What Not To Buy: Eighteen Month Review

Alun,
though your portfolio is wackier than mine, I think we can all match this kind of drop on such shares in any particular year.

However who would have expected a bank like HBOS to lose 89%! Read and weep!

"Our (HBOS) strategy has five elements designed to create enduring value for shareholders. A clear focus on our franchise growth across UK financial services, coupled with targeted international expansion to increase the diversity of our earnings. Cost leadership to enable competitive pricing and profitability advantage. Capital discipline to ensure both sufficiency and allocation for value. The achievement of consistently outstanding performance through the development of the best team in banking."

jheenan1,- I can help agreeing with your point,
I don't remember seeing any HYP updates promoted lately, nor a new HYP portfolio (through embarassment?). This type of stockpicking has been a disaster over the past year or more, and as some of those companies reduce their dividend payouts the whole rationale crumbles.
Of course, the enthusiast would say this is a technique for the long term, but at the moment it looks anything but a winner. Many of the shares would have featured well in a "what not to buy" list.

I think the Motley fool do a good job of giving us sensible financial advice mostly for free. At least we've been tipped off not to go buying any of these - without having to pay for the advice.

I can't really comment on the performance of their share portfolio as I've never subscribed to it. I have tried the Fleet Street Letter & Momentum Investor though.

I really enjoyed reading the Fleet Street Letter, and they encouraged me to make my first ever share purchases. Admittedly after a little over a year though (this was just after the Iraq invasion), the FTSE had gone up substantially, but I hardly broke even with their recommendations that I'd followed. I particularly remember them strongly recommending Jarvis (which promptly plummetted) and recommending selling M&S (which promptly rose in value). At the time I considered it bad that they didn't issue an apology - but I guess that's not the way these things work - you have to accept that your investments are at your own risk.

My pension fund selection did well based on their overall market comments though. I concluded that renewing my subscription was too expensive so quit the FSL.

A few years later I tried the Momentum Investor which I also enjoy reading. While not many of their recommendations have been profitable recently (what has), they took the sensible step of holding back on adding investments to their portfolio. More sensible than me, but I can't blame them for my under-estimation of how bad things might get.

Um .... when you say "It's been a richly rewarding time to not be buying", doesn't that smack of a suggestion about timing the market?

>Um .... when you say "It's been a richly rewarding time to not be buying", doesn't that smack of a suggestion about timing the market?

I'm pointing out that a lot of the drop in the portfolio is down to the bear market rather than my skill. I agree with Buffett that it's fatuous to try to time the market.

>Its easy to pick a portfolio of failing stocks.

Well, if was easy then it would be easy to consistently make 30% PA in a hedge fund, but they don't. Even Buffett gave up shorting.
Listing failing companies is easy but the price may more than reflect the failings. I have bought many firms on their knees. Some have failed but the ones that recover, boy do they reward the brave (or should I say greedy?).
I return to this over and over again. The price of a share is on a different axis to its quality.

>Now that short selling is banned, its kind of pointless.
You may have missed my warning under the table that "this is not a portfolio of companies to short sell." The point of the articles is to illustrate stock picking principles in a contrary way. There are hundreds of buy tips out there.
As to shorting being banned, only bank and insureres are protected in this way. You can short every pick in the table except Northern Rock, and that is delisted.

regards
Alun Morris

I'd just like to confirm Neil's point about the HYP.

Stephen Bland stopped writing for the company in early 2008, and I decided not to continue the HYP in his absence. It was very much his baby, and I wasn't sure that anyone else could carry on in the same way.

There's been a long and lively debate on the pros and cons of HYP on one of our discussion boards. Take a look if you're interested: http://boards.fool.co.uk/Message.asp?mid=11127481

Ed

Ed, Neil,

When I wrote that post about HYP, I hadn't realised Stephen Bland had stopped writing, which explains the silence. I DO miss his writing and style, and I think it's just unfortunate that many of us discovered his wisdom at a point when this type of yield investment became unpopular.
I know all his comments about income etc, but I am only half convinced. At present I'm badly burned on the HYP part of my money and even some of the income is reducing in the current round of dividend cuts. For now, it has to said, that the half of my portfolio run with stop losses and charting in mind is in the ascendant. After this slaughter, the HYP section could take a 5 years to recover.