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john brace
Posted: 18 September 2017 08:25:59(UTC)
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I can't get over the idea that Vanguard funds are essentially trackers and therefore 'brainless'.They will drop with the markets.

As someone who can't follow individual shares permanently - even though I accept they can give by far the best returns I am happier paying a good IT manager to make the decisions to change investments as and when.
I am gradually sorting out the wheat from the chaff - should have piled everything into SMT years ago

2 users thanked john brace for this post.
Mickey on 18/09/2017(UTC), Keith Cobby on 18/09/2017(UTC)
King Lodos
Posted: 18 September 2017 08:39:38(UTC)
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Captain Slugwash;51209 wrote:
King Lodos;51197 wrote:
If you want simple income nowadays, you could buy Vanguard's FTSE UK Equity Income Index:
http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-ftse-uk-equity-income-index-income

HSBC Holdings PLC (UK Reg) 5.34%
Vodafone Group 5.16%
Lloyds Banking Group 4.76%
BP 4.67%
Rio Tinto 4.63%
British American Tobacco 4.62%
AstraZeneca 4.53%
GlaxoSmithKline 4.20%
National Grid 3.52%
Imperial Brands 3.26%

Historic yield : 4.49%


You get Lloyd's, Vodaphone, National Grid and Glaxo, but you also only lose 3-5% if one of those companies nosedives (as opposed to losing 25% of your capital) .. It charges you 0.22% – and you never need pay a single dealing fee.


Or for only 0.07% p.a! the iShares Core FTSE 100 ETF. Quarterly dividend of circa 3.8% and similar holdings as above.

This is almost enough to draw me to the dark side.... ;0


I think the FTSE 100 would be a better idea .. Better still FTSE All World .. If companies like Amazon, maybe Tencent, are going to own the future, you don't want to plough all your money into this strange little UK index.



King Lodos
Posted: 18 September 2017 08:56:44(UTC)
#46

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john brace;51210 wrote:
I can't get over the idea that Vanguard funds are essentially trackers and therefore 'brainless'.They will drop with the markets.

As someone who can't follow individual shares permanently - even though I accept they can give by far the best returns I am happier paying a good IT manager to make the decisions to change investments as and when.
I am gradually sorting out the wheat from the chaff - should have piled everything into SMT years ago


The thing is, the average active fund drops with markets too .. They don't do any better in up-markets than down-markets .. SMT I'd expect to drop quite a bit harder in certain situations.

The idea of efficient markets is that every stock is already priced correctly for its level of risk and the return .. So in a sense, a passive stock fund is the collective wisdom of every active manager, hedge fund, institutional investor, combined .. Which is why you get stories of cats who can pick stocks better than fund managers: the knowledge is already factored into the price – and the cat actually has an advantage in that it won't gravitate towards overcrowded trades.

There's an economics class example, where the teacher asks the students to guess how many beans are in a jar .. And of course no one gets it right, but the mean average guess is usually better than 90-95% of the students .. And that's the idea of efficient markets – every fund manager is adding their own knowledge, and it's working like a giant voting machine .. I would agree, where they're dumb, is that they only usually track a single asset class .. What they don't track is when smart money moves to gold, or long-term bonds .. But there aren't many multi-asset fund managers who are very good at that either

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john brace on 18/09/2017(UTC), Guest on 19/09/2017(UTC)
Tim D
Posted: 18 September 2017 10:41:49(UTC)
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john brace;51210 wrote:
I can't get over the idea that Vanguard funds are essentially trackers and therefore 'brainless'.They will drop with the markets.


Argh; this is one of the great myths the active managers like to try and perpetuate: that when markets drop, the actively managed money will be able to deftly sidestep the worst by moving to some magical "safe haven" just in time to avoid disaster, while the "dumb" index-tracking money plunges screaming into the abyss. But all the evidence is it's complete BS.

