Merchants Share Discussion Threads

[chart trader2000] 23/12/2019 13:11

been a very profitable year for those bought and held the dividend hero trusts, thru all the twists and turns of the market.

[contango1] 19/12/2019 19:13

With the yield now a smidgeon under 5% I've sold half.

[chart trader2000] 19/12/2019 17:38

28% TR for the year. guess it wouldn't hurt to take some money off the table, a lot depends if u are investing for the growing dividend or trading the TR.

[tim 3] 19/12/2019 15:23

Not for me it doesn't I see it as more to do with an improved outlook for the UK economy following the election.

[contango1] 19/12/2019 14:51

MRCH at a premium! Should I interpret that as a sell signal?

[chart trader2000] 17/12/2019 18:22

yep, if u look at the index it would appear to be the right choice, I would guess it will go higher yet but as always it's always easier with hindsight.

[tim 3] 17/12/2019 17:42

Thanks thats a very interesting article. One look at the chart of most American index says buying it here would be wrong and goes against all my instincts.

[chart trader2000] 17/12/2019 16:14

That is why it is sometimes said that five years is the minimum period over which stock market investment should be considered. ........ definitely not true for non Investment Trusts shares and Woodford is a lesson for all, although the concept seemed crazy to me.

[chart trader2000] 17/12/2019 16:09

How to benefit from the longest bull run ever and cope with share price volatility CONTRIBUTOR IAN COWIE Is there still time to join the longest bull run - or period of rising share prices - on record? While many bank and building society deposits fail to keep pace with inflation (Which? Best savings rates of 2019 26.04.19), the average conventional investment trust delivered share price returns of 7% over the last year (Morningstar via Association of Investment Companies). The past is not necessarily a guide to the future and share prices can fall without warning. However, the history of the last century and more shows that anyone who could remain invested in shares for five consecutive years at any time since 1899 had a three-in-four historical probability of receiving greater rewards than cash depositors (Barclays Equity Gilt Study 2019). More recently, since share prices began to recover from the global credit crisis in 2009, medium to long-term investors received share price returns of 82% over the last five years and an eye-stretching 330% over the last decade, according to the Association of Investment Companies (May 6 2019). While the future remains unknowable, investment trusts such as JPMorgan Claverhouse Investment Trust plc can be proud of their record of raising dividends every year for 46 years (AIC 12.03.19). HOW SHARE PRICE VOLATILITY CAN HELP Many stock markets fell sharply during the global credit crisis but have bounced back strongly since then. Did you get your share of that recovery? For example, the Standard & Poor’s 500 index - a broad measure of the American market, the largest in the world - reached a low-point of 677 in March, 2009, since when it has quadrupled (Yahoo! Finance S&P 500 long term chart 06.05.19). During the same period, the FTSE 100 index of Britain’s biggest shares has more than doubled from a low-point of 3,542. Decisive action by governments around the developed world, including cutting interest rates and keeping them lower for longer than many observers expected, reduced returns to depositors in bank and building society accounts but helped to increase returns to stock market investors. WHAT MIGHT HAPPEN NEXT? The past is not necessarily a guide to the future and share prices can fall without warning. In addition to economic factors, such as changes in gross domestic product (GDP) - a measure of national output - or interest rates, stock market valuations can be affected by human emotions. For example, fear and greed, pessimism and optimism, can drive share prices down or up. Technological developments - such as inventions and improvements in efficiency - tend to make the economy grow over time. But investors’ optimism or pessimism about the future may fluctuate in a cyclical fashion, varying between pessimism when confidence and share prices are low to optimism when confidence and share prices are high. But historical evidence suggests it pays to avoid short-term emotion to gain from medium to long-term economic growth. WHY IT PAYS TO TAKE A MEDIUM TO LONG-TERM VIEW One of the most comprehensive analyses of various assets, or ways of storing wealth and making it grow over time, examined returns from shares reflecting the changing composition of the London Stock Exchange and cash deposits since 1899 (Barclays Equity Gilt Study page 101, figure 8). If shares were held for two consecutive years, there was a 69% probability of them delivering a higher return than cash. So, over any two-year period, there was a better than two-in-three chance that shares would beat deposits. Put another way, there was nearly a one-in-three chance that cash might do better than shares. However, if shares were held for five consecutive years, the risk that stock markets might be temporarily