Member Info for Cpt.Hornblower

And maybe today you gain a bit more insight???

Anyway I am happy, I didn't get to fill my full allocation, but I have (maybe!!!) achieved the holy grail, a fantastic dividend and rising share price.

My average buy in price is less than 2.2 pounds. And whilst not replacing the British Pension equivalent (haven't bought enough shares yet) I am 50% of the way there, and now I have not just the dividend cash flow but maybe that holy grail, capital appreciation as well.

Lets see how this goes.

But remember the Bible wrote this, and its in the old testiment.

And now we are starting to see the market's reaction.

For those that had the courage and added to their position below 2.2 pounds very well done.

In the short term the market is a voting machine, in the long term the market is a weighing machine.

The timing between both can be significant, but the weighing machine will win in the end.

And yet for those that were brave enough to acquire, we now have (at least temporary), that ultimate of share holder total returns, rising share price and excellent dividend

The key risk in my opinion is that the Market realises, that there is an inherent risk in buying out private pension schemes, and that risk is that L&G is effectively underwriting the risk.

If things really go to pot, then L&G has significant risk through its underwriting of guaranteed pay out of the pension scheme. I hope their premium is both adequate enough, and they are withholding sufficient premium to build a hedge against this risk.

This is my No 1 concern.

Lol coulda, shoulda, wooda.

Isn't harry hind sight a wonderful thing!!!!

We are all experts at judging the past.

But the past is the past, its the future that counts when it comes to future wealth creation!!!

But here is a beautiful titbit, extrapolation of pasts results, does not work so well into future results.

It's not so simple as a binary situation.

So let me say this a different way. Warren Buffett says if you 'buy a share' you should be prepared for the stock market to shut down for 10 years.

So let me say this a different way,

Forget the movement in the share price, pretend for a moment you have no idea what the share price is.

You bought at your share price in 2018, you have subsequently received dividends. Without knowing the share price, are you satisfied with your return????

Hi Lending, in the short term the share price does not represent the value of the company, as the pricing of that share is a 'voting' machine.

In the longer term, the share price will evolve and reflect the value over time (note this can be up or down).

Warren Buffett obtained this key piece of wisdom from his mentor Benjamin Graham, who coined the term 'voting machine and weighing machine'.

That's my point, very very politely.

You have been in this share for 6 years, your result has been disappointing.

But may I ask, when you entered L&G six years ago?

What was the dividend 6 years ago?

Not trying to make fund of you, this is NOT my intention.

But securities, are not random chips at the casino. There is a business backing up that share price.

The price one pays for a unit in that businesses, is the share price.

I think far too many people confuse the share price with the value price!!! Or Intrinsic Value Price!!!

With L&G current share price, I don't really care if the share price doesn't go up for 20 years, so long as L&G business fundamentals don't tank to such an extent that the dividend is at risk.

At a 9.4% dividend yield, I don't need any growth, I don't need share price appreication. I just need the underlying business to make its profit.

Price is what you pay, value is what you receive!!!

Until you don't get your 4.5% risk free. This 4.5% risk free will not last forever.

It may last longer than expected if interest rates remain higher for long, but it will not last forever.!!!!

As that 4.5% risk free rate declines over time (only a matter of when, not IF), then L&G dividend that is rising (even if only 2%) will look increasing more attractive.

My suggestion: re-run you own hypothsis at 4.5%, 4%, 3.5% etc

I don't think we are going back to a zero % interest rate world anytime soon, but you can work it out.

Of course you are searching for the holy grail of investments:

decent dividend and rising share price. Tha'ts the ultimate.

But consider, why is the dividend yield so high???

Market is very sceptiable of L&G.

But Mr Market is essentially a voting machine.

I am slowlypositioning my self for your 'holy grail' of outcomes.

Both rising share price and rising dividends :)

Come and check on my in a few years :)

Thanks for the heads up. I will be very very interested in seeing share pricing activity post this.

