gamesinvestor
29 Jul 2017
Re: In praise of proper diversification """"And you know... if I had followed Terry Smith and his '16 uncorrelated stocks' dictum (not that he does himself), where would I be then?! Assuming AZN and IMB were both in that 16, which they probably would've been (and uncorrelated they certainly are)."""Terry Smith doesn't have AZN or GSK -- he warned about both of them in this article:-[link] does have IMB and Philip Morris -- these would be hit the least, as IMB is less exposed to the US, as is Philip Morris -- Altrea holds the lions share of the US.There are 30 stocks in his fund and the correlation is open for conjecture, however, they are bar non - all quality companies and he holds non of the many munters that are scattered all over Woodford's list of 135 companies (105 more than Fundsmith).Games -- I'd shoot for Smith any day over the woodchip emulsioned over chappy!!
Proverbs 26 vs 5
29 Jul 2017
Re: In praise of proper diversification 20% up is pretty well standard for the past year. It's purely do to the Brexit devaluation.
Bill1703
29 Jul 2017
Re: In praise of proper diversification "Your 18% performance in the last year sounds very impressive, is that in the last 12 months, YTD or FY ?. I am up about 12% YTD which against a target of 8-10% a year I'm more than happy with. But an interest rate rise and/or correction could soon scupper it all I fear!"Pref - I tend to look at it mostly quarterly, though I do keep a less formal eye on it on a more regular basis. My overall portfolio was actually up 22% in the year to end Q2 (ie. end June), against market returns of (broadly) 13% for UK and 16% globally. The current 18% is an updated - and rough - "running annualisation" (ie, trailing 12 months) - reflecting the later end date (yesterday) and the fact that I am down this quarter so far, though only marginally. I am up 8.6% so far YTD (price only, not total return), which - although notably slower than my return in H2 2016 - I am also pretty happy with, particularly against the UK market return of 4.4%, given my heavy bias to UK quoted stocks, though it is less impressive against the 12% or so increase in global equities overall. I think a 8-10% pa. target is eminently reasonable for anyone, and as such, I am not expecting any fireworks for the rest of 2017... but equally, I think conditions are rife for neither an interest rate rise any time soon (in the UK, anyway) nor a proper correction. Famous last words? Perhaps... and who needs them, when you have regulators (whether for drug approvals or smoking issues) to contend with on what feels like ('cos it is, actually) a daily basis!!
PrefInvestor1
29 Jul 2017
Re: In praise of proper diversification Hi Bill,You'd think AZN ought to be in my wheelhouse as a FTSE 100 high yielder, but having held it a few times it's never worked out. Sold out at a small loss both times. That was when it was about £40 a share, when it went over £50 I confess I thought "forget it" especially with its considerable volatility. Last time I tried catching a falling knife was with BT and that didn't work out well. All of which makes my disinclined to take a position in these at £43-£45 I know Pfizer offered far more but clearly the market doesn't believe that valuation.Poor old woody has had quite a few setbacks lately, this one, IMB, provident financial. He's also into capita, another stock that I have little time for given that it's main business is outsourcing - an area where I have some personal experience and know how hard it is to make any money. They are down at ~660 from almost twice that last year, not sure when he bought in though as they've done a bit better lately.Overall it's been an up and down week with a couple of very bad days. Lloyds results day was disappointing, but all of the uk banks appear under pressure. Though Lloyds look the best of the bunch to me, well apart from HSBC i guess - results there on Monday. Share price has done great things since June, will it continue I wonder.Overall I've done ok this week and was up about 0.4%. Mainly on the back of my prefs though I have to say, equities were down. Your 18% performance in the last year sounds very impressive, is that in the last 12 months, YTD or FY ?. I am up about 12% YTD which against a target of 8-10% a year I'm more than happy with. But an interest rate rise and/or correction could soon scupper it all I fear !.ATBPref
Bill1703
29 Jul 2017
Re: In praise of proper diversification "Have the Yanks timed their Tobacco comments in the week that BAT completes the acquisition of Reynolds as a provocative act or is it complete coincidence?(!)"I can't imagine it is deliberate... regulatory bodies such as the FDA are not that nimble!"Tobacco stocks remain investable?"Pretty much everything is investible - at the right price! But for me, yes.... I don't see this changing much at all. The US (like the UK) is a mature, declining market for the big tobacco stocks - some 20% for IMB (used to be a lot less, sadly), and a bit more I think for BAT (haven't checked)... they spend very little on marketing, etc, there and it's a nice free cash generator, but all the growth - and focus - is in emerging markets.So maybe this will see some acceleration of the existing, well-established trends in the US.. steady decline in smoking, increased uptake of alternative options (e-cigs, etc). But will most likely be gradual, incremental... the greatest emphasis is on stopping younger people from starting smoking, but again, that is nothing new. Hard to quantify, but 4-7% off SPs seems excessive - the tobacco companies have, time and again, shown their capacity to adapt and evolve, and this is hardly a game-changer in this, one market. It comes down to whether you see (saw) them as good value in the first place... IMB definitely, for me, BATS much less so (as per recent posts). "Is AZN an interesting bet at current depressed value?"Is it "depressed value" - or just slipping back, from an irrationally exuberant high, to something more akin to 'fair value'? More the latter for me... only back to where it was about 5 months ago, and not obviously "cheap" on pretty much any metric. I am happy enough holding for the duration - then and now - but not seeing any compelling case to buy more. I suppose it depends how bullish you are on what the pipeline might be "worth" - but as we know, the market's view on that can (and likely will continue to) swing wildly around over time! It's not something I have any insight into, so I suppose I should just roll with the punches as well as the spurts, and collect the dividends while they pay them...
