The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Post XD is just about behind us with the SP holding up very nicely indeed. Some folk on this board thought maybe the SP would continue to sink toward £2.20 post XD, but the opposite seems to be happening. Since post XD the SP has recovered beyond imagination as the norm is for it to continue dropping I must admit. For those buying in on the XD drop, congratulations, you are all in the blue. I have LGEN tucked away in my ISA. I'm 60% all in which many on this board will shout against not being diversified enough. I, like many others, can also look toward a dividend reinvestment payment early June to help compound matters. Normally, at this time of year, I simply sit indoors and watch the rainfall on my LGEN shares, but today, I'm having my day in the sun. Good luck to all LGEN investors on this board no matter what your short, nedium and long term strategies are.
Well that was quick. Recovered from ex-divi drop already. What a great stock to sit on and watch the cash roll in!
Someone was bleating about loss of capital being unacceptable despite the fat dividend. Well it hasn't happened to me, quite the opposite in fact but then I hardly ever buy at the top of the market and so my average is £2.35 for this great share. If I can't buy at a fairly low price, I go elsewhere or sit on my cash.
Mid-60s, retired and happy to be currently 89% in individual dividend paying shares and 11% in funds. Only down on 2 of my 15 individual shares, so things looking up lately. A maximum of 13% in any one share, which is of course LGEN!
There seems to be a lot of different investing strategy's here, the best one of course is the one that you are happy and comfortable with
I guess i have gone a bit more cautious as i'm getting older, a split of 60% funds and 40% dividend shares i find is working well for myself and i would not put more than 10% of my portfolio into any one share, but each to their own as others have mentioned, if you are happy with what you are doing that's all that matters
let's just hope we can all keep making a good profit from this one
I need to look at the Indian etf scenario. Probably safe to say I think they have done all rather
well and I’m probably late to the party. As businessman they are immensely sharp, so it would
be fair to say that you would assume that any legitimate investment would do rather well.
Famous last words and all that, I’ll let you know how I get on.
Thanks,
Finley.
Finley1 - yes, I can recall Charlie saying that on numerous occasions. That's fine if you know what you're doing! I recognise that my circle of competence (another WB/CM saying) is fairly narrow so tend to have plenty of diversification within my portfolio.
I do like managed global equity funds and also tracker funds. Nothing directly in India as yet.
I also still like the odd dable in single shares. Although I've been moving away from them over the years and was down to my last in LGEN, I couldn't resist both Nvidia and Microsoft last year. I consider my purchase in Nvidia, especially, to be a lost opportunity . If only I'd have been braver! Never mind as a pensioner living off his investments I need to be careful. Not too careful though!! Good Luck.
Zac, when I’ve put my feet up watching the television, and the ever helpful YouTube. I’ve listened to dearest Warren and the late great Charlie Munger, and it was often stated that
the small investor can do very well from a handful of stocks, and if they are not that confident in that strategy then just buy the S and P 500.
I dare say you of course know all this, and of course it is each to their own. I know you like the managed funds, do you by any chance have one for India, I’m curious ?
Thanks,
Finley.
Correction, got the wrong year.
It was July 2009, at 51p.
Another point on my strategy.
Having been through the mill with several market crashes, my hope is that the dividend income streams will be impacted to a lesser degree and duration than the capital values. I also have insurance in the form of cash.
I've heard the case for holding growth funds and selling to release income as required. I manage four pension funds for family members, with three in drawdown. They are all invested in funds and investment trusts, because I took a decision not to invest their pensions into individual shares. I can handle a 50% hit to equity, but prefer the protection of a 3rd party investment professional to explaining such a market fallout to a family member.
But it leaves me with the problem of deciding when and how much of the growth funds I need to sell down to cover monthly income requirements. Much easier if the natural dividend income exceeds income requirements but their funds don't allow me the luxury. The following link describes a strategy that might be of interest to others with the problem.
aaii.com/journal/article/10681-optimizing-retirement-withdrawals-using-the-level3-strategy?printerfriendly=true#
Meconopsis, I think the thread deserves a new title.
