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Colinco,
"What was your thinking behind index linked gilts?"
......................................
Yes, I agree with you that deflation is a concern at large currently, but it isn't the thing I fear most...
I don't want to get into a long spiel here as I've written about all this ad nauseam on a blog a number of us share (also called Strictly Bricks, funnily enough....) but, in the longer term scheme of things, the bottoming out of interest rates through cycles has come at lower and lower points and has taken over two hundred years to arrive at where we are (google can provide...) and, as a consequence, quantitative easing has been created as a replacement , as I see it, as interest rate lowering has now run out of track unless state banks start to venture into the dark territory of negative interest rates...
And, as we've seen, governments round the world have found they've got away with QE so far and that it has seemed to be an easy tool to use...?
And this was before coronavirus, which governments are obviously having to throw an unspecified shed-load of liquidity at, and counting...
Traditionally, we know that governments have used inflation to ease the pain of war debt, and I don't see this as being much different, albeit at war with a very small and unseen enemy...?
I've been nursing a concern about serious inflation ever since the credit crunch, and have built up an increasing reserve of Index-Linked gilts since then...
I don't claim to understand them particularly well, and moving cash into them three weeks ago (I went about 65% cash, 35% still in house builders' shares - that's ALL I invest in, hence the moniker...) has cost me as they've dropped a bit (presumably due to the deflation fears you've referenced?) but only a smidgen of the comparable drop in shares, and I'm now down to just over a third in cash/gilts having started gradually moving back in, but now also have the equivalent in shares that I had before that move... (I've become more and more of the view that it's better to aim to be half right, half wrong - my new motto is "wussy investing rules, okay?").
So anyway, I appreciate that I lost a few percent on the Index-linkers I've just bought and sold within a few weeks, and also that that probably hasn't been helped by the government now looking to shift the linking from RPI to the lower CPI (something I hadn't been aware of when I bought them... duh...), but I have no other answer for myself about how to protect from the serious inflation I fear, if it comes, for liquid assets...?
And of course, DYOR and all that, and I'm not looking to influence anyone here - just trying to briefly explain my decision to buy these...
Strictly
Strictly,
What was your thinking behind index linked gilts?
Was this a recent switch? All I can see moving forward is deflation, as the increase in the supply of money is more than offset by the reduction in the speed at which the money moves around the economy.
"Shares take the stair up but the lift down"
The development land market just falls off the Richter scale .It stopped last week Mothballed Friend of mine retiring this month put on the market as his swansong a brownfield site with resi possibilities in the W Midlands for £3m Scrap yard in the Midlands. The owners door has been knocked constantly by agents and developers potential resi tower .main road location all very good so now instructed to formally market
No swansong for him virtually unsaleable over night unless at a distressed price
Hi W13Ken
Not investing any more yet. I really need to be sure that things are improving to borrow money to invest. If I had any spare cash I would be investing now, though easy to argue it should not make any difference.
Incidentally, bwy the only builder left where I am still in profit on held shares and made the most on completed deals with them, but I have held them longer than any others.
BoL
James ive been in the investment business for 65 years & one of the things ive learnt is that the market will forgive an occasionable lapse in profits but never forget a dividend cut so imho bwy will prefer a lower earnings cover to a cut in which case a yield of 7.3% looks very tempting even in the present awful climate.my portfolio is 70% bwy 30% grow.l but ive a much higher level of cash for a funeral if im found dying in a ditch with Boris!!!
Yes. I have read a lot of stuff about all the house builders, but people on this board seem to have great understanding of the details of the business and long term experience. I have taken a few a) for potential yield b) a bit of capital growth as the sp, like everyone else, has been smashed and c) to diversify the PF a little.
I have taken a big hit on Bellway but stuck with them and have even topped up a reasonable tranche at £20 today. Not sure that I'm calling this near the bottom but I hope we'll not be sub £19 again. For other shares, I've sold Gym Group (germ paranoia may mean that gym membership never fully recovers) and Hotel Chocolat (good business but retail hit is being hard at the moment). I am getting heavily back into Games shares again: Team17 (TM17) is releasing 10 games this year starting from April and Frontier Developments (FDEV) look a good bet on sandbox games like Planet Zoo and Elite Dangerous while people stay at home more.