Consider this exhibit: the passive L&G's UK AllShare Index Tracker (red) vs the active Jupiter UK Growth (green) vs. the active Ruffer Investment Company since 2005.

trustnet chart

Jupiter UK Growth is - I think - a typical active UK fund. In fact it's probably one of the better ones: I see it's in HL's "wealth 150" and I've held it since the early 90s and every time I'm tempted to sell it (its 0.9% OCF pains me) its long term outperformance stays my axe. But did all that actively managed agility help it in 2008? No it did not. In fact if I changed the chart start date to the 2007 peak its drawdown was considerably worse than the index. I think you'll find the same story for most UK equity funds back then (and the pattern repeats internationally). I wouldn't expect anything different next time we go off the rails.

Ruffer I've thrown on there as a wildcard example of a fund which did quite successfully navigate the crisis... I think they were heavily into gold or the yen or something at the time. Somewhere I vaguely remember reading an interview (wish I could find it again) with one of the managers where he basically admitted this was rather by accident and they were actually hedging against something quite different to what actually happened (to be fair to Ruffer, it might have been an interview with one of the other "permabear" trusts' managers). But they certainly didn't claim to have done it by deft market-timing footwork, and over the long term it can be seen their cautious approach has arguably held returns down (although again if you change the chart start date to 2007, putting everything in Ruffer would still look like the smart move).
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King Lodos on 18/09/2017(UTC), Guest on 19/09/2017(UTC)
King Lodos
Posted: 18 September 2017 11:21:41(UTC)
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Ruffer's *sort of* a different category of fund – in that it's multi-asset, and built to hedge against market falls (making it a hedge fund) .. I think it was the Swiss Franc that got them through 2008.

Ruffer don't market time .. On the other hand BlueCrest achieved the same thing through 2008, and they did it 50% with trend following, and 50% seeing liquidity problems and liquidating to 2-year bonds.

2008 was avoidable, but most active funds don't even have the flexibility to go to cash or gold, don't hedge, and aren't paid by investors to do that .. If you're in the UK All Companies sector, chances are you're just trying to beat the UK All Companies index – hedge funds, on the other hand, are just trying to generate positive returns (which is why, when markets do really well, everyone hates hedge funds, and forgets what they're for) .. Ruffer's proven the right way to invest since 2000, but largely because it's paid to be hedged since 2000

3 users thanked King Lodos for this post.
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Jeff Liddiard
Posted: 18 September 2017 14:54:52(UTC)
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Tony Peterson;51194 wrote:
I owe Captain Slugwash some thanks for his generous comment, and he has, in my view given the op by far the bast advice so far.

I would only differ a little from his four choices. Because our dividend haul this month exceeds the op's investable amounts, I would suggest that my choices for a 10K investment at Friday's prices would be as follows:

LBG 3800 ords
VOD 1200 ords
NG 250 ords
GSK 170 ords

This would bring in around £500 in dividends which could be added to new investments as, and when.

I have already used our BT dividend to buy back LBG at the beginning of the month at 63p the shares I sold in May for 72p
I have also replaced at under £15 all the GSK shares we sold in June at over £17.
Unless Vodafone suddenly rises back over 220p I will top our holding up further. when the SSE div rolls in.

And, skipper, I prefer NG to Centrica (but hold both) because its US operation matches its UK one in size.

And. RFE, you do need a serious sh*t detector switched on on these sites. We have many people offering you mantra driven advice which is absurd. .There is one IFA (that's a vested interest for starters), who hails from the Indian subcontinent, who with monumental effrontery describes the most successful 100 UK companies ever trading as "dinosaurs". And those who say "don't buy individual shares" (why do you think they would say that?)

I didn't get where I am today by not buying individual shares. There is, currently, no other game in town.




Hi Tony
When a company announces additional shares to be listed (as SSE below) do they usually issue them pari passu so that the additional shares going into the market don't affect the existing shareholder's value? What has your experience been when/if this has happened before with shares you hold and what is your view on a company doing this? The sp has moved down a little over the past few days which may or may not have anything to do with the announcement. Thanks.