Well, that was a shocker – Berkshire’s holdings. Sadly, I think many private investors have a similar profile to their holdings, but probably not with Apple at the top. Going by the boards of some stocks I follow for amusement; the headliners would be stocks 99 out of 100 investors have never heard of. In Buffett's defense, while Apple might not have the near term growth expectations of Nvidia, for example, I think Apple is likely to be around 20 years from now - another Coca Cola - I wouldn't be so sure of Nvidia.
As I’ve transitioned from a position with employment income and investment income into retirement, diversification has been on my mind. A conventional route in retirement would be an allocation to bonds and annuities. Not for me but appropriate for many investors.
Frequently, over the decades of my investment career I’ve looked at bonds. I love numbers and have played out various scenarios with ladder structures around bond interest and duration to pay a reliable income stream, but ultimately rejected them on the basis equities prevail over the longer term.
Last year, a family member with a very low investment risk threshold asked me for advice. (Many years ago, I completed 3 FCA certificates, so I know the importance of client assessment.) Knowing he doesn’t have any dependents, or close family, I suggested he consider annuities. He chose not to, but the exercise prompted me to look at LGEN. I saw a company paying close to 10% dividend yield with an expectation the dividend would grow at 5% over the following 2 years. I noticed that many other UK companies had also entered the high yield sphere. Previously, I’d been more focused on growth plays. While I maintain that a good growth stock will likely produce a higher total return than LGEN paying 10% growing at above inflation, I chose to move a large part of my portfolio into the high yield sphere.
While I’m still tweaking my strategy, my thinking is that the dividend payers cover more than my income requirements, which allows me to invest the excess back into my preferred growth stocks and a bit back into the high dividend sphere to enhance the inflation proofing of my dividend income. (I think that explains it)
I also see this as a good point to be in UK stocks. Whether it’s Brexit, Covid government policy or whatever, I feel the stagnation in share pricing may be coming towards the end and as interest rates drop – I think towards 3% - the high yield sphere will be more attractive. The dividend yield on LGEN might fall towards 6% but we’d see a corresponding appreciation in the capital returns.
* When I invested in LGEN last year my portfolio application (Microsoft Money) threw up an investment I made in LGEN in July 2008, at 51p. Highlights the chaos of the period and the case for not over trading - I sold the holding a few months later, probably trading into something going the other way.
In isolation, no. However, even allowing for the size of their holding in Apple, Berkshire are still well diversifiedacross other shares and businesses they own. I just think it can be an uneccesarily high risk for private investors to hold a very concentrated portfolio.
That's my view but each to their own.
Hi strictly, thanks for your reply.
I’m pleased to hear about your recovery from a dire experience through the 2008 financial crisis. Single company investment certainly heightens the risk through such a period. I’ve been through four crises in the market, 1987, tech 2000, financial 2008 and Covid 2020. In each I lost c.50% of my equity. The lessons for me were don’t panic (or panic early), and don’t overtrade – others will have their own strategies. For my part, I was on a 6-month sabbatical during the summer of 2008, surfing and working games reserves in Africa. In October I was in a lodge in Zimbabwe, when the English owner told me about the financial crisis – the first I’d heard of it. Later that month I returned to market chaos which only turned the following March – remember Haines bottom?
I recall your focus in the housing sector was on tangible book value. Given Bellway’s focus on organic growth I could imagine Bellway featured in your recovery plays, but my focus is on the macro, as was my question yesterday - what’s different this time round for the house builders. While I understand your decision to rotate to a different sector, I’m left wondering why you think the traditional builders will return to their previous growth rates, albeit starting 3-years out.
I’ve posted my macro view to the Vistry board, in which I attempted to make the case that it will be different this time for the traditional builders, hence my preference for Vistry’s partnership model. I post my ideas in the hope of receiving a response along the lines, you’re wrong and this is why!
Yesterday, the FT posted an article on housebuilding. The key stat is that the number of completions would fall from an average 210,000 over the past 5 years to 160,000 over the coming year (to March each year).
It prompted me to write a post, again expanding on my current views on the sector macro. I didn’t post – didn’t see the point - but I came to this LGEN board and saw your post, which piqued my interest in your reasoning.
