Buying Shares

[Archie_tect]

Source of wealth is to work to create a surplus which one can either share out or hoard... the hoarders remove that wealth preventing everyone from having an equal share for the work they do. The hoarders then do not require to work and everyone else supports them in their idleness... and so the inequality perpetuates and reinforces itself.

 

[Notafettler]

My main aim is or was to buy investment trusts with a large dividend reserve/cover. Preferably more than a year. These tend to be income biased investment trusts. Therefore high income low share growth. An example is city of London investment Trust. Which has raised its dividend every year for 53 years. This is achieved by putting money into the reserve during the good years and paying it out in the bad years.
Investment Trust do not have to trade at there actual value (net asset values) ie the underlying value of the investments they hold and rarely do.
In a crash the share price tends to fall faster than the nav.
Also In a normal market a share that finished the day on 200p would probably have traded at a low of 198p to high of 202p on that day. In a crash 190p to 210p or even greater would not be unusual. Investment trusts are mainly owned by retail investors...the ones that can and do panic sell, so a larger variation is more likely.
So setting a limit order is how I bought most of the shares. I looked at what price the shares were trading at, what the highs and lows were for the day and set the limit near the low. So say I wanted to buy an Investment Trust at 120p 1000 shares for upto 7days. If the price fell to 120p with in 7 days they were bought.

I bought city of London investment Trust which normally trades on a slight premium to its nav. Annoying it didn't give it up. Average premium for the year is 1.8% premium just checked 2.8% Friday. But at the price i paid, i will get a 6.5% dividend and at the moment I am up 9% on the share price.

Sequoia Economic Infrastructure Income Fund Ltd supposedly low risk so shouldn't have fallen much but the limit order was breached and i have it on 7.0% dividend and 8% share increase.

No dividend on this Acorn Income Fund zero dividend preference shares. A split capital investment trust. On a discount of 6%. Still is. Redeems in 18 months which would equate to 7% annualized return.

The latter are not quite what I planned. The rest are all around 8% dividends. Shares which if you check there 5 year share price growth is minimal to negative. Compared to a growth investment Trust ie Scottish Mortgage investment Trust (nothing to do with Scotland or Morgages) it has a share price return of over 100% over 5 years (today's prices).

Now it was assumed that the next bear market would be a product of over priced tech companies share prices falling (think .com bubble). As it happens they are more likely to gain or at least not loose out by the coronavirus. While low growth companies the main stay of income biased investment trusts are the ones that have suffered the most.
Consequently they are the ones that will provide the big share price growth and in a relatively short period of time as they fallen the furthest......that's my guess and thats exactly what it is, a GUESS!! In the meantime I will enjoy the dividends.

Note it is easy to pick the bottom of the market, its called the P.U.L. method. You are 100% guaranteed to buy at the bottom if you use it

 

[Notafettler]

Pure
Unadulterated
Luck
The only system guaranteed to give you perfect stock picking ability.

 

[gbb]

Pure
Unadulterated
Luck
The only system guaranteed to give you perfect stock picking ability.

A former manager of mine used to do stocks and shares, he could equal his annual salary doing it but he likened it to studying form with horses, you can increase hour chances by doing the homework, but ultimately, at his level, as with the horses, it was luck as well.

 

[Notafettler]

Well I bought Lloyd’s shares. They were priced low before the Covid crash then they almost halved. Dividend yield is good, way better than current interest rates so I thought it would be a good time to buy. I’m expecting a big boost after the Covid recession but I don’t plan to sell, I fancy them long term.
Shares values have always recovered well after any crash.

RBS are no where near there pre 2008 price. Even though they "amalgamated" everybody's shares 5 for 1. Don't know in the case of Lloyds.
The latter statement is not a prediction.

 

[Notafettler]

Source of wealth is to work to create a surplus which one can either share out or hoard... the hoarders remove that wealth preventing everyone from having an equal share for the work they do. The hoarders then do not require to work and everyone else supports them in their idleness... and so the inequality perpetuates and reinforces itself.

On the other hand the so called hoarders reinvest there surplus into the business to create a bigger surplus to reinvest into the business etc etc. The result is better paid jobs resulting in a surplus for the workers to spend on important things like beer. Dyson would be an example of someone you are envious of.

 

[Notafettler]

As an aside and not a prediction can anyone find fault with investing in legal and general. Present share price (Friday) will give you a 8.5% dividend. The dividend has been increased by 7% (roughly) a year for more than 5 years. This question is question of knowledge of the downside and upside of coronavirus.

 

[cisamcgu]

8.5% dividend is fine, if the share price stays stable.

but..