depressed was reduced and the historic probability of shareholders receiving higher returns than depositors increased to 76% - or better than one-in-four. That is why it is sometimes said that five years is the minimum period over which stock market investment should be considered. Over 10 consecutive years, the historic probability that shares would do best increased to 91% (Barclays Capital Equity Gilt Study 2019 pg. 101). HOW INVESTMENT TRUSTS MINIMISE RISK AND MAXIMISE REWARDS Investment trusts are one of the oldest forms of pooled fund, bringing many individual investors’ money together to share the cost of professional management and invest in dozens of different companies and - in the case of international funds - different countries. The aim is to diminish the risk inherent in stock markets by diversification. Since 1868, investment trusts traded on the London Stock Exchange have enabled investors of all sizes to gain exposure to income and growth opportunities in Britain and overseas. More recently, since share prices began to recover from the global credit crisis in 2009, medium to long-term investors received share price returns of 82% over the last five years and 330% over the last decade, according to the Association of Investment Companies (06.05.19). RISING INCOME AND CAPITAL GROWTH While the future remains unknowable, investment trusts such as JPMorgan Claverhouse Investment Trust plc can be proud of their record of raising dividends every year for 46 years. That means this fund - which aims to provide a combination of capital and income growth, mostly from companies listed on the London Stock Exchange - succeeded in increasing dividend distributions throughout a period spanning several wars and stock market crashes. Over the last five years, JPMorgan Claverhouse Investment Trust plc has increased its dividend from 20p per share in 2014 to 27.5p in 2018 (Association of Investment Companies, 06.05.19) and its yield - or the income it pays expressed as a percentage of its share price - is currently 4%. Dividends are distributed to this investment trust’s shareholders four times a year - in March, June, September and December. Meanwhile, JPMorgan Claverhouse Investment Trust’s total share price return was 41% over the last five years and 216% over the last 10 years (Barclays Equity Gilt Study 2019 06.05.19). Alternatively, JPMorgan Global Growth & Income plc enables shareholders to benefit from the best ideas from around the world with a predictable quarterly income. JPMorgan Global Growth & Income plc yields 3.9% and delivered total returns of 101% over the last five years and 297% over the last decade. WHY TIME IN THE MARKET MIGHT BEAT TIMING THE MARKET Share prices are volatile and it is impossible to predict with certainty whether they will rise or fall in the short-term. As discussed earlier, investor sentiment may fluctuate between fear and greed, driving prices down or up. Sometimes the best days for rising share prices follow soon after share prices have fallen, so short-term speculators who duck in and out of the market run the risk of missing some of its potential returns. For example, someone who invested £1,000 in the FTSE All Share index 30 years ago could have enjoyed an annualised return of 8.7% and a final fund value of £12,146 if they had stayed in the market the whole time (Fidelity International 06.05.19). By contrast, if this investor missed just the best 10 days in the market during the last three decades, he or she would have received an annualised return of 6.4% and ended up with a total fund value of £6,496 – that’s a difference of £5,650. If this investor had missed the best 30 days - equivalent to an average of missing just one day per year during this period - then their annualised return would have plunged to 3.6%, reducing their final fund value to £2,927. That is why it is sometimes said that time in the market is more likely to build wealth than attempting to time the market. Many stock markets have recovered strongly since the global credit crisis more than a decade ago to create the longest bull run - or period of rising share prices - on record. Stock market investors have benefited from low interest rates, while these reduced returns to bank and building society depositors. But share prices are volatile and can fall without warning. Investment trusts diminish the risk of stock market investment by diversification and sharing the cost of professional fund management. Investing over the medium to long term - that is, over five years or more - is least likely to be affected by short-term volatility and most likely to produce satisfactory results. Ducking in and out of shares may mean you miss some of their potential returns. Time in the market is a safer path to wealth creation than trying to time the market. Investors should remember that share prices can fall without warning and that you may get back less than you invest. However, investment trusts seek to diminish the risk inherent in stock markets by diversification and professional fund management. There are hundreds of investment trusts to choose from. For more details see the Association of Investment Companies.