While researching my post on the FT article I came across the interest rate chart in the link below. It graphically illustrates the following wind the house builders had post 2008, and the headwinds they face today. When the latest peak in the house price to earnings ratio was 7.0 (2020), the BOE interest rate was 0.1%. It seems a forlorn wish to expect that ratio to be achieved again while interest rates remain much higher. The current forecast is for a reduction to 4% by the end of 2015.
https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
* For balance I'll post later my thoughts on LGEN. I don't think I've posted here before.
“Is that why Berkshire Hathaway 'only' owns around 40 shares and 65 companies?”
Number of companies isn’t a good measure of diversification. It’s the relative levels of investment.
The graph here shows how undiversified Berkshire is currently - https://www.investopedia.com/buffett-berkshire-hathaway-annual-meeting-2024-8643136#toc-2024-05-04t185435023z
“… thanks Meconopsis, for your contributions…”
Much appreciated and you’re welcome. I’ve benefitted from your insights on the HB side.
I’m fairly well diversified but with a few holes to fill out. Easy when you’ve been fortunate enough to catch a bagger to think that’s the way to go…. Experience has taught me otherwise
Finley1 - " . . . as Mr Buffett states common mistakes with investors is buying into the scenario that investors need a diverse portfolio . . . "
Is that why Berkshire Hathaway 'only' owns around 40 shares and 65 companies?
Strictly, as Mr Buffett states common mistakes with investors is buying into the scenario that investors need a diverse portfolio. Buying less than a handful of companies is a very good strategy and buying on the dips has served me very well.
I’m like yourself and have a reduced holding in the house builders, but I’m minded to the fact of interest rate reductions and whether the Tory’s do something with stamp duty in the next budget. It’s quite clear that rotation is now in play and investors are buying the London market
so finally, and hopefully investors will see stocks increase to the eye watering PE’s afforded to the yanks, or least better than the historic lows.
Something to think about.
It's foolish to invest those percentages in any single shares imo, but hey it's your money
So best of luck anyway
Continued....
And my view of the FTSE100 at that time was that, overall, and to borrow from Kipling, it was “A trap set by knaves for fools” and I’d analysed the entire index just a few years previously so it was an opinion based on personally researched numbers not mere personal jaundice…
So, I don’t think I overlooked the big insurance boys (I haven’t gone back to check the numbers for this comment) so it’s probable that their share prices at the time against dividend payouts made the yield far less than the 10% it is now…?
And bear in mind that the Game of Strictly Bricks (which is where I get my nom-de-plume here from) was producing an average gain of around 20% a year with underlying house builder ROE combined with inter-house-builder trading for further gains on top.
So, as of how I see it now, the two roads forward seem different for the medium term compared to back in the day…?
What happens as, if and when Bellway & co get back well the right side of 10% ROE, or the insurance boys start to disappoint, well ~ I don’t know yet…?
But, as of right now, I’m 36% Bellway, 14% LGEN, 25% M&G and 25% Phoenix.
I appreciate that having that few number of different holdings would likely make many here shudder, but I am someone who has been happy & comfortable for the past twenty years to be 100% invested in a single share if I’ve thought the perceived value warranted it ~ as I fortuitously was in Redrow at the time of the Barratt takeover earlier this year…
Nice to have got something right…! 😊
Strictly
Londoner,
Firstly, I thought I'd change the heading as it gets confusing if people are discussing other topics under the same title...
You’ve asked a good question, so let me do my reasonable best to give you a good & fulsome answer ~ hopefully it’ll all fit into one comment.
2008 was an absolute sh.tstorm for me…
I was largely invested in Barratt at the time the smelly stuff hit the twirly thing…. then, as now, I was pretty much completely reliant on investments for income by that time; I was heavily leveraged to be able to invest more; and I was significantly investing in a heavily leveraged company.
The upshot was that, in order not to be selling shares at below bargain basement prices in order to pay my Sainsburys bills and whatever, we sold our house in the New Forest and relocated to a somewhat more modest property on Dartmoor ~ and that’s as in “on” Dartmoor, not “in” Dartmoor, which has a whole different connotation and I didn’t break any laws in moving.
Without getting into it, it also took a toll on me personally, but I took the view that the plan was to stick with it, wait out the recovery that was almost certain (IMO) to follow, and to continue to trade my way through it.
Bowed but not broken, maybe..?
