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Milliethedog - the answer to your first question posed to Thronegames is clearly yes. However, you can't simply factor the drop caused by Covid out of the equation. It's very relevant. L&G dropped 57% from its high this year to its March low point. It has now partly recovered but still needs to deliver 41% growth from here to get back to its Feb high. UK dividend paying shares seem to lack both resilience and recovery attributes.
Thronegames.....because it was filmed there?
Tell me, is your FTSE performance so poor simply because of the March drop due to Covid 19? If you factor that drop out would your overall FTSE equity return be more reasonable?
Also, is your moving into cash strategy driven by any particular worries? Do you see the US markets having a 'correction', impacting on US equities? Or is there another reason.
Curious to know.....
M
Zac04 and MillietheDog (wouldn't it be funny to ask people how they chose their names?!). Thanks for the conversation. Firstly Millie, no that was not the article as far as I can see; it was about 6 weeks ago in a CNBC direct quote from Buffet that most people should not choose individual stocks and by implication buy into an ETF or managed fund of some kind. I have actually started to move my pension fund more into cash, little by little. I have 50% invested in funds through Std Life ; they are more or less index-linked. I'm kinda stuck with SL for the next couple of years due to exit charges; all their funds seem to be index linked but with a weighting in about 10 particular stocks. The other 50% of my investments are individual stocks. I have been hugely over-exposed to the FTSE 100 though in the last couple of years through individual stocks and I would say my buys have been disastrous! LGEN is the only one that has performed. I have also had a punt on the AIM with EUA shares and this has single-handedly rescued me! It's encouraged me to speculate a little on a couple more AIM shares, cautiously. What makes things worsefor me is that I am in Ireland, so buying in euro has left me about 7% worse off over a year based on weak GBP and dollar. I am well diversified though and any uplift in trends mentioned could have positive impact. My overall strategy is to move slowly to cash while monitoring trends. I've been trading stocks for over 20 years; you'd hop I would have learned something! But no. I am coming to the conclusion that it's a 'mug's game', and this is exactly the time that stocks will take off!
Thronegames - I'm not clever enough to determine how much of a disconnect there is, or isn't, between markets and reality. On that basis I'll continue with a buy and hold strategy. What I am betting on is that with a growing and ageing global population growth will continue long-term in demand for healthcare, infrastructure and technology will continue to disrupt. Hence my position in the 3 tracker type funds I've mentioned in a previous post. My other funds are invested in businesses that produce a high return on capital, a large proportion of which is re-invested into the businesses rather than being paid out to shareholders in the form of dividends. To date these funds have produced better overall returns than my individual dividend paying holdings. Hence my medium term strategy to move away from individual, dividend paying, shares. Whether this proves to be the correct decision only time will tell.
Throne...possibly your coment re Buffett article.
https://www.marketwatch.com/story/warren-buffett-said-this-metric-signaled-the-2001-crash-now-its-sounding-the-alarm-on-stocks-around-the-world-2020-08-12
Zac04, I've slowly been coming to the same realisation. Buffet said recently that people should probably not invest in individual stocks. Anyway, I'm stuck with a few at the moment. The only ones I've been impressed with are some of the big names on the Nasdaq like MSFT and AMZN, AAPL whose share prices have risen inexorably, bouncing back from every setback. I'm sticking with LGEN for a while. My biggest concern is the disconnect between markets and reality; not sure that the inevitable recessionary impact of COVID is priced in and there may be worse to come.
Hi Thronegames. Let me try to answer your questions then explain my thinking / strategy. I'm deciding to hold LGEN and sell, albeit when the time it's right for me, SLA simply because I'm in profit on LGEN. If LGEN cut the dividend I'm off! After many years of investing I've finally come to the conclusion that investing for income, ie dividends, is false economy. Simply investing for capital growth via proven investment funds (OEICs) and taking capital when required is far more beneficial. Here's an example. If you'd have invested £10,000 in LGEN 5 years ago you'd have received dividends over the last 5 years to the value of £2,887. However, your capital is now worth £8,426. So a nett gain of £1,313 (13%) over 5 years. Now take my largest holding by far, Fundsmith Equity fund. Had you invested £10,000 in that 5 years ago and at the end of each year drawndown capital to the equivalent value of the LGEN annual dividend you'd have paid yourself the same as the dividends, ie £2,887, however your capital is now worth £20,221. A total return of 131% v 13% here. Good diversified funds offer less risk, less sleepless nights and far better returns. The above is my opinion, fact based however, only. Good luck.
