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Showing posts from March, 2020

A bonfire of the dividends!

Dividends are a function of cash flow, and cash flows will undoubtedly come under intense pressure. (Richard Bernstein- March 2020)
Two weeks ago I wrote* about Buying in Market Meltdowns. One of the features of that piece was looking at the eye-watering dividends that were available in the FTSE100. By way of recap they were (with estimated dividend cover for 2020 in brackets):
1.Imperial Brands (IMB) (Tobacco)- 15.78% (1.22) 2.Shell (RDSB) (Oil)- 13.49% (1.26) 3.BP (BP.) (Oil) - 12.10% (1.22) 4.BT (BT.) (Telecoms)- 10.22% (1.55) 5.WPP (Advertising)- 10.78% (1.45) 6.HSBC (HSBA) (Banking)- 9.14% (1.28) (Source- Stockopedia- 13 March 2020).
Out of interest they now are as follows:
1.Imperial Brands (IMB) (Tobacco)- 15.70% (1.25) 2.Shell (RDSB) (Oil)- 12.1% (0.78) 3.BP (BP.) (Oil) - 10.6% (0.68) 4.BT (BT.) (Telecoms)- 12.7% (1.55) 5.WPP (Advertising)- 11.6% (1.40) 6.HSBC (HSBA) (Banking)- 8.67% (1.25) (Source- Stockopedia- 28 March 2020).
Of course there is an inherent problem in relying on these fig…

Learning from the Intelligent Investor

If you follow the behavioural and business principles that Graham advocates….you will not get a poor result from your investments (Warren Buffett)
I was really gratified to receive good reaction to last week’s blog* on Buying in Market Meltdowns. I’m pleased that so many of you read it and found it helpful.
I’ve been revisiting my reading on the recent period of history that fascinates me most- 1925-1930. Bill Bryson wrote One Summer: 1927 in 2015 and his writing on that single pivotal year lays the essential foundation for what remains burned into the conscience of many investors- the Great Crash of 1929.
I believe that history teaches us how Stock Market crashes come about and crucially how clever investors can profit as we exit such difficult periods. It is pertinent for 2020.
1929 is particularly important as it heralded the Great Depression. My grandfather lived through the 1930’s and his cautious approach to money throughout his life was birthed in that era.
Of course the Great …

Buying in Market Meltdowns

The most important condition for the emergence and continuation of panic is a feeling of entrapment with an impending threat.Enrique Quarantelli (The Nature and Conditions of Panic)
As I sit writing this* on a Friday evening in March 2020, the World seems in meltdown. The words above of Quarantelli seem almost prophetic and the man even has an Italian name. Entrapment is particularly apposite. We know high risk elderly people who are planning to “self-isolate” for months. Many businesses have asked their employees to work at home for an indefinite period. In the UK we all know the threat is coming and will peak in coming weeks and months. It is scary and induces worry.
Thursday March 12th 2020 should have seen horse racing at Cheltenham jostling for attention with the peak day of the largest world property shown in Cannes. The horses were far from the headlines and the property jamboree was cancelled. The reason? The threat of Covid-19/Corona Virus had induced full on Market panic. Th…

Thoughts on Volatility

Volatility is the enemy of the low risk trader and a friend to the gambler that likes action more than making money.Mark Minervini
I went to Spain three weeks ago. I was fortunate to get there owing to Storm Dennis. We were one of the lucky flights that escaped out of Luton on that gale-force Saturday afternoon. It was the bumpiest take-off that I’ve ever experienced and the turbulence was no fun. Whilst we were delighted to take-off and reach our destination, the ride was one to forget.
The recent Market action over the last fortnight has blown me off course in the manner of Storm Dennis. I had been planning to write* about different sectors to buy, the best approach to picking quality shares and why size matters. That will all have to wait. At present, the live Market commentary is too enthralling to ignore.
I wrote a review piece last month on the Art of Execution by Lee Freeman-Shor. The first bad habit that the author identified was that of the Rabbits. Chief failing of that cate…