Woodford Concerns

Brian65

littlecub wrote: »

I just feel so so guilty for being stupid,

Investing in Woodford fund was not unreasonable based on the information available at the time - The fund was not a scam and investing in it Certainly wasn't stupid. Look at all the others who invested - they are not all daft.
Spare a thought for the many who have been taken in by Scams and lost the lot. Then taken in by recovery fee fraud and scammed again. Its a lot worse for them than it is for you.

Sailtheworld

SonOf wrote: »

We don't know your portfolio. If you built your portfolio correctly then it shouldn't really be any more than 20-25% of your overall portfolio. So, the loss relative to your portfolio shouldn't be much more than a minor setback. Indeed, the rest of your portfolio could well have more than made up for it. It's a setback but it shouldn't be a large one costing you years.

Cold comfort when it's pretty clear he didn't build his portfolio correctly and it is a large setback costing him years.

He bought into the idea (promoted by the financial sales industry) that he had the skills to pick a star manager ahead of time or, for just a 'small' fee, they would tell him. Mix in a touch of greed and gullibility and all sense went out of the window.

Lots of disciples on this board are all too happy to comment on 'flavour of the month' this and 'top of the league table' that and perpetuate the myth. I can see why - nobody likes to attribute one iota of investing success to luck and, of course, diversification is so so unsexy.

eskbanker

Sailtheworld said:

SonOf wrote: »

We don't know your portfolio. If you built your portfolio correctly then it shouldn't really be any more than 20-25% of your overall portfolio. So, the loss relative to your portfolio shouldn't be much more than a minor setback. Indeed, the rest of your portfolio could well have more than made up for it. It's a setback but it shouldn't be a large one costing you years.

Cold comfort when it's pretty clear he didn't build his portfolio correctly and it is a large setback costing him years.

He bought into the idea (promoted by the financial sales industry) that he had the skills to pick a star manager ahead of time or, for just a 'small' fee, they would tell him. Mix in a touch of greed and gullibility and all sense went out of the window.

Lots of disciples on this board are all too happy to comment on 'flavour of the month' this and 'top of the league table' that and perpetuate the myth. I can see why - nobody likes to attribute one iota of investing success to luck and, of course, diversification is so so unsexy.

Not sure what you're referring to but where exactly does the industry promote the idea that star managers can either be picked readily by DIY investors or even identified by qualified advisers?
Likewise, practically all posts I've read on here by anyone with any sort of credibility (i.e. based on quality not quantity of posts) reiterate the importance of portfolio diversification - where do you believe you've read otherwise?

bowlhead99

eskbanker said:

Sailtheworld said:

Lots of disciples on this board are all too happy to comment on 'flavour of the month' this and 'top of the league table' that and perpetuate the myth. I can see why - nobody likes to attribute one iota of investing success to luck and, of course, diversification is so so unsexy.

Not sure what you're referring to but where exactly does the industry promote the idea that star managers can either be picked readily by DIY investors or even identified by qualified advisers?
Likewise, practically all posts I've read on here by anyone with any sort of credibility (i.e. based on quality not quantity of posts) reiterate the importance of portfolio diversification - where do you believe you've read otherwise?

I would agree with that reply (as someone who hopefully meets the criteria of some sort of credibility based on history, albeit it is a brave New World now the forum software has changed and the 'thanked in x number of posts out of y total posts' has been lost' )

It is certainly true that people on this on this board are all too happy to comment on 'flavour of the month' this and 'top of the league table'  that. But when you see the nature of those comments, they are invariably to say DO NOT base your investment decisions on what is flavour of the month or top of a five year chart.

There are some posters who are vocal about their view that you should not hold 'failing' funds that are not making as good a return as other leading funds seen on recent charts; that they are frustrated or worried by seeing red in their portfolio so will set a mental stop loss and abandon the fund if it doesn't do as well as other things they are hearing about. It would not be very classy of me to name names. 