SSE (the "Company") announces that application has been made to the UK Listing Authority for the listing of, and to the London Stock Exchange for the admission of, a total of 23,497,675 ordinary shares. Expected admission date 22 September 2017.

The total of 23,497,675 will be issued pursuant to the allotment of shares under the Company's Scrip Dividend Scheme in respect of the final dividend for the year ended 31 March 2017.

The above shares will rank pari passu in all respects with the Company's existing issued ordinary shares.
Tony Peterson
Posted: 18 September 2017 15:21:49(UTC)
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Jeff

Others may wish to correct me on this, but I don't find the practice terribly alarming. It seems to me that if a company does not have enough shares in treasury to honour its (often already overpaid) directors entitlement to bonus shares it might be necessary to create a few more. Since SSE is one of many companies that has been buying back shares (thus increasing the value of stakeholdings) I am a little surprised. (Only a little, I add).

If you look at the total number of shares in issue, making a fuss about the practice might be a bit nit-picky.

The biggest Damoclean sword hanging over the utilities is Corbyn's desire to renationalise them. That is holding the share prices of utilities back rather more than small increases in share numbers. I do not myself fret about possible disasters on the financial front - terrorism and asteroid strikes are enough to worry about. I just let numbers determine my investment choices.

SSE is currently one of our minor shareholdings. We cashed in 105K's worth at 1517 a couple of years back and piled them into Rio at prices around 1700. It seemed a good idea at the time. It seems even better now.

It will be interesting to see, though, what the numbers demand we do with our ISA RT divs on Thursday and our new SSE holding's div on Friday.

If I don't take too much flak from the trolls I might even tell you all at the end of the week



5 users thanked Tony Peterson for this post.
Jeff Liddiard on 18/09/2017(UTC), Mickey on 18/09/2017(UTC), Tim D on 18/09/2017(UTC), J Thomas on 18/09/2017(UTC), Guest on 19/09/2017(UTC)
Tim D
Posted: 18 September 2017 16:10:22(UTC)
#49

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King Lodos;51215 wrote:
Ruffer's *sort of* a different category of fund – in that it's multi-asset, and built to hedge against market falls (making it a hedge fund) .. I think it was the Swiss Franc that got them through 2008.

Ruffer don't market time .. On the other hand BlueCrest achieved the same thing through 2008, and they did it 50% with trend following, and 50% seeing liquidity problems and liquidating to 2-year bonds.

2008 was avoidable, but most active funds don't even have the flexibility to go to cash or gold, don't hedge, and aren't paid by investors to do that .. If you're in the UK All Companies sector, chances are you're just trying to beat the UK All Companies index – hedge funds, on the other hand, are just trying to generate positive returns (which is why, when markets do really well, everyone hates hedge funds, and forgets what they're for) .. Ruffer's proven the right way to invest since 2000, but largely because it's paid to be hedged since 2000


Yes I was including Ruffer (which I'm well aware isn't a UK Equity fund!) because the original poster seemed to be under the impression that simply avoiding "brainless" trackers was somehow protection against downturns. The point I was trying to make (admittedly badly) was that the way to avoid such setbacks isn't to avoid passive... it's more to avoid being purely in equities and be in something more multi-asset and/or hedged.

Thanks for the BlueCrest pointer; hadn't looked at them before; seems to be called HighBridge now... just reading their info; looks like an interesting - and more importantly successful - bunch of strategies in a single wrapper.
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Guest on 19/09/2017(UTC)
King Lodos
Posted: 18 September 2017 22:58:02(UTC)
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Tim D;51227 wrote:

Yes I was including Ruffer (which I'm well aware isn't a UK Equity fund!) because the original poster seemed to be under the impression that simply avoiding "brainless" trackers was somehow protection against downturns. The point I was trying to make (admittedly badly) was that the way to avoid such setbacks isn't to avoid passive... it's more to avoid being purely in equities and be in something more multi-asset and/or hedged.

