Future of tesco, morrisons

A_Flock_Of_Sheep

Shares are a bit risky. Stick to funds.

Rob_192

A_Flock_Of_Sheep wrote: »

Shares are a bit risky. Stick to funds.

Not bloody likely! Do you realise how much you pay in fees for something you could equally achieve through owning a portfolio of shares with proper diversification.

My portfolio has on average cost me less than 1% in initial purchase costs (share dealing fees and stamp duty) and costs me almost nothing to hold thereafter. My investment style is 'high yield, long term buy and hold' - why would I choose to pay a fund manager a substantial annual % to achieve the same as I can for next to nothing?

Just becuase you invest in a fund it doesn't make things any less risky, it just means you don't generally see the losses, but trust me, they still exist - what do you think a fund is? It's a basket of shares and if your fund happens to hold TSCO or MRW, you are subject to the same risks as holding those shares individually.

R

Glen_Clark

Scarpacci wrote: »

Tesco reportedly made £127m profit online last year. Tesco's UK profit is £2,191m, so online is still only a small part and is less profitable than Tesco Bank (£194m). Still, Tesco reported 11% growth in UK online in their latest results. For a segment many people believed was losing money, £127m profit seems relatively impressive. Sainsbury's & ASDA haven't revealed their online profit, while Ocado has yet to turn in a profit.

£127m figure: http://www.independent.co.uk/news/business/news/tesco-who-says-its-hard-to-make-home-delivery-profits-9153185.html
Online growth & Tesco Bank profits from Tesco's latest results: http://www.tescoplc.com/index.asp?pageid=17&newsid=954

I wonder how they allowed for lost store sales - people who would have come into the store if they couldn't get it online.
Or since the online operation is run from the store, how much of the store running costs (rent etc) did they charge to the online department.
Just consider how long it takes you to go to the store, get your shopping, and come back. Imagine you were paying a driver to do it - say £20 per hour total costs, plus vehicle costs, fuel etc. Then ask yourself if the profit on the groceries would cover it. I don't think so. Thats why Ocado aqlways lost money on online groceries when they didn't have retail stores to subsidise it.
Sainsburys and Asda are probably wise not to give a figure for online profitability because its impossible to calculate when its an integrated part of the rest of the operation.
Seems to me the supermarkets have been going into online to increase turnover at all costs. As the Dragons would say 'Turnover is Vanity, Profit is Sanity. Thats why Aldi & Lidl have avoided online, as Morrisons should have done.

Glen_Clark

Rob_192 wrote: »

why would I choose to pay a fund manager a substantial annual % to achieve the same as I can for next to nothing?

Because you can get Investment Trust assets at a discount.
So the fund manager is a liability that is already priced into the shares.
PS: also you cannot maintain the same diversification when buying or selling part of your portfolio if it is held directly in shares. It wouldn't be practical to buy/sell 1% of each shareholding where you can easily sell 1% of a fund.

Glen_Clark

A_Flock_Of_Sheep wrote: »

I could get some Aldi and Lidl shares I would consider them a sound investment.

You don't mention the price!!
Tesco shares are only 10 times earnings. In the current sentiment, Aldi shares would be far more expensive.

grey_gym_sock

Rob_192 wrote: »

My portfolio has on average cost me less than 1% in initial purchase costs (share dealing fees and stamp duty) and costs me almost nothing to hold thereafter. My investment style is 'high yield, long term buy and hold' - why would I choose to pay a fund manager a substantial annual % to achieve the same as I can for next to nothing?

that may a reasonable approach to direct investment. there are still a few possible reasons some ppl might use funds instead, though:

it need perhaps a minimum of £30k to keep the costs low (assuming a minimum of £2k into each share, and at least 15 shares for basic diversification).

it's still less diversified than a fund.

it's more work. it's not that it needs to take much maintenance time when it's up and running, but there's a fair bit of learning to get started.

to do the same thing for ex-UK shares. too, would involve a much large minimum investment, and more research time, and the dealing costs would be higher than for UK shares.

Rob_192

grey_gym_sock wrote: »

that may a reasonable approach to direct investment. there are still a few possible reasons some ppl might use funds instead, though:

it need perhaps a minimum of £30k to keep the costs low (assuming a minimum of £2k into each share, and at least 15 shares for basic diversification).

it's still less diversified than a fund.

it's more work. it's not that it needs to take much maintenance time when it's up and running, but there's a fair bit of learning to get started.

to do the same thing for ex-UK shares. too, would involve a much large minimum investment, and more research time, and the dealing costs would be higher than for UK shares.

Yes, I accept most of your points.

You are quite right that you do need a reasonable sum of money to keep the costs down and your sums are probably about right, although I tend to buy in blocks of anything from £1k upwards

I'm not sure I accept that it's less deversified. I hold shares in 39 companies, that's pretty well devirsified and probably a damn sight better than many achieve using funds.

It's certainly a lot more work and I accept that it takes a fair bit of learning to start with, but the plus side is that I know to within a fraction of a penny what I've paid for every share, I know my exact holding in every company, I know the historic yield, I can assess the forward yield, I know the P/E on every share etc etc. Most funds, you can't even work out what companies they're invested in, let alone what the fund manager paid and when. You take an awful lot on trust and you pay a fair wedge in fees for doing so.

All I can say is I feel so much more in control and seem to be doing far better now that I make my own investments. The funds I still hold continue to baffle me and it seems a lottery why some perform well whilst other don't. I hold various funds which appear to invest in very similar sectors, yet they perform completely diffrently - I like to be able to understand what's happening, but there seems to be no easy way of doing this with funds.

I fully accept individual share ownership is not for everyone, but Flock of Sheep's sweeping statement "Shares are a bit risky. Stick to funds" is just plain wrong.

planteria

just looking at the Sunday Business, and at the FTSE100. Morrisons, at 201.5p is yielding 6.5%.
the year high is 312.25p and the year low is 196p.
i reckon it's a buy.
hopefully, when i can access my ISA with II, they will be even lower :think:

yatinsardana

On the other tesco forum it appears someone mentioned that morrisons are cutting their dividends though? I don't know if it's true or not but if it is, it may be an important factor.

Tesco have a really good dividend record so don't expect them to cut their dividends

If we can have some clarity over morrisons future dividend prospects then on the basis of the current yield itself it may be a risky long term buy.

Ifts

yatinsardana wrote: »

On the other tesco forum it appears someone mentioned that morrisons are cutting their dividends though?
If we can have some clarity over morrisons future dividend prospects

No cut in the dividend that I'm aware, if anything MRW are increasing the divi this year.

This from their Final Results:

Final dividend of 9.2p. Total dividend for the year up 10% to 13.0p (2012/13: 11.8p) in line with guidance

https://www.share.com/find-investments/advanced-finder/company-overview/morrison-wm/news/7364/?pass=1&story_id=21538050&rns=1

I don't hold Morrison's myself so ain't really up to date on their numbers but from what Iv read is their divi is probably ok up to 2015, after that its anyones guess.