[chart trader2000] 17/12/2019 15:53

yep, I sold NAIT when it nearly doubled, including dividends. I put 33% into BRNA for the better dividend, waiting for America to fall, still waiting. when it does fall I'll buy back the full position, I've set a target yield of 5% so it will not be anytime soon.

[tim 3] 17/12/2019 14:39

Woodford lost the plot in the end but thats for another thread. I miss the sharp falls/crashes as history shows they are nearly always a great time to buy quality. I still have 40% of my funds in cash some of it waiting for an opportunity to buy am happy to leave it there as its part of my long term investing plan having funds available to buy in a crash/correction and keeping some funds as cash. I don't like the US at the moment as it has gone to high to quick for my liking and many of their shares are not supported by dividends.

[chart trader2000] 17/12/2019 14:00

Woodford had a disastrous IT. One of the most succesful market strategies as has been shown again and again is to reinvest dividends and watch your investment grow. Tim3 also when the market is falling it allows u to add at great prices. I guess several readers are lucky that they have no experience of that but luck always runs out one day. GL to all investors.

[tim 3] 17/12/2019 13:45

Really are some very high quality posts on here thanks for sharing. On timing I totally agree its hard to hit the button when everything is falling as chances are they will be cheaper at at some point but you really have to move away from trying to buy the absolute bottom, set what you think is a fair price to pay and when it hits buy. Investment trusts really are one of the citys best kept secrets with your risk spread across many different shares and not suffering the redemption problems highlighted recently with Woodford, of unit trusts. I have gone from having a high risk strategy to a much more conservative one over the years as you realise that with high potential gain comes with high potential to be wiped out at some point as happens to so many who play the market. One of the most succesful market strategies as has been shown again and again is to reinvest dividends and watch your investment grow. For mrch I think they could be entering a period of steady growth as the outlook for the UK is a lot better than it was a week ago whatever your views on Brexit the fact that the majority the Torys got now means they can make decisions and move on and most seem to think it will be positive for UK stocks most of which have not seen anything like the growth seen in the US and other markets.

[chart trader2000] 17/12/2019 12:40

based on the market value of the company's long term debt and preference shares, the capital net asset value per ordinary share was 520.08p. 15 Dec based on the market value of the company's long term debt and preference shares, the capital net asset value per ordinary share was 534.41p. 16 Dec

[chart trader2000] 17/12/2019 12:33

As recommended by the AIC, net asset values are calculated on both a capital and a cum-income basis. The Merchants Trust PLC announces that at close of business 16 December 2019: 1) based on the par value of the company's long term debt and preference shares, the capital net asset value per ordinary share was 550.73p. 2) based on the market value of the company's long term debt and preference shares, the capital net asset value per ordinary share was 534.41p. 3) based on the par value of the company's long term debt and preference shares, the cum-income net asset value per ordinary share was 565.07p. 4) based on the market value of the company's long term debt and preference shares, the cum-income net asset value per ordinary share was 548.75p. In the valuation of the company's long term debt at market value, the margin added to the yield of the relevant reference gilt is derived from the spread of A UK corporate bond yields over gilt yields, with the exception that the Loan Notes issued on 18 December 2017 are valued at the yield over the reference gilt at which they were issued.

[chart trader2000] 17/12/2019 11:09

now trading at a premium, touched it's previous high, ignoring dividends earned, it's all random, isn't it ?

[goldpiguk] 16/12/2019 14:49

Hi Panshanger1, DIG is an excellent share to pair with MRCH in any portfolio. DIG's change in strategy compliments Merchants Trust as they are clearly differentiated; one of the reasons I chose it. It was widely felt in the market that DIG had something to prove; which explained its big discount to NAV. I would expect that discount to continue to narrow over the next few years, with dividend growth to surprise on the upside. MRCH and DIG are core investments in my ISA which I expect to hold for many years. As chart trader2000 points out finding Investment Trusts that tick all the boxes is getting harder, a reason I am looking to buy two new Investment Trust holdings next year. At the moment there are no really stand out candidates on my shortlist. Goldpig

[chart trader2000] 16/12/2019 14:28

MRCH price is going crazy bananas, will it breach its previous 2007 price which of course doesn't include dividends received.