Thanks for the BlueCrest pointer; hadn't looked at them before; seems to be called HighBridge now... just reading their info; looks like an interesting - and more importantly successful - bunch of strategies in a single wrapper.


Oh I absolutely agree – and point made perfectly.

A Harry Browne Permanent Portfolio (25% each Stocks, LT Bonds, Gold and Cash) does a similar job of protecting capital and producing positive absolute returns .. I'm also quite happy to have 10% in funds like Ruffer, RIT Capital Partners and Hawksmoor Vanbrugh, because they bring different kind of diversification to a portfolio (perspectives, strategies).

The one flaw with the whole passive investing movement is it's never been properly expanded across asset classes .. The idea only really works if you create lots of benchmarks – which you can beat – and ignore that the 'real' market return might be a lot smarter than being 100% invested in US or UK stocks

EDIT:

And should mention BlueCrest is no longer available to the public ... Shame – really great hedge fund (doing much better now it's private though – much higher returns because they've shaken off some old restrictions) ... But Highbridge took over a year and a bit back ... I don't know its track record so well, but it's another popular fund with institutional investors
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Tim D on 19/09/2017(UTC), Guest on 19/09/2017(UTC)
Tony Peterson
Posted: 19 September 2017 06:53:37(UTC)
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Jeff

Senior moment in my last post. I overlooked the fact that one of the reasons new shares are issued is for converting the dividends of those who have opted for reunvestment of their div into new shares instead of collecting their cash. Such a move does not really dilute the value of existing shares

In my view it is a big mistake for shareholders to opt for automatic reinvestment of dividends. There is usually across my portfolio one or two shares screaming out for top-ups as they are so far below the level at which I last sliced profit.

Our SSE dividends on Friday have, on the face of it, a 4% chance of ending up in SSE shares. But one of the four I mentioned earlier seems to me nearer an optimal purchase. I won't know until Friday.

You do find some risible posts on these threads - such as those who hold dividends to be a distraction. Like saying that rent is unimportant to a landlord. Or pay is not important to journalist. At a time when you can barely get a fraction of one percent on deposited cash, yet inflation running at 3%, I notice cheerfully that 8 of our 22 FTSE 100 holdings are paying five percent or more. SSE, of course is one of them. (6.3%).

Dividends should matter to a serious investor. Reinvesting them in an optimising manner gives control over portfolio growth,



9 users thanked Tony Peterson for this post.
Captain Slugwash on 19/09/2017(UTC), Micawber on 19/09/2017(UTC), Mickey on 19/09/2017(UTC), foxy ron on 19/09/2017(UTC), Jeff Liddiard on 19/09/2017(UTC), Tim D on 19/09/2017(UTC), andy mac on 19/09/2017(UTC), Money Spider on 19/09/2017(UTC), RFE on 20/09/2017(UTC)
RFE
Posted: 21 September 2017 11:01:37(UTC)
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Tony Peterson;51207 wrote:
RFE

You are getting there. Unlike others.

But the principal point I am always trying to make, in trading in markets which are essentially chaotic, no one has any privileged knowledge of future share price movements.

No matter how small the offtakes of fund managers (who know the future no more than you )- this talk of "research" only means free lunches with persuasive CEOs, The talk of fund managers' "star quality" just mean "past luclk",


Well, after last weekends thought provoking Thread I took the plunge and am in...I sold off some of the chaff to clean my portfolio up. I kept some of them because I have reasons to like them. I have really learned a lot about weighting and so on from you guys and have incorporated some of it.

I took my current portfolio and spent 2 days playing with it. I started 2 Test portfolios with the same 21k initial investment (My 12k was just too small to make any real transactions on). I let 1 run passively run from 4/1/16 to date and benchmarked it aginst the UKX.TR. It did well (Bull Market, I know) but some of the shares I bought tanked...-90%, -75%. It returned about 33% or 28.5k.

