3 Very Quick Share Ideas From Neil Woodford

What report?
Neil who?

Yeah, let's have a special report about Doris.

Thanks F958B
"Your portfolio is significantly skewed because you entered markets at the beginning of a strong bull run."

How does a bull run help a dividend reinvestor like me?
It would obviously suit my book for the market to tank as low as possible short of the whole economy going into meltdown.

More to the point, it's certainly been a buyers' market for me so far, and I don't yet know how on earth I'd ever cope with a sellers.'

You're absolutely right to raise the question of inflation, but your examples are a bit selective - I don't know the numbers for 1996-2012, but all experience suggests that for the last eighty years or so, and for just about every decade therein, it's averaged about 5%.

ANuvver

You and I were having a learned discussion - under Harvey's "Market, Please Crash" - about timers and pricers etc until we were so rudely interrupted.

You: MK's success was very much as a pricer and a long-term holder. He would doggedly stick to underwater positions he believed in, rather than trading out of them.

Me:Thanks for that - it'was news to me, and apparently quite true.
Very odd though.

The Crest fund was launched in about 1929, while his General Theory Cap XII, reputedly the locus classicus - I know you like your Latin tags - of MK's views on investment was published long after he apparently became a pricer.

You wouldn't think so if you read it, as I've just done.
Really weird.
What 's even weirder is that WB endorses it whole-heartedly.

Anyway, let's look on the bright side.

It gladdens the heart of a pricer like me to learn that a one-time timer, whom I'd always thought to be the greatest speculator in the history of investiment, was actually a dismal failure who had to be bailed out by his rich Daddy; yet he eventually saw the light, remustered as a pricer and made himself and his beloved Kings College, Cambridge a very satisfactory killing.

Or have I got it all wrong?

Goodlifer:

Wouldn't have called it all that learned (at least from my side)! JMK did indeed go through the seven ages of man, as do we all. He was also quotably known for changing his mind when necessary (much like Uncle Warrant). It is possible to be a prescient macro analyst but a lousy investor and vice versa.

He also, IIRC, came up against stiff opposition from the dons over leveraging college property for investment purposes.

In common with F, I don't see pricing and timing, to reintroduce your division, as exclusive philosophies. Our approaches seem to be similar. I agree with him also that anyone starting three or four years ago has been spoilt, and should maybe guard against overconfidence.

My holdings are split (often arbitrarily) into income, growth, fixed income, commodities, property and cash. The income section is far and away the largest allocation (I'm extremely conservative at heart), but I also regard trading cash as an asset class.

Its value is in opportunity, which can't be spreadsheeted. Well, I'm sure there's some clever way of quantifying optionality or some other pertinent metric, but I don't go into that (although I do keep an eye on the VIX).

This is the part of my portfolio where I exercise my opinion, my attitude about macro concerns. By regarding cash as an asset class in its own right I can play my gut feeling as a percentage game against the rest.

Heigh-ho, back to watching GDP Eurovision... Espana - minus trois points...

Nil carborundum!

Bear in mind that Woody runs funds which invest in stodgy blue chips, mostly based in the UK. He is obliged to keep most of that money invested at all times. He can't easily move to other asset classes such as bonds or precous metals.

Woody's a "safe pair of hands" who generally knows what he's doing with his slow-and-steady approach to his whole portfolio (we all buy and few duds and sell a few winners, but it's the whole portfolio that counts).
His periodic underperformance is inevitable due to constant shifts in market fashions - notice how some big blue chips are among the FTSE's worst performers in recent months due to a change in fashion. It is interesting, however, that a slow-and-steady equity income fund should manage to outperform so many of the equity growth funds. The reason: growth is usually overpriced while slow-and-steady is often underpriced.

Of all the money managers in the UK, I think Woody is the one I'd feel most comfortable with - and probably for you too, from what your comments have implied about your investing style.

Buffy does as he pleases - buying shares anywhere in the world, sometimes wth borrowed money, and sometimes buying entire companies. Sometimes Buffy hoards cash. At times he has been known to dabble in precious metals despite his and his sidekick's recent anti-gold propaganda.

Neither of them are perfect but I have a lot of respect for both Woody and Buffy. I have more of a soft spot for Woody.

Further thoughts.

I'm now inclined to think Mr Woodford's a competent professional who probably does a pretty good good job for his clients.
I'm also inclined to think that people who keep plugging him as God's gift to British investment are in grave danger of making themselves - and perhaps also Mr Woodford - look ridiculous.

One of the reasons why, these days, I don't normally bother to read our Foolish experts' articles,
I just go straight for the comments