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Loanranger Couldn't have put it better.. Well said.
"I will, at the risk of invoking your censure offer one final comment , your holdings of BT , VOD and LLOY are heavily dependent on the UK economy and offer no diversification , why not consider a global ETF as a counterweight?"
In the last 30 years we have invested in funds, but their performances were underwhelming, even in rising markets, and over many years we lost trust in relying on others to make our investment decisions. We were lucky, because we did invest a substantial amount in a fund post the dotcom bubble bursting, which tied up our cash for 5 years; And fortunately for us, we cashed out of the investment fund a year before the Financial crash, and invested the money into a 2 year savings bond with the Halifax, paying a guaranteed 6% annual interest; The financial crash happened half way through the 2 year investment period and I wont deny it was squeeky bum time, as the amount tied up was considerably higher than the FSCS compensation threshold.
After all that we did look at funds again, around 2009/10, but the historical performances looked rubbish even pre-financial crash. When we went in and spoke to an adviser, I pointed out the 6% annual return we'd received on a savings bond outperforming even the best he had to show me, he looked dejected but shared the fact he'd personally taken a hammering due to the financial crash. We'd also been previously underwhelmed by returns from Endowment mortgages, and an Endowment fund we'd invested in.
For all the above reasons, we only invest in stocks where we have full control of the investment and receive the dividends directly into our accounts. I have zero trust in the managed investment world, and even though ETF's and passive's are cheaper these days nothing will get us back into investing in funds.
Soon back to 99p and a penny to be made!
Fleccy glad your investments are working for you, there are many ways to invest wisely (though many more to invest badly!!)I wouldn't classify my strategy as "jumping in and out of stocks" - my average holding period is measurable in years not minutes, but the big moves in sentiment are IMV relatively easy to spot, in my investment career - and it is a career, it has been my primary source of income for almost 25 years, I have seen a number of large , long-duration market falls and equally significant rises , from the dotcom boom and bust to the GFC, to the astonishingly short-lived covid crash in early 2020 and, by buying steadily into the rises and taking profits when they are significant, I have done well.
I see slow gains in the Uk market in the medium term but am currently more heavily invested in the US where , IMV greater gains are to be made over a two/three-year timescale.
I absolutely endorse your last sentence , crypto , meme stocks NFT,s are tantamount to Ponzi schemes , as sadly are most of the aim stocks which attract hundreds of posts on these boards, I have learned that the fundamental way to invest successfully is not to lose money chasing big returns.
I will, at the risk of invoking your censure offer one final comment , your holdings of BT , VOD and LLOY are heavily dependent on the UK economy and offer no diversification , why not consider a global ETF as a counterweight?
Due to fly back from Dubai today so will not be able to respond for a while!
"OK that doesn't offer a formula but I don't believe one exists, a certain amount of logic, coupled with judgment has served me well. I have said elsewhere and maybe here that my strategy has been for many years now to aim for 10% over inflation per annum and have achieved that in all but 3 years of the last twenty odd."
"fibre rollout will weigh on profitability for some time and I suspect that until the shadow boxing between the other players is resolved by some sort of tie-up and the smoke clears the telecoms sector may tread water."
It's great if you can time when to jump in and out of stocks and achieve consistently good results, most can't and the ones who can are the exception rather than the rule. I'm currently sitting on paper losses on the three stocks I hold, BT, Lloyds, and Vodafone, but I'm on target to bring in dividends of around £21,000 over the next year; Including the Vodafone dividend, i'll receive £10,400 of the £21,000 before the end of September. My paper losses are due to being heavily invested over many years, but I have brought my average cost per share down significantly throughout Covid, and each of my holdings average cost per share are well below historic averages, so I'm not worried by my holdings current underperformance. I'm growing my holdings by reinvesting dividends while I perceive low prices, and I'm 100% sure my shares will show significant capital gains once the market decides to take it's foot off UK value stocks. Going forward, I've decided that I wont be injecting any more external capital into stocks, and will concentrate simultaneously running the share dealing accounts down, while topping up the ISA's.
As far as BT is concerned it's the stock I have most confidence in, not from a Revenue growth perspective, but from a Net Income perspective. Ofcom regulation has been responsible for much of BT's decline in revenue, through forced opening up of the Network; Companies like TalkTalk rely on regulation to support their whole business model, since their businesses wouldn't be viable without cost controlled access to BT Fibre and the Openreach workforce. BT's costs will come down dramatically over the next 8 years, so much so that they could easily undercut any of the current rivals and still maintain good margins, in my opinion. The market is short sighted in my opinion, and I don't think this risk on mentality will last forever. I believe the current market mentality is a bit surreal, when you consider the amount of cash thrown at useless cr@p like Crypto.