Zac04. Yes our situations are similar. I'm stuck with BP and RDSB too for a while. One question for you though. I have been having a look at SLA and ex d is next Thurs. Dividend still sounds secure; they sound as if they want us to think they have some moral obligation to income investors during these difficult times bla bla bla. As div is the same approx as LGEN, why do you propose to sell SLA? I know the div cover is not that great. Finally, I'm wondering what altruistic rationale LGEN have trotted out for maintaining the dividend? I'm also wondering if next April's high payout will be maintained? - they know they would be forgiven for a cut, given what's going on in the divi market at the moment. The dividend is the deciding factor for me as to whether I hold, increase or sell. What do you think?
Thronegames - I'm in a similar situation, in that my dividend paying UK listed shares have underperformed for many years and have not protected my capital at all during this difficult period. I'll probably continue to hold L&G so long as the dividend remains in tact. My other holdings, BP, RDSB and SLA will be sold once I have feel the time is right. Luckily only about 20-25% of my total portfolio is in individual shares. The majority is held in a combination of managed and index funds, about 12 in total. No real complaints I'm happy to say. The only point I would add is that my index funds track sectors rather than simply the FTSE or Dow etc. As examples I hold 3 index funds tracking global technology, global health & pharmaceutical and global infrastructure. Good luck with your investments!
ecc....i guess it would depend on whether you think there is going to be a crash/correction in the markets.
If this did happen & your portfolio lost 30%+ of it's value then, as they say, 'cash would be king'...
M
Dam it I wish one could edit these posts, I meant investor not "adviser".
Mr Buffet:- "Cash always loses." Now one has to realise that he is a medium to long term adviser but why does he say that? Simple, unless one can find a cash deposit account offering interest after tax above the prevailing inflation rate, your money is steadilly trickling away it's purchasing power. You have found such a deposit account?, oh do tell me.
Millithedog, in answer to your question, I haven't a clue! I would love if someone would give me the LGEN quote about sustaining the dividend. Oh alright then I'll google it ffs!! But if you look at Dow and Nasdaq, they have historically recovered strongly from corrections....that's based on charts I've looked at. UK stocks have been miserable by comparison over the last year. UK is basically 3rd world economy at the mo. Spent a while this morning looking at Standard Life charts and supports that. I listened to Warren Buffet's assertion that "most people should not buy individual stocks" and I thought about that and went 50% for index funds 8 months ago[ weighted in China and North America. I still - foolishly or otherwise - like LGEN....!! It's dividend consistency that is key for me here and I deffo see myself buying in the next crash. But markets may be poised for a huge leap forward?
I feel I have predicted 20 of the last 4 corrections.
The US indices are dominated by some very large tech companies whose empires seem to know no bounds....they seem to just get bigger.....I think I have read that most of the US market By number of stocks is in bear territory....
At the moment there just seems to be endless money for tech. Who would have thought Tesla would be the most valuable automotive company around. So yes there will be a correction, maybe not tomorrow or for some time into the future, but when it comes a lot of positions will be unwound by margin calls and there will be a big fall. It is not different this time, just a different time.
I enjoyed reading your post Throne, thankyou. I sold out of Lgen @ 304.6 yesterday in the hope of a larger drop than the dividend. Off 8.4 at the close but bought in recently at around the 207 mark (31stJuly), so am going to hang on a little more.
Can i ask you if you, or anyone, has an opinion on a possible correction in the DOW or Nasdaq?
There also seems to me to be a disconnect between these indices & the 'real' world.
M
The market is unpredictable. My FTSE 100 dividend payers have disappointed in every way over the last 2 years for obvious reasons. I am interested, RT003 in your strategy of buying LGEN, BP and RDSB at lows. I am invested and hold in all three of these for a number of these and anytime I topped up, I have been stung - with the exception of LGEN. I am careful of accumulating though.
When I look at trends in index funds over the last 3 months, 6 months, 1 year and 3 year time horizons, UK equities has been generally the worst performer in each of these time periods and North American equity the best performer in all those time buckets. I have been slowly selling out of UK individual equities and buying some o the obvious bigger names on the Nasdaq; no matter what happens, they always come back and do well.
The exception is LGEN. I have 'topped up' as you English say at 2.17. I have been moving into cash in my pension fund and will continue to accumulate LGEN for one simple reason. I can't remember the exact words used earlier this year by Director of LGEN but it was to the effect that many people rely on this dividend income stream in old age. That statement stuck out and they have effectively committed themselves to staying with the dividend as the 'Robin Hood' of the FTSE 100! The final dividend paid in June next year is huge, compared to this interim payable in Sept. So while BP and Shell have failed here, many still rely on LGEN and IMB for income. LGEN obviously the better choice by far!
It's a dangerous market though and I have learned to transition slowly to cash with view to buying more LGEN on any serious downswing. That's my strategy; any opinions?