But those posters are generally criticised by the community, because it is well known that funds can't be top performers at all times; that diversified portfolio construction requires us to hold assets that are uncorrelated not just the most recent high fliers; it is generally not great to pile on to something that's just gone up the most; fund sector boundaries allow funds with different risk levels to be lumped together in league tables and relative performance can change over an economic cycle; etc etc.

AnotherJoe

ChesterDog said:

jimjames wrote: »

I don't think a lot of people could foresee it. I invested, I've been investing for over 25 years and still got caught out.

Jim, I'm surprised to see you getting caught out. I've always felt you and I are very much on the same wavelength.

I invested in the Woodford OEIC initially (as did a friend to whom I suggested it), but as time passed, I became concerned enough to pull out well before the crisis hit. I twisted my friend's arm to do likewise even though - as he pointed out at the time - I had always told him investment is for the long term and you shouldn't chop and change. But this was a special case...

The fund got chucked out of the Equity Income sector - bad sign.

There was a high level of small, unlisted, high-risk companies in it, and the proportion of these grew and grew - bad sign.

Increasingly, the holdings didn't reflect his previous successful funds - bad sign.

There were big problems with individual holdings within it (Capita, Provident, Industrial Heat...) - bad sign.

The performance, initially good, fell away - bad sign.

Woodford started to rule-bend and wriggle the regs (Guernsey listings) - bad sign.

Withdrawals from the fund sucked further value from it - bad sign.

Woodford - the high-hubris, high-conviction, dedicatedly contrarian investor - found himself issuing contrite apologies to his investors, while also blaming them for the poor performance by pulling their money out - bad sign.

Etc, etc, etc.

So I am curious: what made you hang on?

As you put, the writing was on the wall for a long time, and its shameful so many FA's hung on on behalf of their clients for so long. No disrespect but if amateurs like you and me could see the issues building, what on earth is going on when so called professionals cant? 

(dont answer that, having seen so-called professional analyst reports on companies I really understand, as a group, they are clueless.

bostonerimus

Once you ditch the dogma of beating the market you can simply ignore active managers. You'll avoid the massive failure, obviously the successes too, but given that you can't know the future I think that's a worthwhile trade. My "no active manager" filter and also "BS" sensor meant that I was never in the Woodford camp. My sense is that the Lindsell Train IT might be on course to have some big reverses just because any fund that holds 50% of the parent company isn't exactly diversified.

Sailtheworld

eskbanker said:

Sailtheworld said:

SonOf wrote: »

We don't know your portfolio. If you built your portfolio correctly then it shouldn't really be any more than 20-25% of your overall portfolio. So, the loss relative to your portfolio shouldn't be much more than a minor setback. Indeed, the rest of your portfolio could well have more than made up for it. It's a setback but it shouldn't be a large one costing you years.

Cold comfort when it's pretty clear he didn't build his portfolio correctly and it is a large setback costing him years.

He bought into the idea (promoted by the financial sales industry) that he had the skills to pick a star manager ahead of time or, for just a 'small' fee, they would tell him. Mix in a touch of greed and gullibility and all sense went out of the window.

Lots of disciples on this board are all too happy to comment on 'flavour of the month' this and 'top of the league table' that and perpetuate the myth. I can see why - nobody likes to attribute one iota of investing success to luck and, of course, diversification is so so unsexy.

Not sure what you're referring to but where exactly does the industry promote the idea that star managers can either be picked readily by DIY investors or even identified by qualified advisers?
Likewise, practically all posts I've read on here by anyone with any sort of credibility (i.e. based on quality not quantity of posts) reiterate the importance of portfolio diversification - where do you believe you've read otherwise?

What do you think sales & marketing budgets are for? They're not there to ensure the punters are making the best choice - they want you to buy their fund no matter what and I'm certain they couldn't give a monkey's about whether the punters were becoming overly concentrated. There's simply no need for some many hundreds of funds to be in existence; it's a requirement to help mask the awkward fact that not only are most investors incapable of beating the market neither are the fund managers they employ either.