I guess I have learnt from the "Shares take the stair up abut the lift down" maxim and think I will look to sell if bad news hits shares before they lose 20% or all profit. Once they lose much more than then you feel that you should stick with them.
Strictly, yes I'm losing money in West Ealing :-)
Nige, good luck to you. Are you buying again now?
James, difficult to judge on the dividend but one important factor is that dividend cover has always been pretty decent in the past. One minor negative was that Bellway weren't especially cash-rich even before this crash. These are risky times so do your own research and don't just rely on folks in an echo-chamber of a shares forum.
Good morning all, I'm a newbie here. Been reading the posts below and it is clear that before all this crap started happening, you all thought Bellway was a damn good investment. How do you think it will affect the dividend payment? How do I get access to the blog?
Many thanks
JP
Hi Strictly
I'm still all in so have made massive losses. Can't anticipate things like this.
No way I'm selling anything, cos they will recover, but the media love to report disasters (which could make them worse than they really are). I'm with HSBC who let you borrow up to 50% of your Trading A/c, (at very low interest rates) and tempted to do that soon.
As you say timing is critical and (despite what the media is reporting) this could happen fairly soon. Sars vaccine is being tested and results look promising (no need for testing on mice, chimps... cos already done) and new vaccines in development, but about 6 months away (not 18 months) cos of new testing methods.
So we need a vaccine and a decline in the number of new cases and deaths. As we get closer to Summer both should decrease, then the big question is are we prepared for next winter.
Doesn't matter much, so my idea is to borrow about half my limit to invest around June, depending on the above, hold until around Sep, and review then.
I don't think Politics, Brexit and Flu (or even a Recession) affect builders value much at all (now undervalued by a factor of 3, so bwy worth about 8400 now, Imho). Or whether you get back in at 2500, 3000 or even prev high of 4100, doesn't matter much, when they are worth 8400. Just don't move back in too soon.
Most other countries regard Builders as safe havens in bad times (like Utes), but not our Market.
Hoping for an improvement later today, but won't start investing until +ve news.
BoL
W13Ken,
Most of the crew on my blog who have notified in have gone partly or fully to cash - especially the veterans of the credit crunch who have the scar tissue to show for it...
Personally, I'm now about two thirds Index linked gilts and the remaining third invested split about two thirds Bellway and one third Inland...
I'm just contemplating another blog post about all this.... eye of the storm or what...?
I mean, getting out is only half the process.... getting the timing reasonably right going back is another matter entirely...
Re the 20% a year, that's the average per year over 20 years.... within that, the two big bad boys of 2007 and 2008 were minus 38% then minus 62% respectively, followed by 2009, my biggest ever year percentage-wise (on smaller beer, unfortunately, given the pasting I'd just taken the previous two years..) which by magic took every £100 down to £23 then back up to £59 but, at least, very much onwards and upwards from there such that every original £100 remaining invested from the start of 2007 has now become £918.
I couldn't possibly call this year... I'm 13% down as far as things stand so, to achieve a decent result, two things would have to happen:
Firstly, the market would have had to have bottomed out well in time for some decent gain from there before the end of the year and, secondly, I'd have had to have got my timing reasonably right...!
And, more morbidly, I'm of an age at which I can't just poo poo the possible impact of the coronavirus itself on me if I happen to catch it - and my working assumption is that everyone will catch it in due course, and that it's a matter of when rather than if, and, if that doesn't happen, well - that's a bonus!
Strictly
PS. Is that W13 as in Ealing?
What a difference a few weeks and a global virus scare can make: Bellway down 33% and maybe more to come!
Only my Gaming shares held up reasonably well - presumably as people will be spending more time as home - but I've even sold Team17 shares for now as the rulebooks look to have been rewritten on what is considered fair value for stocks.
Strictly, it's not looking so good for that annual 20% rise at the moment.
Thoughts folks? Did anyone apply a stop-loss as we're all advised to do?