Fleccy - just got back to my hotel and spotted your post of 18.13 last night.The question of fair value for BT is impossible to answer as it consists of the interplay of a myriad of often conflicting elements, BUT I'll have a go.
BT appears in my folio now and again as part of the defensive, divi earning element which includes other shares such as LGEN,NG,IMPS,MNG, PSN.....all of which I currently hold and have held off and on for years (As I have said I am a buy and hold man but that means to sell when they are over my value estimate and buy when they fall back in , as at some point they all do)
While I have no hard and fast rules, I judge them on divi, P/E , recent earnings momentum, recent SP momentum, my perception of the market generally and any obvious threats/Opportunities they may have.
OK that doesn't offer a formula but I don't believe one exists, a certain amount of logic, coupled with judgment has served me well. I have said elsewhere and maybe here that my strategy has been for many years now to aim for 10% over inflation per annum and have achieved that in all but 3 years of the last twenty odd.
To get back to BT I will watch and wait, for me the short -term momentum is downward, the Drahi thing gave the stock an impetus which seems to have dissipated, fibre rollout will weigh on profitability for some time and I suspect that until the shadow boxing between the other players is resolved by some sort of tie-up and the smoke clears the telecoms sector may tread water. If you want me to pick a number for the SP I really can't. It would clearly be below my sell average which was I the high 180's and below today's SP , would 140 tempt me back? possibly, depending on all the other criteria set out above, below that it would be back towards the territory of my last buys and would definitely appeal. If / when I buy back in I will declare so and may still offer my input here on occasion between now and then. If I miss a rise and you profit then you have my very best wishes!!
Now it's late afternoon in Dubai, the temp is 40+ and the cool, shady air-conditioned bar downstairs is calling me (despite the extortionate prices!!)
GL
Just repeating the words on the RNS. Where there were sales on the other people the words “principally for tax purposes” followed the info on the sale. For those two there were no such qualifying words to explain the sale.
"Handy ,you are right all except Allera and Mehta were for tax."
Are you sure about that? If they were awards of free shares, then they're probably subject to income tax and national insurance. It's possible they received accounting advice to cash in the shares, but I don't know since I've no idea on the type of awards they were given, or the conditions attached to the awards.
"As with most of my sales, I will keep a watching eye and may re-invest if/when I think the SP falls below my estimate of fair value."
That's fair enough. What do you consider as fair value for BT, and how do you calculate said value? Also reading between the lines, I assume you believe BT may drop from here?
Somehow the market managed to knock 30p off the share price, using a combination of speculative headlines involving VMO2 and the results on the 28th July, as excuses to knock the price down. It isn't the first time speculative articles have appeared leading to BT's share price dipping inexplicably, and excessively, lower. Coinidentally, or not, the TalkTalk/VMO2 story knocked 14.55p off the closing price on the 15th July, compared to the previous days closing price; When BT's results came out on the 28th July, which I thought were ok, 14.25p was knocked off the closing price compared to the previous day. This leads me on to the reason I think BT wont go any lower, when BT went ex-dividend the price dipped to below 155p, but has since recovered to near the Pre ex-dividend and post results price, which makes me think the market's decided on around 161p/162p for BT's current price.
I'm of the opinion that big players use Off Book trading to do their major trades, and drive prices On Exchange using Algo's. Considering the daily closing price drop after the TalkTalk story and after the results release were within 0.3p of each other, it does make you wonder if the same Algo's were used on each occasion to drive the price down. It was probably coincidental that the drops were within 0.3p of each other, but that's pretty close and you could be forgiven for being suspicious, especially since many of these stories appear out of the blue, like the Sky/VMO2 rumours that fizzled out. I'll add that I don't believe the TalkTalk story either, but if there is a glimmer of truth to it, I don't see it impacting BT/Openreach in the short term, and probably not in the long term either.
Handy ,you are right all except Allera and Mehta were for tax.
Fleccy I am not a short term trader , I've been a succesful investor for 30 years and my general strategy is to buy and hold good companies with good prospects. That said, every investment decision implies that there are no better choices elsewhere. I bought Into BT in early 2020 (having held for a number of periods in the past) when the price, then a little over £1, seemed far too low for a company unlikely to go bust and with an income stream less likely than most to suffer from the impact of covid lockdowns and all that followed. My analysis was borne out by the steady recovery, which IMV has now stalled . As with most of my sales, I will keep a watching eye and may re-invest if/when I think the SP falls below my estimate of fair value.