And the volatility between different house builder share prices in 2009 provided wonderful opportunities ~ not to be seen since, sadly ~ I made a 150% gain that year which got me out of jail (metaphorically, of course, not literally).
This time round, well, based on scribbler forecasts for 2026, we’re looking at a slower recovery ~ pfreviously, it took Bellway seven years from a pre-credit crunch 20% ROE to get back to their average 16% ROE whereas, this time, seven years doesn’t get them half way back.
And while we are likely to lose Gove in the coming election (hurray!) he’ll probably be replaced by someone even worse from the new mob (boo…!).
Strictly, interesting to see your switch in sectors. I've a position here in LGEN, which I entered for the reasons you've described - a high dividend yield, likely to be inflation proofed in the foreseeable term - but the capital markets presentation next month will be key. I have a diversified portfolio, with LGEN my position in the sector. I prefer to weigh sectors rather than companies within sectors. But I understand your strategy and the success you've had within the house building sector.
Good luck weighing the relative merits of LGEN, MNG and PHNW. I look forward to your analysis.
But the reason I'm posting is the ask, why the switch now, when you stayed with the house builders through the financial crisis of 2008, what's different this time?
Personally I would NOT be distributing your dividends like so.
There is trouble ahead and if you follow BUFFETT in USA, he has a cash pile of $200bn as of May .
I would be topping up in large sums not in tiny amounts at lower levels .
Your paying to invest in these prices, sounds rather daft. But everyone is different.
Recieve your income hold it, and throw it at stocks when we get a large drop like what Buffett and I’m doing.
There are no bargains at the moment anywhere…
Gary,
In sharp contrast to my approach to investing in house builder shares in which I tend to go right into the in’s and out’s of a duck’s a.se when it comes to the vital numbers, I have taken a somewhat different approach with these big insurance/pension companies.
I have invested in them fully mindful that I don’t have more than a minimal understanding of their balance sheets ~ so I am not using book value growth or return on equity as metrics despite this pretty much being indelibly tattooed on my forehead when it comes to builder shares.
What I have considered is how big these companies are, how long they’ve been around, what their dividend track records are and what their stated dividend policies are going forwards.
As I said before, Bellway are projected to only be making a return on equity of 7% by three years’ time ~ still only marginally above the 6.5% they made in 2020, the year of covid…. since then, of course, they’ve also suffered the headwinds of cladding, Gove, Vlad, inflation & interest rates…
So, how many years beyond the next three will it take to get back up past 10% ROE, which is the sort of dividend yield alone available on two of the three insurance boys let alone that if that dividend increases it implies at the least a confidence that there is underlying profitability of above 10% ROE whatever the latest government accounting requirements may be.
I freely admit I can’t understand why Mr Market has allowed these FTSE100 boys such a big yield, but if it’s based on the fear of something I’m not aware of then that seems a long time manifesting given that these div payouts have been high for years…?
My feeling is that most posting here are also likely similarly basing their decisions to invest in these companies on the div yield & track record without necessarily having any more insight into the companies’ figures than I do ~ though an obvious & impressive exception to that is Meconopsis on this share chat who clearly seems to know what he’s talking about.
So ~ thanks Meconopsis, for your contributions here.
Gary, I probably differ from you in approach given your comment “I’d like a little drop before I buy” as I consider that to be calling the market which I do not have the ability to do, unless you’re looking for a price shift relative to a different share that you’re holding and which you’d trade out of to buy into one of these under discussion…?
However, having now moved two thirds of my portfolio away from house builder shares, I remain undecided at present as to what would be an appropriate point to go back into Bellway et al..?
That would likely depend on the relative share price movement.
I mean, on what happens to Bellway’s, etc., share price as well as to LGEN’s, MNG’s and PHNX’s…?
Strictly
At the risk of being accused of a "love in" may I wholeheartedly welcome you to the LGEN chat board Strictly. Like yourself I have LGEN in the folio but MNG & PHNX are just on my radar at this time, I'd like a little drop before I buy & it's a while until any reach ex-divi territory. Perhaps an insurance blog SB? I for one would be very interested in your take here. Good luck to all & happy bank holiday from the beautiful Quantock Hills where the sun is shining, at last!