Woodford Patient Capital

iglad

Brian65 wrote: »

Why is it fun?
I'm glad I didn't buy in, but take no pleasure in seeing people lose money especially when its much needed British start up companies. Perhaps you won't find it such fun when there are no British Industries left to provide real jobs, pay taxes and fund essential services

'Fun' was perhaps the wrong word 'Interesting' is more like it. I didn't realise Woodford was the saviour of the Great British Startup.

iglad

bowlhead99 wrote: »

Yes, you've mentioned in other threads that you don't like sitting on a loss so would prefer to sell and get a different holding with which to attempt to make your losses back. Some people are like that. It is psychologically difficult for them to hold a stock that shows red on their portfolio summary, even though the prospects of that stock from that price may be quite reasonable.

However, other people are not on a mission to recover a specific entry price, even if the current price is below the one at which they first bought. Instead they recognise that investing in things with potential can sometimes simply involve forgetting your old expectations and recalibrating them.

For example, a few posts up the thread, AnotherJoe mentioned Burford, a company where the share price went from £15-20 down to £5-6 in a short space of time. It may take a heck of a long time for holders to get back to £15-20. Even with years of patience they may not get to £20 before they give up, because 300% return could take decades.

However, if they had got out yesterday while the market temporarily undervalued the stock at £5.50 they would have missed the increase to £7.50 today, which would have given them more than 33% return in just one day. By contrast, over the same one-day period, Scottish Mortgage only went up 3% while MSCI AWCI went up less than half a percent. So on the face of it, SMT or AWCI wouldn't have been a better place to keep your money, and it can be perfectly reasonable to hold something that has lost a lot of value.

So it goes with WPCT. You think it will never go up 200% from here, to allow the people who invested all their money at the absolute peak, to make a profit. So why would they hold? Perhaps it is because if Woodford or some other manager is able to elicit an undemanding 60p of proceeds per share (midway between current share price and most recent declared NAV, and 25% lower than declared NAV), they will make 50% above today's 40p price. That is a decent enough reason to hold rather than sell, if you think it may transpire.

Of course if you are AnotherJoe and believe the underlying value of WPCT is only 30p, then you would be of the opinion that it's foolish to spend 40p buying WPCT and wait for a 100% NAV increase to get only a 50% share price increase. Investing in hard-to-value shares requires some judgement and it can be easier to leave well alone, instead of risking making mistakes through judgement calls.

But 'don't stay in a fund which shows a share price decline because it could take ages to get your money back, while if you make a clean break and buy something fresh today you might be in profit tomorrow...' is an attitude borne out of naivety or ego / personal psychology, rather than logic.

I cannot quite see the logic in holding onto something when it's quite clear you will never get close rto ever getting your money back yet you wait and wait and wait. Thats not quite what I read in the 'Art of the Execution'. Then again you could always buy more as they are cheap and when it picks up you'll help cut your losses.

masonic

iglad wrote: »

I cannot quite see the logic in holding onto something when it's quite clear you will never get close rto ever getting your money back yet you wait and wait and wait. Thats not quite what I read in the 'Art of the Execution'. Then again you could always buy more as they are cheap and when it picks up you'll help cut your losses.

Investing in anything with the objective of "getting your money back" is not a great idea, because it is emotional investing.

The point bowlhead was making, quite clearly, was that the losses suffered by investors so far should be regarded as a sunk cost. They cannot go back in time and sell at a higher price than today's price. Therefore they should appraise the investment based on today's price and its prospects to either rise or fall from the current price.

Investors have two choices: sell now at 40p, or hold in the hope they will achieve a return on their investment from the 40p level.

boomer69

iglad wrote: »

I'm just watching as it's fun to watch the % losses mount up and people still haven't run for the hills.

you need to get out more.

iglad

boomer69 wrote: »

you need to get out more.

I would but it's always raining!!

boomer69

iglad wrote: »

I would but it's always raining!!

Not in the pub surely ?

iglad

boomer69 wrote: »

Not in the pub surely ?

I live upnorth and it's been known to rain indoors, especially in a Wetherspoons.

AnotherJoe

masonic wrote: »

Investing in anything with the objective of "getting your money back" is not a great idea, because it is emotional investing.

The point bowlhead was making, quite clearly, was that the losses suffered by investors so far should be regarded as a sunk cost. They cannot go back in time and sell at a higher price than today's price. Therefore they should appraise the investment based on today's price and its prospects to either rise or fall from the current price.

Investors have two choices: sell now at 40p, or hold in the hope they will achieve a return on their investment from the 40p level.

Exactly. What's happened has happened. You stay in it , or not, based on your expectations from here on. Are they better for this stock than something else you could do with the money? As someone else posted recently the stock doesn't know what price you paid for it.