was in on 2/1/18 - nobody could buy or sell anything because their Glasgow office had taken a collective sickie? Well I hope some of you have made provisions for that. The way the VIX it might be imperative that you can access your accounts.


#234

Hi macbonzo,

As Scotland have slightly different Public Holidays to the rest of the United Kingdom, I expect the “collective sickie” north of the border, simply reflected the fact that the second of January (as well as New Year’s Day) is a “normal” Bank Holiday in Scotland.

Regards,

Steve


#235

It is, but, when people are contracted to be at work, on the 2nd, to serve the other 60 million who are not on holiday, it is shambolic. I would have shut my account as a matter of course. In fact, I did, many years ago (when it was TD Waterhouse), then contacted the Ombudsmen when they took 3 weeks to close the account. The ended up paying be for loss of opportunity


#236

Hi @StevesShares,

Well yes the LSE may be open on monday morning, but how many city types do you really think are going to be around on monday. No they will all finish today is my bet.

And I looked up the scrip tax situation over breakfast this morning and from what I could see on the HMRC site I dont think tax is due on anything you take as scrip ?. Just CGT (potentially) if you ever sell it. You had better check that yourself though as I wouldnt want to tell you the wrong thing. DYOR etc.

As I see it your situation with certificated shares seems really disadvantageous for a whole load of reasons compared with holding them in an ISA (or even better in a SIPP where they can be passed on to your family free of Inheritance Tax). But presumably you have thought about this and are doing it for some specific purpose and not just perpetuating the situation which applied when you first got the shares 20 years ago ?. Were your dividend income figures above the dividend tax allowance than the incentive to go away from certificated shares would be much higher as you would then have to pay tax on any dividends above the limit that you took as cash. But I am sure you know your own situation best.

Regards

Pref


#237

Hi Pref,

With several fully qualified accountants on my wife’s side of the family - one was a tax specialist for high net worth individuals for several years, we are aware of various tax-efficient schemes.

Transfer of assets to a spouse who survives the deceased is normally relatively straightforward, and that is where ALL our money would go in the first instance.

It starts to get a bit more complex when leaving money to the next generation(s), and even with a SIPP, I thought there were some limits to the tax-free element - such as if the deceased is over 75.

Paper certificates for our HSBC shares continue to suit us at the moment, but when we reach our revised targets, or indeed, are in danger of breaching the dividend tax allowance threshold we will consider other ways of holding these shares.

Some industries close down for a prolonged Christmas / New Year break, including much of the construction sector, where my brother works, but many people continue working right up to sometime on Christmas Eve, and enjoy doing so.

In fact, some people seem to prefer to spend time with colleagues rather than be at home - either being bored, or amid family tensions, which seem to so often exist at this time of the year!

City workers, Banks, Building Societies, Post Offices, Royal Mail and of course the Retail Sector will be working (for part of) Monday, and in this area we even have a household waste collection that day - but nothing the following week.

I did Christmas Post for a couple of years while still at school (in the sixth-form), and have worked in Banks and Post Offices, and it was the accepted norm to work (part of) Christmas Eve - unless Christmas Day was a Monday - then just two days off, before getting back to the grind!

Regards,

Steve


#238

Correct… you don’t owe taxes to HMRC on the scrip until you sell the shares and earn capital gains on them (and they treat the ‘buy’ price as zero)… unless it is a foreign scrip divi (as mentioned earlier)… in which case you pay zero tax.


#239

FTSE 100 up 0.4% at the moment. Could that be the Santa rally at last?

Frog


#240

Hi All,

Well US markets performed in accordance with my worst expectations on Friday, tantalisingly positive at one point but all US indices ending up about 2% down. The FTSE and European markets actually closed up a bit as much of the drop in the US markets didn’t happen till after they closed. By the US close IG Had the FTSE down 1% at 6640, the STOXX 50 down 1.11% at 2965 and the ASX 200 down 0.4% at 5406.

It may be tempting to buy back in on Monday as markets will likely be down after Friday, but I think I shall try to stay out now till around the brexit vote. I am guessing it will likely be a quiet week for the markets next week as no big players will be at their desks.

Have a good Xmas everyone. Hoping for a better year next year, not sure if it will happen though !.

ATB

Pref