[chart trader2000] 16/12/2019 14:25

Re : DIG yep, the acid test will be if they have to dip into reserves to pay the dividend, until then enjoy the ride. I have a guild where I discuss IT's/yields and run a dummy portfolio. if anyone wants to join email me and I'll reduce the fee, which is set to bar the losers and the morons. I will have to hand this board back to MRCH as I do not want to outstay my welcome.

[chart trader2000] 16/12/2019 14:21

The emotional benefits of dividend re-investment I really like this style of investing and use it myself for my share portfolio. What's particularly good about it is that you focus your attentions on the performance of the company and its ability to keep paying a growing dividend rather than what's happening to the share price. The bigger the amount of your investment return that comes from dividends and their reinvestment, the less you tend to worry about share prices. In fact, with this investment strategy you can actually welcome falling share prices. As long as the underlying business is sound, a falling share price allows your dividend to buy more new shares which means more dividends to potentially boost your long term returns. With this mindset, you worry less and concentrate on what's important rather than the short-term whims of the stock market. To me this is proper investing and more people would be better off financially and emotionally if they put their money to work this way. Buy and hold is not the same as buy and forget This strategy is based on holding on to a share for a long period of time. This is known as a buy and hold strategy. However, this must not be confused with a buy and forget strategy. Whilst you do hear stories of people who had left shares invested and forgotten about them for 30 years, and then to find out they had become millionaires, it is probably wiser to keep an eye on your investment from time to time. I;m not talking about obsessing about share prices every day. Instead you should read the company's half year and full year results statements to see that all is well and that your dividend is still safe and growing. The other thing to keep an eye on from time to time is the dividend yield on your shares. This is important because it represents the rate of interest you are getting on your reinvested dividends. What you need to be constantly asking yourself is whether you can reinvest at a higher rate elsewhere? Edited article from Sharescope. ............. too boring getting rich slow for the many, not the few, where I have heard that before ? u will get many desperate days but u will also get some days like the last few and hopefully a few more.

[panshanger1] 16/12/2019 14:19

Re : DIG The change of manager there and the subsequent restructuring of the portfolio have made the difference As a long term holder I was starting to lose faith !! - the longer term numbers have now improved markedly as well - discount might even close further

[chart trader2000] 16/12/2019 14:04

it's not a one way street, u will go thru periods of watching your portfolio's value decrease, that's how markets work. when any bad news hits the market, the Mmakers slash their buying prices therefore buying back shares they sold at a higher price. it's their business and that's how markets work, remember they never asked u to buy the share in the first place. u need a plan and u need to stick to the plan. if your portfolio is not making new highs today or close to new highs u need to examine your plan to see where u have gone wrong.

[chart trader2000] 16/12/2019 13:55

it's worth noting that DIG has only now returned to it's 2007 price but u would have earned around 140p in dividends plus the dividends on the dividends re-invested.

[chart trader2000] 16/12/2019 13:35

yep, pleasantly surprised with DIG, been a long time holder thought I might have to sell when they announced they were tweaking their dividend policy. worked out well so far as the discount has fallen from 10% to 4.65%. it yielded 8% in 2009 and the dividend has been increased by 20% so a 9.6% yield on buying price. 10.25p > 12.45p. (unfortunately I never owned them in 2009.) as long as u buy shares to earn dividends to buy more shares etc., one day Mr. Market will give u bargains to buy and u will have cash to buy the bargains. u have to believe in the plan though to press that buy button as everyone bone in your body will be telling u to wait as the price may be better tomorrow.

[scottishfield] 16/12/2019 13:29

Yes good performance here. I have DIG also, which provides a similar yield, and trading at a discount too currently.