W13Ken,
Well, good luck with computing shares then - they are WAY ABOVE my pay grade...!
By the way, as you seem to be looking at PBV as a part of all this now, and I just put a post on the PSN chat (I'm not a fan) that includes a fair bit of consideration of that...
I have to admit I find Persimmon interesting - but only in that I don't trust them (I'm not the only one in that respect, it seems...) and I'm watching and waiting for it all to come out in the wash, at some point....
And if I'm wrong about them and they are the good guys after all, well, it hardly matters does it...?
Strictly
Strictly,
As I highlighted in my first post, I've found your housebuilder commentary very insightful over the years and I can understand why you are sticking to this sector. I've dabbled in other housebuilder shares but not all worked out well for me but Bellway is well run and has never let me down and the numbers stack up well. Sure, it seemed to spend an age bouncing between £30 and £36 but it's broken that cycle now and I will be happy to keep it as my biggest shareholding for the foreseeable future.
Meanwhile I will apply the Zulu Principle and also learn more about UK gaming shares - it helps that my son is doing a degree in Games Computing right now - and hopefully we'll all make wise investment choices for the long term.
W13Ken,
Having started managing my own stuff in 2000, I had my "Damascene moment" about house builder shares in 2003, about the same time that, by doing a shed-load of number crunching, I came to understand that, to paraphrase Kipling, the numbers for the FTSE100 are "Twisted by knaves to set a trap for fools".
And, on the latter point, I'd rest my case on the fact that the FTSE100 index has barely moved in 20 years...
But I have, periodically, looked at other sectors and, for me, when you take into account the combination of strong underlying growth together with the very saleable asset base when things go Pete Tong, none comes close to house builders for me - being something of an investing wuss...
And the house builder shares game has yielded me an average annual gain of around 20% for the past 20 years and, while that might not satisfy a top notch hedge fund manager perhaps, it's more than good enough for the likes of me, guv....!
It's also motivated a lot of people from within in my circle to follow me into this over the years and, for my sins, for the past four years or so, I've been writing an investing blog for them about investing purely in just house builder shares (called Strictly Bricks, funnily enough...).
And now, having past the O.A.P. starting line several years ago, writing that and all the stuff that goes along with it in helping family & friends has become something of a job for me - though with somewhat more irregular hours...!
Strictly
Strictly and co,
I can't say I have fully grasped PBV yet but I'll look into it a bit further to try and understand its importance. Regarding the unlikely scenario that BWY would rise 25% in a short period of time, as it's my largest shareholding I wouldn't have a problem with cutting back on it. I'm not quite as strict on my bricks as you are and have been diversifying my portfolio in recent months.
I found it interesting to read about Steph's ideas on alternative shares, particularly Draper Esprit (GROW), on this board so will briefly share info on a few of my other shares:
Gym Group (GYM) - Fast growing low cost model with 800,000 members, only gym on the FTSE market.
Hotel Chocolat (HOTC) - Premium choc maker with growing interest in expanding to become an international brand.
And most interestingly of all, Team17 (TM17), a Wakefield-based games developer and publisher. It's a world away from housebuilding but I think it's set to be huge in the coming years as of course is the games industry - now bigger than the film and music industries combined. They make their own games like many others but cleverly they are also the go-to company for indie games developers around the world, partnering with and even professionally completing indie games that have brilliant ideas but would not be ready to market. The CEO, Debbie Bestwick, is extremely impressive and has 30 years in the business and they have an exciting year ahead with at least 10 games being launched this year with demo versions being launched at the Pax East expo in Boston next week. They're relatively new to the stock market but the EPS went up 387% last year and the future looks very bright indeed.
Sorry if the above is too off-topic and if it looks like a ramp. It's not meant to be, but I've appreciated advice from others on here and TM17 is one that is definitely worth a look for those of you not tied to bricks. DYOR of course.
W13Ken,
Do bear in mind that, if Bellway's price hit 5,470p this month, that would put their PBV on 2.2.