LK Hyman
29 Jul 2017
Re: In praise of proper diversification Rhino,"What were you doing in 1963 - got a feeling you might be my dad?"Hmmm. It's entirely possible, m8. What was your mum's maiden name LOL?Acksherly, come to think of it, my main memory of 1963 was of freezing my buns off in the dorm at the old school in the coldest winter since 1947 if memory serves ... and it does ... so it's more likely that your dad is someone else.I'll tell you one thing, though .... they had better pop records in 1963 than they do today. Sit back and enjoy this gem from 1963:[link] on the flybridge they don't make 'em like that any more
Yee Wo
29 Jul 2017
Re: In praise of proper diversification Agree with comments below, weird week! BATS, IMB & GSK all in my pot circa <15% total and although the £ value of the aggregate weeks fall is best part of a months salary, in % terms it's not too bad at all. Still nicely up for the year and plenty of juicy dividends to come through.Key Questions: - - Have the Yanks timed their Tobacco comments in the week that BAT completes the acquisition of Reynolds as a provocative act or is it complete coincidence?(!)- Tobacco stocks remain investable?- Is AZN an interesting bet at current depressed value?
nick2name
28 Jul 2017
Re: Non-exec buys are they not just spending their fees?
rhino666
28 Jul 2017
Re: In praise of proper diversification LKWhat were you doing in 1963 - got a feeling you might be my dad?
LK Hyman
28 Jul 2017
Re: In praise of proper diversification Bill,"my overall portfolio is down by less than 1% on the week!"I haven't looked at my position on the week yet but am feeling generally nervous because I'm half way through liquidating a massive chunk of my equity positions in order to pass them on, so have a fairly substantial gob of cash awaiting reinvestment by the anklebiters. It makes me realise the riskiness (both on the upside and the downside) of being out of the market for any length of time.I've done well, as it happens, by getting out of AZN and holding on to Mrs LKH's Diageo (thus far) but there have been some others where I've got out and then the suckers have risen.Ah well, never mind, it's only money.Have a good weekend.LKH on the flybridge
Bill1703
28 Jul 2017
In praise of proper diversification The market has seen fit to throw all sorts of nasties at me these past couple of days... all of AZN's pipeline of drugs are no better than smarties, apparently, and now we hear that Trumpton is going to ban all his fellow 'Mericuns (surely, his fellow half-Scots and/or half-Germans???) from smoking... apart from transgender people, who will presumably now be forced to smoke 150 untipped Gitanes a day...And yet, my overall portfolio is down by less than 1% on the week! Slightly down (<1%) on Q3 to date, but still holding up very nicely on an annual basis (up some 18%, comfortably above the market run-rate). Praise be!And you know... if I had followed Terry Smith and his '16 uncorrelated stocks' dictum (not that he does himself), where would I be then?! Assuming AZN and IMB were both in that 16, which they probably would've been (and uncorrelated they certainly are).I suspect Woody, with his own rather longer stock list, will be similarly relaxed as myself... with a little (doubtless, smug) smile to himself for having offloaded both GSK and BATS in recent times.As for Terry, he can stick his well-used head (according to City bar-room legend) up his well-upholstered proverbial...
Bill1703
28 Jul 2017
Re: Non-exec buys "My rule of thumb is that I pay no heed to director buys worth less than £50k. Often the latter result from the CEO twisting the NEDs' arms to play the white man at a time when the share price is under pressure. But, yes, unless one is Jeff Bezos, £100k probably means that the bloke thinks the shares are worth whatever the sam heck he paid for 'em."Yes, I generally concur LKH... it pays to be a bit sceptical, you never know what shenanigans goes on in any boardroom...I have done some detailed forensic digging into said Philip Broadley, he of the ~£100k purchase (ie. typed name quickly into browser and glanced at first web page it gave me). He was CFO at Old Mutual and the Pru (is also now non-exec at L&G)... so I would surmise, he's made out pretty well in the old insurance markets - hence the odd £100k knocking around in chump change.But no Bezos... so I think we can call it a reasonable commitment, at least.
LK Hyman
28 Jul 2017
Re: Non-exec buys Bill,"it's not exactly chicken feed"My rule of thumb is that I pay no heed to director buys worth less than £50k. Often the latter result from the CEO twisting the NEDs' arms to play the white man at a time when the share price is under pressure. But, yes, unless one is Jeff Bezos, £100k probably means that the bloke thinks the shares are worth whatever the sam heck he paid for 'em.LKH on the flybridge amateur psychology his special subject
Bill1703
28 Jul 2017
Re: Non-exec buys "Bill, I'm impressed, to me £100k's worth is pretty big stuff. The other at some £21k is, ok, not sending out a massive message. "Yes, Lupo, a fair point... it's not exactly chicken feed. Though you never know how wealthy some of these non-execs are - so I am usually cautious about reading too much into such transactions. But yes - certainly some kind of reasonable vote of confidence, at least!
Bill1703
28 Jul 2017
Re: Non-exec buys "Hmm, not so sure about the takeover. Pfizer's was on the back of getting in before some US tax regime changes, which I've forgotten just now, wasn't it. Someone'll google it, no doubt. "Sure, there was the subsequent clamp down on 'tax inversion' deals - though it's hard to see how they can stop at least some kind of fiscal benefit flowing through? And as Proverbs points out, the original offer was worth £72 at the prevailing FX, against the £60 I think would suffice today (they might even get away with a tad less?) - so there is probably adequate compensation in this discount for the loss of some of the potential tax benefit?Not to forget, Novartis has also been touted as a possible bidder... and the Swiss franc is still pretty strong against the GBP? Along with almost every other global currency, of course...I wouldn't say a bid was a strong probability... but with this recent approval set-back, and the CEO almost certainly still going (no smoke without fire), it now seems more likely than it has for a while...
