Saturday, 5 July 2014

The 'Reverse Bubble' (Portfolio Sale)

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One of our human investing behavioural biases is the fear that a paper gain we have made on an investment will suddenly be snatched away. This bias leads us to sell winners 'too soon'. Of course, the difficulty is identifying 'too soon' - I haven't yet found anyone putting forward a coherent strategy for when to sell, other than 'not too soon'.

My own observation is that the high-yield securities I aim to buy tend to behave a little differently to the run-of-the-mill 'value' shares. Not all high-yield is 'value', of course - the skill lies in sorting out the fatally flawed from the temporarily disabled. A high yield opportunity often exists primarily because of a perception of risk that is subsequently proved to be overly pessimistic. In other words, it is like a 'reverse bubble': once it pops, the price returns to 'normal' levels.

Friday, 4 July 2014

On Doubling Up (Portfolio Buy)


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The dividend shares I buy. as well as being 'high yield' are usually 'value' shares, in the sense that their price compares favourably with their earnings and book value - and they don't have too much debt. The market will be worried about something else about the company - hence the high yield.

It may be hubris, but when one of my 'chosen ones' falls in value, and this is for no apparent good reason, I often consider 'doubling up' - buying more on the price drop in the hope that the price will quickly rise again. This is obviously putting myself at odds with Mr Market (but then that's what I do a lot) - but it seems to work, more often than not.

So, when should you think about doubling up?

Tuesday, 1 July 2014

More ETFs (Portfolio Buys)

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With an average yield of (now) 6%, the DIY Income Investor portfolio is throwing off cash at a satisfying rate. Add to this the sale of both profitable and unprofitable investments and the portfolio hit a substantial cash glut over the last few weeks.

I don't like holding cash in an investment account, as it just sits there, lazing around figuratively watching the Footie or Wimbledon, rather than earning its keep, like it's supposed to. Personally, I can't wait until I can access Ratesetter's peer-to-peer lending rates from inside an ISA (now the New ISA or NISA) or SIPP.

Until then I need to keep looking for better uses for the cash - and the long-term strategy says 'buy ETFs when the yields are attractive'.

Monday, 30 June 2014

London's Juicy Bond ETFs

It's all about the juice...
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I'm always on the hunt for interesting Exchange Traded Funds (ETFs). Not just any, of course, but specifically high-yield and preferably geographically diversified. What is slightly surprising to me (given the wealth of data available) is that these are not so easy to find - there does not seem to be a comprehensive list that is ranked by yield.

I recently looked at high-yield dividend ETFs. Today I'm specifically looking for fixed-income ETFs quoted on the London Stock Exchange. So here goes with some more real-life Do It Yourself investing...

Sunday, 29 June 2014

Update on the ETF Strategy (Portfolio Buy)

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Regular readers may be aware that I am trying to increase the proportion of Exchange Traded Fund (ETF) holdings in the DIY Income Investor portfolio. With recent sales and this latest purchase (see below), they account for 30% of the portfolio - but I'd like to buy more.

So why am I a fan - and why am I buying some and selling others?

Thursday, 26 June 2014

The New Sell Rule (Portfolio Sale)

In the new 2014/15 financial year I started implementing a new 'sell' rule, to deal with the unpleasant - but necessary - task of getting rid of poorly performing investments. At the time this helped me to rationalise a clean-up of the portfolio, getting rid of long-term losing 'trees' that would provide a better overall view of the investment 'wood' (so to say).

Having adopted the rule, when it flashes 'sell', then I now feel much less reluctance to take the loss and move on.

Monday, 23 June 2014

The Old Crossroads

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I've just come back from my first visit to the small-but-perfectly-formed East Anglia Bluegrass Festival. During the weekend several bands performed a gospel song made famous by the late, great Bill Monroe - The Old Crossroads.

Although this music may not be your cup of tea, the chorus has a warning that has familiar ring for investors:

The old crossroads now is waiting
Which one are you going to take
One leads down to destruction
The other to the pearly gate


Thursday, 12 June 2014

Renewable Energy (Portfolio Buy)

What would the Don say?.
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After getting a bit depressed about the options for good yields on offer for my current cash pile, a comment from a reader cheered me up - hopefully, in a good way.

I guess that most of us have become more aware of the environmental impacts of our activities. Despite trying to 'do the right thing' environmentally. I have always been a bit sceptical about alternative energy.

Until now, that is...

Tuesday, 10 June 2014

Selling the Crown Jewels? (Portfolio Sale)


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Yields are falling all around as both dividend shares and fixed-interest prices are rising on the London Stock Exchange. Perhaps it's due to an influx of Euroland money, seeking a safe haven - who knows?

But it is providing a bit of a conundrum for this DIY Income Investor.  The latest portfolio sale is almost shocking - kicking out the poster boy for the portfolio as a whole. It shows how difficult things are to judge right now.

Saturday, 7 June 2014

Consols 4%

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In the world of yield-oriented income investing, you have to accept that the goalposts are always moving. Mr Market is continually changing his mind, lurching between euphoria and despair, swept along by a never-ending stream of news, both trivial and significant.

In all this churning activity, for the UK-based DIY Income Investor one important reference point is the undated UK Government Consolidated Loan Stock, with a fixed coupon of 4% - affectionately referred to as 'Consols 4%' (LSE:CN4).