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TJL
Posted: 14 May 2018 06:55:05(UTC)

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From a post by TP a few weeks ago:-

KL
Markets are always choppy, whether on an hourly, daily, weekly, monthly, yearly or decadely time scale.
It is why, forty five year ago I developed a strategy to exploit choppiness. which has, it appears, worked so well for me that you do not believe me.
Mind, I have to note that, if the Times a few weeks back is to be believed there is one fund that has outperformed me since 1999 at least. Just one. Marlborough Special Situations. Annualising at 19% With so many of you apparently believing that the past is a guide to the future I am surprised that it gets so little mention in these columns.
I really do wonder, seriously, why that is?
Tony Peterson
Posted: 14 May 2018 07:10:04(UTC)

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andy

The one fund that has, since 1999 in spite of charges, made better returns than I have is Marlborough Special Situations according to a report in the Times some weeks back

It is the charges that make other fund managers so easy to outperform.

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andy mac on 14/05/2018(UTC), Captain Slugwash on 14/05/2018(UTC)
CUEBALL
Posted: 14 May 2018 09:58:12(UTC)

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I think you'll find that I (the only on until recently) have been championing "Giles'y" from the beginning.." a Preston lad"..with offices on chorley new road in Bolton...made me a lot of money the lad
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Tony Peterson on 14/05/2018(UTC)
Apostate
Posted: 14 May 2018 10:09:14(UTC)

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I wonder if GH top-slices?
CUEBALL
Posted: 14 May 2018 10:14:53(UTC)

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YES
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Tony Peterson on 14/05/2018(UTC)
King Lodos
Posted: 14 May 2018 14:42:57(UTC)

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Apostate;62274 wrote:
I wonder if GH top-slices?


No.

Funnily enough he actually does what I do – which is add to winners and cut losers – the polar opposite of top-slicing and dip-buying .. And it's not very common for retail fund managers to trade like this, but it is supported by evidence.


...we’re great believers in not snatching profits. If very good companies get pretty expensive in the short term there’s no point selling them...

Mr Hargreave tends to exit positions early if they are not working and conversely adds to holdings whose share prices are supported positively by the market.

We believe this has been a key factor in the fund’s longer-term success. The fund is also appropriately priced given its remit.


https://www.telegraph.co.uk/investing/funds/everyone-expected-brexit-to-hammer-smaller-firms---but-weve-hard/
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Trudy Scrumptious on 14/05/2018(UTC), Aminatidi on 14/05/2018(UTC), Slacker on 15/05/2018(UTC)
CUEBALL
Posted: 14 May 2018 14:54:49(UTC)

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I've held this fund for a very long time son, of couse he "top slices"..just like every other manager

In fact have you actually read the article?...."I SEE NO REASONTO SELL THE BEST PERFORMERS EXCEPT FEVERTREE WHERE WE HAVETAKEN A BIT OF PROFIT OFF THE TOP"....and of course that goes for every company he might buy

King Lodos
Posted: 14 May 2018 15:10:21(UTC)

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I think the word 'except' does imply an exception.

Especially as he quite clearly says he doesn't do that as a rule, and that his long-term returns are specifically defined by not doing that
CUEBALL
Posted: 14 May 2018 15:21:02(UTC)

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Give it up pal...you don't have a clue because you've never invested
King Lodos
Posted: 14 May 2018 16:19:10(UTC)

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Why not try adding something of value around here, rather than writing nonsense and jeering from the sidelines?
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Aminatidi on 14/05/2018(UTC), Guest on 14/05/2018(UTC), John Miskelly on 14/05/2018(UTC), t s on 15/05/2018(UTC), Trudy Scrumptious on 15/05/2018(UTC), john_r on 21/05/2018(UTC)
Dan L
Posted: 14 May 2018 16:24:36(UTC)

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CUEBALL;62288 wrote:
I've held this fund for a very long time son, of couse he "top slices"..just like every other manager



Nobody really knows if they do or don't. Nick Train and Terry Smith have specifically said they don't sell in general. However of course they must if there are outflows to meet. I wouldn't call that 'top slicing' though as the percentages are tiny.

Top slicing as a matter of course is probably part of the reason that so many fund managers fail to perform as well as they could
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King Lodos on 14/05/2018(UTC), Aminatidi on 14/05/2018(UTC)
kWIKSAVE
Posted: 14 May 2018 16:40:35(UTC)

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The Master of top slicing, as we have deduced many times, is Tony Peterson.
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King Lodos on 14/05/2018(UTC)
King Lodos
Posted: 14 May 2018 16:54:07(UTC)

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Dan L;62294 wrote:
Top slicing as a matter of course is probably part of the reason that so many fund managers fail to perform as well as they could


Exactly – as outlined in this 7-year-long study of fund managers .. Consistently slicing profits from winners was one of the main mistakes they regularly made.

https://images.gr-assets.com/books/1442796898l/26512908.jpg

It's very typical trading behaviour, because we get nervous that the gains we've made will be taken away (so we have an urge to sell), and we don't want to admit when we're wrong (so we have an urge to hold onto losers) .. Which the likes of Peter Lynch (and Terry Smith) call: digging up flowers to plant weeds.