Its in my diary now.

Again thanks for the heads up.

That's great news and thanks for the heads up re Trading update.

With recent bond yields spiking back up, this may have a negative impact on the trading update.

Let's wait and see.

Any significant pull back in share price as a result of such anouncement (remember its just number flow between the balance sheet, P&L and future obligations) gives me another opportunity to top up.

Does anyone think we can hit around 2 pounds even?? That really would be a very nice top up point. But I think I will settle for around 2.05 pounds. Good enough for me.

Please Please

Sorry I SO disagree with you on this post.

Share price only matters when one is considering buying/selling.

Why? because at this moment in time, the decision to buy/sell should be made against the intrinsic value of the company per share.

Yes but the dividend has continued to increase regardless.

Isn't it a matter of price is what you pay, value is what you receive?

Market hated Aviva, until it didn't!!!

Surely we can't determine Mr Market's temperament to future pricing of the share.

We can self determine the price we enter, upon which we are happy with the future returns generated by the company, regardless of the movement in share price. Given share price is what one pays. But future returns are what one receives.

Anyway I am happy with my 9.5% dividend return (I am humble and only seek a 10% total return a year, at 9.5% I only need 0.5% capital appreciation over the long term).

Share price will do what it wants to do.

Its long term profits I am focussed on. Mainly company generated profits, not share price movements.

But that is just me.

Isn't this both intelligent, and forthright commentary by management.

Of course further buy backs will be subject to future profits and financial conditions.

I would be more concerned if management said 'yes unequivocally' future buy backs will be maintained at X.

I am sorry but why is L&G 'crap'.

Is it because the definition of 'crap' is the movement in the share price?

Sorry I just don't understand.

Because these are accounting standard mandated adjustments to the balance sheet. essentially that as bond yields rise, the value of the bonds on hand deteriorate. That detoriation needs to be reflected through the unajusted P&L expense and a decrease in the 'investment' assets mark to market on the balance sheet.

That's why legal and general is appearing as a PE of 30+ when its real non-accounting mandated P&L is NOT.

The essential thought: the balance of future payment obligations, against assets held. If assets held decrease (because of mark to market of the assets), but the future payment interest rates on the assets increase (because of higher interest rates on those assets), then there is no change, accounting standards be stuffed.!!!

It's a simplistic excercise for me.

How many shares and dividends do I need to replicate the British pension. British employees have to contribute how many years of a portion of their working income to be eligible for the British Pension.

My excercise, is stuff all this. If i don't want to slave away for many many years working, just to get this income, how can I fast forward it, and just buy shares to match it.

20/30 years constantly putting money into the state pension pot (and does the UK even seperate this money out and say 'yes its yours'). Or does this money go into government consoliated revenue to which the British Government 'promises to pay you in the future??'

The forma, I like, but its the later which I suspect. I suspect its a forma future IOU pension that's unfunded.

So isn't it better I have my pension lined up directly, my capital, my dividends, nothing to do with British Government, unfunded future commitments that they IOU promise to give me (whilst being unfunded).

I can't copy and paste.

But if one goes to London SE fundamentals tab, and look at the revenue, profit, earnings section, and then the balance sheet, we have both profit and equity going up.

The counter risk is that with L&E taking on more counter party risk (if things go to pot, L&E is on the hook for underwriting the defined benefit plans).

For me this is a calculated punt.

If L&G goes belly up, as the underwriter, well many thousands of pension holders are going to wake up and find no more pension. Given what happened to Liz Trus, government will step in.

Maybe I am simplistic in my thinking.

2% dividend increases, when the yield is already 9.5% does me fine.

Whilst bond yields are going through another ruction, my firm belief is that UK interest rates will go down. Its just a matter of 'when' not 'if'.

Right now it looks like that might take a bit longer, but that's ok, Legal and General Share price drops as a result. So as I slowly dribble into the position on lower share prices, aren't I compensated for this with additional exposure???