I have read and learned a good deal from your posts for which I thank you, your knowledge of the company is impressive and certainly greater than mine, BUT I do note in your posts the tendency to assume that anyone with an alternative opinion to you either doesn't understand the company or has an ulterior motive. I can assure you that does not reflect my view, My judgements, I hope, are entirely based on the best deployment of my resources and for now that is not here. I wish you and all who remain invested here good fortune, I can only repeat that I think there are, at the moment, better places for my cash.
Seems to me that most of the selling of shares by directors is to cover tax due. Am I wrong?
2-3 yrs at least before BT becomes more positive and popular share (IMHO) Unless a certain large investor /s takes the company a different route. Just reinvest and cross your fingers till then.
Sale of shares by directors isn't so bad as they have living costs too and their s are going up as well as everyone else's. I'm sure the school fees will have jumped and the cost of crewing the yacht not to mention the rent on the flat in London. Cash is king in a dodgy market.
"I do not currently hold as I see better opportunities elsewhere and am left wondering whether the costs of Fibre rollout will hold the SP back for some time?"
From what you've said I assume you're a short term trader, rather than a long term investor? From a long term investor point of view, wouldn't a depressed share price be a good thing if you believe in the long term outlook?
The way I view BT isn't as a growth stock per se, but as a company with huge potential to grow the bottom line through cost cutting initiatives, in the meantime I can grow my future capital gain by reinvesting dividends while the price is low.
I believe the perceived threat of competition from Altnets and VMO2 is overblown, with Altnets having a 1990's Deja Vu cable company feel about them. By 2030 BT will have a more efficient network, with less buidings and much lower operating costs. The Openreach workforce is saleable based solely on their operating profits, add in BT's Fibre, mobile, core network assets, etc and BT is clearly undervalued.
As a display of confidence in the medium/long-term SP, the immediate sale by eight directors of "free" shares as a result of the investment plan (see both of yesterday's RNS's) does not look good. The rules covering when directors can sell do limit opportunities to those times when they are NOT in possession of "inside info" but clearly at all times, they have a pretty good idea of how the company's medium-term prospects look.
Expect a gentle negative reaction to the SP over the coming days.
I do not currently hold as I see better opportunities elsewhere and am left wondering whether the costs of Fibre rollout will hold the SP back for some time?
Something else, these sales were listed as share award scheme related sell's. As they're awards they're treated as income, so taxable as income apparently.
"Share-award schemes
Share-award schemes involve giving employees actual shares rather than share options, free or for less than their market value. The value of shares given to employees is treated as employment income - subject to tax and National Insurance contributions, unless you opt for a HMRC approved share scheme which comes with specific rules and requirements."
https://www.nibusinessinfo.co.uk/content/defining-share-option-and-share-award-schemes
https://www.hl.co.uk/shares/shares-search-results/b/bt-group-plc-ordinary-5p/director-deals
"so why did he allow this with these two individuals who are in critical posts in BT? especially by Marc Allera? Thoughts would be appreciated !"
Marc Allera is still holding 839,884 shares, so still has a significant holding. Mehta Harmeen is only left with 7,344 shares after her sale, but you can bet there was a reason behind her sale that wasn't company related.
I missed Allera, that’ll teach me to read to the bottom. That raises the same question I asked about Mehta and I think it unlikely that they will both be for the chop.If anything it’s even more of a concern that someone in Allera’s position shows so little confidence in BT share price growth prospects.
As an avid reader of this BT Board.. Some observations
An RNS on the 3rd August included in Director Transactions the following regarding Marc Allera, CEO Consumer..
VESTING AND SALE OF 115,742 SHARES UNDER THE BT GROUP DEFERRED BONUS PLAN AND VESTING AND SALE OF 178,861 SHARES UNDER THE BT GROUP INCENTIVE SHARE PLAN. Note: No share Retentions likewise with the award to HARMEEN MEHTA ..Also no Retentions.
What I find interesting is that their boss P J must have been aware of their intentions and did not or could not change their mind regarding just selling enough to cover tax due...PJ must have recognised the impact both these actions would have caused... so why did he allow this with these two individuals who are in critical posts in BT? especially by Marc Allera? Thoughts would be appreciated !