Which is why I urge anyone taken in by such strategies touted on here to request some evidence
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John Miskelly on 14/05/2018(UTC), Aminatidi on 14/05/2018(UTC), Dan L on 14/05/2018(UTC)
Mr Helpful
Posted: 14 May 2018 18:03:07(UTC)

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Re Top-Slicing - think it depends?
If earnings (and dividends) are growing nicely may not be appropriate.
If however a rising share price has pushed PE/(DY) significantly towards top of historic valuation range, then top-slicing might be prudent.
The snag with fast growing companies is that adjustments have to made to the earnings/(dividends) on almost a monthly basis, rather than use the static historic figures. Involves some projection calcs.
So wouldn't be too quick to praise or condemn top-slicing.
Mr H (aka Fence Sitter).
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Sara G on 14/05/2018(UTC), Aminatidi on 14/05/2018(UTC), john_r on 21/05/2018(UTC)
King Lodos
Posted: 14 May 2018 18:38:39(UTC)

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Mr Helpful;62301 wrote:
Re Top-Slicing - think it depends?
If earnings (and dividends) are growing nicely may not be appropriate.
If however a rising share price has pushed PE/(DY) significantly towards top of historic valuation range, then top-slicing might be prudent.
The snag with fast growing companies is that adjustments have to made to the earnings/(dividends) on almost a monthly basis, rather than use the static historic figures. Involves some projection calcs.
So wouldn't be too quick to praise or condemn top-slicing.
Mr H (aka Fence Sitter).


That's what Terry Smith did with Domino's, and Giles Hargreave with Fever Tree .. even Buffett has a point where he will sell if a position is unjustifiably overvalued.

But that's not 'top-slicing' – that's really disciplined value investing.

The idea that there are prices ranges stocks should trade in, however, is not a market-beating strategy .. In an index fund, 75% of positions will lose money; the vast majority of returns come from a few stocks delivering >10,000% .. And if you're cutting positions because you get nervous when they're up 50%, you're never to compound those really high returns (that only a handful of stocks are capable of) – and that's why index funds are tough to beat .. the alternative is finding a continuous stream of winners, and getting the timing right
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Sara G on 14/05/2018(UTC), Aminatidi on 14/05/2018(UTC), Keith Cobby on 15/05/2018(UTC)
TJL
Posted: 14 May 2018 18:47:33(UTC)

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Delete Commence: 21:21 14.5.18
Delete Complete: 21.22 14.5.18
Comment: Thank you Aminatidi
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Aminatidi on 14/05/2018(UTC)
Big boy
Posted: 14 May 2018 18:50:50(UTC)

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I would rank my holdings daily (sometimes more if markets moving ). Didn't worry about macros etc or what anyone said on the forums etc.

Top of the list I would reduce and bottom of list I would add. Never worried about if profit or loss just aim at outperforming others in the same sector even in a bear or bull market.

Investors try to add value but very few succeed....all theory and story telling. Was this "top-slicing"? Anyway it was very successful over many years.
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Aminatidi on 14/05/2018(UTC), Tony Peterson on 15/05/2018(UTC)
Sara G
Posted: 14 May 2018 18:51:12(UTC)

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I would agree with that, KL, and personally think it depends on the stock that you're 'slicing'... Someone on here said that they don't 'buy and hold' anything forever and I think that's the right approach, so in my own case I have split my individual shares into categories:

1. Strong companies with future growth prospects I'd like to build a position in over time and hang on to for the *foreseeable* future - e.g. PRU, ULVR - so I'll buy the dips but not sell.

2. Contrarian / value / recovery plays that I'll top slice (or possibly sell altogether) if they reach a price that I consider to be fair value, e.g. GFRD, MCRO, BT (enjoying the dividends while I'm waiting)

So I'm not selling any shares that are growing and have prospects to rise further.

(For IT's it's a bit different as I have top-sliced good holdings when the premium has got out of hand.)
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King Lodos on 14/05/2018(UTC), Aminatidi on 14/05/2018(UTC), Dan L on 14/05/2018(UTC), John Miskelly on 14/05/2018(UTC), Mr Helpful on 15/05/2018(UTC), Slacker on 15/05/2018(UTC), john_r on 21/05/2018(UTC)
King Lodos
Posted: 14 May 2018 19:29:01(UTC)

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Sara G;62307 wrote:
I would agree with that, KL, and personally think it depends on the stock that you're 'slicing'... Someone on here said that they don't 'buy and hold' anything forever and I think that's the right approach, so in my own case I have split my individual shares into categories:

1. Strong companies with future growth prospects I'd like to build a position in over time and hang on to for the *foreseeable* future - e.g. PRU, ULVR - so I'll buy the dips but not sell.

2. Contrarian / value / recovery plays that I'll top slice (or possibly sell altogether) if they reach a price that I consider to be fair value, e.g. GFRD, MCRO, BT (enjoying the dividends while I'm waiting)

So I'm not selling any shares that are growing and have prospects to rise further.

(For IT's it's a bit different as I have top-sliced good holdings when the premium has got out of hand.)


With stocks I go for a fundamentals approach.

So I start with a very small universe of stocks (mostly things I use, understand a bit, etc) then track valuations and profitability as businesses, and momentum in fundamentals (e.g. F Score) .. Have a certain level of diversification .. Estimate returns using my valuation shrinkage model (at the bottom, and calculated before most of those rose >10%) .. Then try and find a best fit that optimises the mean scores across the portfolio, whilst maintaining adequate diversification.

So that does mean there's scope to kick things out and replace them (having an 8 stock limit) – but not necessarily on price rises .. e.g. the only thing I kicked out so far was JNJ, when Facebook looked better .. So I chucked JNJ out on a small loss .. The logic there being that stocks don't remember where you bought them, so it's all about what has the most potential going forwards

https://i.imgur.com/hVmbHSH.png
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Sara G on 14/05/2018(UTC)
Sara G
Posted: 14 May 2018 20:53:37(UTC)

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KL - I like the heat map approach - my spreadsheet is not as pretty as that!

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King Lodos on 14/05/2018(UTC)
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