You buy £1000 of shares, if the price drops by, say, 30%, then your 8.5% is not £85 as you hoped, but now £59, and your capital is now £700, not £1000.

No such thing as a free lunch

 

[greenmark]

I'm going all in on tulips. I think the market price is ready for a recovery.

 

[Notafettler]

8.5% dividend is fine, if the share price stays stable.

but..

You buy £1000 of shares, if the price drops by, say, 30%, then your 8.5% is not £85 as you hoped, but now £59, and your capital is now £700, not £1000.

No such thing as a free lunch

You obviously can't be bothered to read. The dividend remains the same ie £85. Dividend do not fall just because the share price falls. It remains the same unless the company makes less money. As stated I expect the dividends to rise even if the company shares they own pay them less money because they have a dividend reserve.
If you follow what i wrote I bought when the shares fell it is the equivalent to saying I bought at £700 with an 8.5% dividend. As the price falls the dividend as a percentage rises. I have no idea when the market will recover or if it will fall again and further.
It is quite astonishing that you think that the dividend falls in proportion to the share price. Please do some research before ever consider investing.

 

[Notafettler]

I'm going all in on tulips. I think the market price is ready for a recovery.

A neighbour is florist the dutch have literally bined all there tulips. The "recovery " is a long way off!!

 

[Notafettler]

8.5% dividend is fine, if the share price stays stable.

but..

You buy £1000 of shares, if the price drops by, say, 30%, then your 8.5% is not £85 as you hoped, but now £59, and your capital is now £700, not £1000.

No such thing as a free lunch

Seriously? Staggering post

 

[wafter]

Can't help with any tips as I've never owned shares in my life. I have considered it numerous times as the potential gains are obviously attractive, but it seems that the market's one big, unsustainable, loaded ponzi scheme where the uneducated little man is mostly going to come off worst at the hands of "professional" traders and trading algorithms.

Having watched the markets for a fair time it seems that a company's productivity is now largely irrelevant to its share price (massive b*llock-droppings notwithstanding of course) with the biggest effect on the markets as a whole being government fiscal policy and the rampant speculation that surrounds it; with everything (IMO) typically being massively over-valued thanks to government money printing.

I think the lastest crashes have really only taken the QE-driven froth off the markets and returned them to what I'd consider a more legit value. The limited sources I've looked at suggest another, shortish-term QE-led rally before a much longer and sustained downturn. So as a short term pump-and-dump exercise it might be worth buying in.

I'm personally less convinced by the long-term argument as I view the whole stock market as a crooked, distasteful and unsustainable mechanism for speculative "professional" spivs to profit off the legitimate productivity of others, while I think we may be nearing the natural end of the current financial system as we know it..

 

[vickster]

I'm not sure I'd be investing in insurance companies in light of the enormous impact CV19 is likely to have

 

[Notafettler]

Can't help with any tips as I've never owned shares in my life. I have considered it numerous times as the potential gains are obviously attractive, but it seems that the market's one big, unsustainable, loaded ponzi scheme where the uneducated little man is mostly going to come off worst at the hands of "professional" traders and trading algorithms.

Having watched the markets for a fair time it seems that a company's productivity is now largely irrelevant to its share price (massive b*llock-droppings notwithstanding of course) with the biggest effect on the markets as a whole being government fiscal policy and the rampant speculation that surrounds it; with everything (IMO) typically being massively over-valued thanks to government money printing.

I think the lastest crashes have really only taken the QE-driven froth off the markets and returned them to what I'd consider a more legit value. The limited sources I've looked at suggest another, shortish-term QE-led rally before a much longer and sustained downturn. So as a short term pump-and-dump exercise it might be worth buying in.

I'm personally less convinced by the long-term argument as I view the whole stock market as a crooked, distasteful and unsustainable mechanism for speculative "professional" spivs to profit off the legitimate productivity of others, while I think we may be nearing the natural end of the current financial system as we know it..

Ignoring your ignorance your final statement implies the end of all forms of business and therefore jobs. Anarchy will reign. Therefore money will have no use.
If QE had not taken place we would have entered a depression leading to spiralling deflation, where consumers and businesses wont buy good/invest because they believe the price of the goods will fall further. Which of course it does.
Companies with high productivity have proportionally higher share prices ie Amazon, google etc.
The main complaint about the Conservatives was a lack of fiscal policy. QE is not fiscal policy.
The government is talking about borrowing money not QE although no doubt some of that may take place. Personally I believe this is the time to experiment with helicopter money (aka helicopter drop)a mix of both fiscal and monetary policy (via QE)
PS share prices in the UK were not considered to be high based on average P/E ratios