The second one, I used Tony's "Quantum Mechanics" 5% strategy along with the Ichimoku and RSI signals that I normally use and the return was about 41% or 31k. I was able to cut my losses in the companies that tanked by 30 to 50% and was able to (over the 21 month period) take the small 5-8% profits and either increase my shareholding at a low point or use them to rebalance other shareholdings. In the end I was able to increase my shareholdings across the entire portfolio, and I could keep the weighting more consistent.

This kind of strategy wouldn't work for a small investor unless you had an extremely cheap (or Free) investment platform. It wouldn't be as bad if you were moving the amounts that Tony is moving, 5% of 110k is vastly different than 5% of 2k.... I see the value of Tony's method, and if I can find a platform with very low Trading Fees, I'll incorporate it into my Strategy. The most difficult thing about it is setting up my charts with lines every 5%...

Here is my Portfolio as of Today...

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Mickey on 23/09/2017(UTC)
King Lodos
Posted: 21 September 2017 12:16:59(UTC)
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Trading 212 will give you 10(?) free stock trades a month, then it's just £1.95 (or so) after that .. So you could use that for a small portfolio .. No ISA option yet though.
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RFE on 21/09/2017(UTC)
RFE
Posted: 21 September 2017 13:18:37(UTC)
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King Lodos;51285 wrote:
Trading 212 will give you 10(?) free stock trades a month, then it's just £1.95 (or so) after that .. So you could use that for a small portfolio .. No ISA option yet though.



And the range of Equities is limited...and no access to Funds, Trusts, OEIC's etc...but for FTSE Shares it's cheap. It looks like Investment Club has the cheapest "all access" platform that I've found so far.
Tony Peterson
Posted: 21 September 2017 13:38:53(UTC)
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RFE

You are quite right. My strategy works as a function of present valuations and the present tax regime. Some posters regard my holding as large, but I am sure there are plenty of others out there playing with much larger asset bases.

In my view a novice investor should do what we have done - i.e. build up a portfolio of blue chip companies at times when they are cheap rather than when they are popular. And reinvest dividends into other companies. And not be in too much of a hurry. Impatience is the biggest single cause of investor loss. LTBH for starters. And ISAs for trades.

Which is why I am able, now, to play such interesting games as putting my ISA dividend today from Rio Tinto, an investable amount, into UU. I could not have predicted that trade yesterday. But I have been able to buy back more of the UU shares I sold in May at 1033 at a bargain price of 859. That was, for me, today, this day's bargain. Tomorrow I have to work out what to do with the munifence bestowed upon us by SSE. And next week by BHP and LBG. Until the day the dividend comes I have no idea where it it will go. The chaos of the market lets me impose my own order upon it.







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Tim D
Posted: 21 September 2017 14:57:21(UTC)
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Tony Peterson;51290 wrote:
Which is why I am able, now, to play such interesting games as putting my ISA dividend today from Rio Tinto, an investable amount, into UU. I could not have predicted that trade yesterday. But I have been able to buy back more of the UU shares I sold in May at 1033 at a bargain price of 859. That was, for me, today, this day's bargain.


Something seems to have given UU a kicking this morning. Any idea what? All I can think is there was someone banging on about re-nationalizing utilities this morning on R4... 10 minute listen. The really interesting/scary bit starts 5:20 in.

Anyway thanks for the pointer. Picked some up for the income portfolio at 861p.
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Tony Peterson on 21/09/2017(UTC)
philip gosling
Posted: 28 September 2017 08:07:50(UTC)
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[quote=Tony Peterson;51205]Loddy

Tony Peterson etc
""""Loddy's posts simply betray his lack of comprehension skills. Complex analysis is a fantastic branch of mathematics which I mentioned. He said I use "complex algorithms" - something he made up. Algorithms are just souped up flow charts"""

Tony peterson Are you a rude person by choice or is it just in your nature?


Suggest you stop abusing someone and being so pompous - it is not necessary and will put most people off bothering with your advice .

Or tell me you were " only joking". .

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