Member Info for zac0_4

Robleo - Unfortunately, the freezing of the income tax allowance, the reduction of the tax free dividend allowance from £5k to £0.5k and the cgt allowance being reduced from £12.5k to £3k have pushed me in the direction of looking at reducing the amount of tax I pay.

I've happily paid income tax and never really considered other options. However, because of the points listed above, i'm now stopping drawing down from my workplace pension as I'm taxed at 20% (I recieve the state pension) and I'll simply sell down investments that sit outside of my isa and pay cgt, if needed, on the profits at 8.75%.

And thereby lies the problem. The more governments' increase taxes, the more people will look for legitimate ways to reduce their tax burden. Higher taxes can result in a reduction of tax taken.

Dentonxxx - thanks for the reply. I do like to read salient information regarding LGEN. Some background to your statement would have added context.

You state that the £150m buy back, alluded to in the JPM report, as being very large and a reason not to sell at this time. Why? It represents only 1% of the current market cap of the business. In addition I view a buy back as a 'neutral' transaction with regards to the share price.

" . . . there is a talk of a very large share buyback being announced . . . "

Really? And where exactly has that information come from?

I was under the impression that they had missed operating profit expectations for 2023!!

" . . . If a company pays the same amount out towards dividends every year but buys back 10% of shares also in a year then the following year you will get a bigger dividend . . . "

Really? In 2019 the annual dividend was 32p ps. During the period from the end of 2019 to the end of 2023 BP have spent 22bn $ on buying back almost 4bn shares.

The result? A dividend in 2023 which needs to increase by a further 43% to get back to its 2019 level!

Some interesting points around differing investment strategies and outcomes. I've been investing for 25+ years. I decided to retire early in 2018 and use my investments for income. It's only really since that point that I've started to keep detailed analysis of my portfolio's performance.

I'm pretty much always fully invested and since 2019 my total calendar year returns are as follows:

2019 +21%

2020 +1%

2021 +17%

2022 -10%

2023 +11%

2024 (ytd) +8%

Probably 2019 I was 30% dividend paying assets and 70% global equity funds

Today 17% dividend paying assets 83% and global equity funds of which 20% are tracker etfs

Good luck all!

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.

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.

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?

How can you have reinvested your dividend when it hasn't been paid yet?!!

Tichtich - " . . . You claimed or implied that the price of LGEN was falling over the long term . . . " - You're going to have to copy and paste my comment around the above statement

" . . . your approach ignores the fundamental value of companies . . . " Far from it. My largest holding by far is with Fundsmith. Take a look at their investment strategy and how they define a good company

" . . . I think you've said you're planning to sell your dividend payers . . . " No I haven't. I've been very clear. Dividend payers used to make up around 30% of my portfolio by value. That was too high and a drag on performance. I've reduced this to around 17% currently. Ideally, I'm aiming for 15%

TheTrotsky - Well spotted! : - )

It just goes to show that financial metrics are simply a guide and no guarantee of share price movement. On a PE ratio basis LGEN is a bargain. It's a pity that sentiment is not shared by the market.

I didn't say MSFT was a bargain and it may well be overpriced trading on a PE ratio of 35.

Out of interest what is LGEN's current PE ratio?

I've been steadily moving away from single shares for a number of years now. I've reduced my exposure to around 5% of my portfolio value. 30% in one share is too much of a risk in my view. It's fine . . . until it isn't! But that's only my view.

TheTrotsky - my 18.5x figure was based on a published annualised growth rate for the S&P500 over a 30 year period with dividends re-invested.

My statement regarding 'mind boggling' returns was a bit of a throw away comment. It was based on Microsoft's latest quarterly earnings. Revenue $61.9bn +17%, Operating Income $27.6bn +23%, Nett Income $21.9bn +20%. Growth figures are in comparison to the corresponding quarter 12 months ago. I don't know about you but the level of revenue, income and growth rate are, to me, somewhat 'mind boggling'!!

Tichtich - " . . . Your idea of long term seems to be the last 10 years . . . " - I only use this preiod as most of the analysis from Morningstar / Trustnet only goes back 10 years for analysis purposes

" . . . Over the last 30 years LGEN has gone up 6x . . . " - the US stockmarket, which you keep refering to, has gone up 18.5x over the same period

" . . . US stocks on the whole are significantly overpriced . . . " - maybe, maybe not. Some of the so called tech stocks are producing mind boggling returns

" . . . I'm curious to know what your reaction would be if there's a crash . . . " - probably do what I've always done. Sit tight. One of the reasons I maintain a (at present) 17% exposure to dividend payers is to have some income coming in in the event of a market correction.

For your information my portfolio is split as follows geographically: USA 52.5%, UK 18.0%, RoW 25.6% & cash 3.9%

Tomglan - you'll be pleased to know I've taken your advise and created a simple spreadsheet. However, you won't be as pleased to hear my findings!!

I've taken the mid-point in each year between the high/low share prices as the entry point for dividend reinvestment.

So, my simple spreadsheet reveals the following findings. With dividends reinvested over the last 10 years your initial capital would now be worth approximately 79% higher than it was when you started. That's an annualised growth rate of 6.05%. Well short of your 10% pa

I've cross checked my figure with the published annualised return from Morningstar. They state 6.7% over 10 years. I assume the difference is simply because they will have used actual sp figures for reinvestment purposes rather than an average that I've used.

Tichtich - see comments below. I love a good debate! It's good to have to justify your position and test your theories. So long as we're both comfortable with our investment strategy that's ok by me.

" . . . the market price doesn't matter . . . " - it doesn't in isolation but total return is my key measure

" . . . The stock price only matters when you sell . . . " - agree. However, if a stock price shows a continuous decline over the long term it would be foolish to ignore

" . . . you don't need real growth to get good returns, as long as you have a good enough dividend . . . " - that's assuming your capital is not decining and eating into your overall total return

" . . . Are you sure it's not you who sees the US stock market through rose tinted spectacles? . . . " - absolutely not. It was you that brought it into the equation, not me! I'm more of a global equity tracker fund merchant which, accepted, includes a 65% exposure to listed US businesses

Good luck with your investing

Tichtich - don't forget, with a static share price, the inflation adjusted value of your capital is in decline by about 2.5% pa.

So, your "8.6% p.a. real (inflation adjusted) return" is nearer 6.0% taking the capital inflation adjusted value into consideration. That's assuming the share price doesn't continue to fall year on year, of course!

I might add that I hold LGEN but don't view my investment here through rose tinted spectacles!!

Tichtich - " . . . Current yield is about 8.6%. In principle, if you hold forever and the dividend rises with inflation forever, that's an 8.6% p.a. real (inflation adjusted) return. That's better than the long term average from UK or US stock markets (and probably any other stock market) . . . "

No it's not. The US stock market has an annualised average return of 15.45% over the last 10 years (probably longer!)

Tomglan - how do you get to an averaged annualised return of "just under 10% per year" when (i) you state the average yield has been 6.5% pa, and (ii) the share price is only up 17% over the 10 year period, so an average annualised growth rate of 1.6%?