Putting aside any possible price impact of joining the big boys in the FTSE100, Bellway last hit 2.2 PBV in the 1990's, didn't stay there for long, and each time soon plummeted down below PBV 1.4.
So, careful what you wish for - and especially if you're moving money in rather than cashing out...!
Strictly
Thanks cyberduck. BWY is my biggest hold so a great day after HSBC upgraded their target price to 5,470p from 4,300p, much more in line with the SWS valuation. Should be a good year...
W13Ken, search for "ftse250 list" in Google - it's the sharecast website. Replace the '250' in the url with '100' to get the ftse100 list.
Interesting cyberduck, where are you getting your daily ranking positions from? Also, how do you add URLs in LSE chats? A link was removed in my previous message.
Happy to report that the Simply Wall Street website, which does some pretty comprehensive analysis using a Discounted Cash Flow model, has Bellway at a 'fair value' of £57+ so they believe it's undervalued by 26%.
Steph
Blimey just looked at GROW today -certainly an opportunity missed . Well spotted.
For ex Teffers the planning appeal on Cambridge Heath Road was dismissed today mainly on Heritage grounds A £30m +headache so they are holding a very expensive site indeed
So those who have arrived here have definitely found a safe haven Good Luck all
Anybody interested in a Cheltenham comp!!!!
There are two ways BWY can enter the FTSE100.
By virtue of it rising to position 90 or above in terms of market cap. When I checked this morning the 90th position in the FTSE100 was about £5172m and BWY £5227m so at this time they qualify on that criteria.
The other way to qualify is that if FTSE100 constituents fall out because their market caps are less than the company in 11th position in the FTSE250. This morning when I checked 11th position in the FTSE250 had a market cap of £4407m and the lowest 2 caps in the FTSE 100 were £1666m and £4227m with the third being £4417m so as BWY were #2 in the FTSE250 they also qualified on that criteria.
All very fluid though and when I last checked on 12th February BWY weren't getting promoted.
Demos,
Thanks for the heads-up here about Bellway getting to position 95, and also thanks to W13Ken for pointing out that it's now right on the threshold for 4th March at position 91.....
That aspect, i.e. the hokey cokey of the FTSE100, is not really one that's been on my radar, as it's an other-than-underlying-value consideration, but I've now had a look at that stock challenge website and saved it as a favourite - so, hopefully, I'm now "on it" with that one....!
And, Demos, I'll probably put something on the SB blog about this for everyone there.... so you might want to add a comment on that in due course if this is something which, unlike me, you've been paying attention to going back and therefore maybe have a somewhat better feel for what this may do for Bellway's PBV...?
Unlike, perhaps, most people, I don't see Bellway becoming a FTSE100 company as being good news, given the possibility that they may now, as a consequence, be taken up out of the value zone along with the likes Persimmon, Barratt and Taylor Wimps when all the tracker funds jump in, which is a bit of a bummer - but it is what it is and I guess we'll just have to embrace wherever it goes....
Strictly
Hello BWY regulars, I'm a long time viewer, first-time poster but I have been investing in BWY for quite a few years. I've also dabbled in RDW, TEF & CRST over the years although Bellway are my only housebuilder share at the moment.
Re the subject matter above, I see that the http://www.stockchallenge.co.uk/ftse.php page has recently been updated and BWY are excitingly ranked #91 with Samantha picking BWY for promotion to the FTSE 100 where we would hope and expect that multiple fundholders would choose to buy in. Exciting times if the shareprice holds up or goes higher for the quarterly review D-Day on 4th March.
Finally for now, thanks to all of you for sharing your knowledge, especially strictlybricks who has been a font of wisdom for many years and Steph who highlighted Draper Esprit (GROW), which I have started to buy.
Cheers,
Ken
Someone bought over £3,000,000 of these shares after 4.30 or at closing. Is something happening?
I'm reading that BWY is now at position 95 per latest stockchallenge.co.uk listing (as of end Jan). That's up from 106 at end of November 2019. Seems like it's not enough to get automatic entry to FTSE100, but steadily getting there. Still a couple of companies in the queue ahead of Bellway. Everything moving in right direction though.