You only have to hint that someone on here might not have an investment edge and umbridge is taken despite the fact that in many more cases than not it's going to be true. Even the wise owls with the credibility of a high thanks to posts ratio (lol) aren't above this way of thinking. I think it was Bowlhead who said I was simply sore that someone in flavour of the month fund x, y or z was ahead of me in trackers so he/she clearly sees my lack of investment edge as being worthy of insult.

How many times on here have people been advised on here to bolt the stable door despite the horse disappearing off into the far distance? When this happens a little less frequently I might start thinking things are turning in favour of the client.

eskbanker

Sailtheworld said:

What do you think sales & marketing budgets are for? They're not there to ensure the punters are making the best choice - they want you to buy their fund no matter what and I'm certain they couldn't give a monkey's about whether the punters were becoming overly concentrated. There's simply no need for some many hundreds of funds to be in existence; it's a requirement to help mask the awkward fact that not only are most investors incapable of beating the market neither are the fund managers they employ either.

Of course commercial products will be advertised, but you were specifically asserting that the industry promoted the idea "that [a poster] had the skills to pick a star manager ahead of time or, for just a 'small' fee, they would tell him", but don't seem to be able or willing to support that. When you said 'the industry', were you referring to fund managers or to brokers, etc?

Sailtheworld said:
You only have to hint that someone on here might not have an investment edge and umbridge is taken despite the fact that in many more cases than not it's going to be true. Even the wise owls with the credibility of a high thanks to posts ratio (lol) aren't above this way of thinking. I think it was Bowlhead who said I was simply sore that someone in flavour of the month fund x, y or z was ahead of me in trackers so he/she clearly sees my lack of investment edge as being worthy of insult.
How many times on here have people been advised on here to bolt the stable door despite the horse disappearing off into the far distance? When this happens a little less frequently I might start thinking things are turning in favour of the client.

I can't identify any correlation between that and my point about diversification being generally recommended by those who have some sort of idea about what they're talking about, were you answering something or someone else perhaps?

SonOf

Sailtheworld said:

SonOf wrote: »

We don't know your portfolio. If you built your portfolio correctly then it shouldn't really be any more than 20-25% of your overall portfolio. So, the loss relative to your portfolio shouldn't be much more than a minor setback. Indeed, the rest of your portfolio could well have more than made up for it. It's a setback but it shouldn't be a large one costing you years.

Cold comfort when it's pretty clear he didn't build his portfolio correctly and it is a large setback costing him years.

He bought into the idea (promoted by the financial sales industry) that he had the skills to pick a star manager ahead of time or, for just a 'small' fee, they would tell him. Mix in a touch of greed and gullibility and all sense went out of the window.

Lots of disciples on this board are all too happy to comment on 'flavour of the month' this and 'top of the league table' that and perpetuate the myth. I can see why - nobody likes to attribute one iota of investing success to luck and, of course, diversification is so so unsexy.

I don't think you will find the "financial sales industry" promoting the idea that holding a single sector fund in isolation is a good idea.     The problem was that he probably thought that he was being clever by not paying for advice and just made a bad decision because his knowledge and experience was not good enough.  i.e. a case of bad quality DIY.
"Flavour of the month" or fashion investing, as it is more commonly known, is an issue but that is one driven by the media and marketing and inexperienced investors looking at past performance alone.  Investing, if done properly, is typically quite boring and mundane.  It should not be viewed as something exciting.

bostonerimus

SonOf said:

Sailtheworld said:

SonOf wrote: »

We don't know your portfolio. If you built your portfolio correctly then it shouldn't really be any more than 20-25% of your overall portfolio. So, the loss relative to your portfolio shouldn't be much more than a minor setback. Indeed, the rest of your portfolio could well have more than made up for it. It's a setback but it shouldn't be a large one costing you years.

Cold comfort when it's pretty clear he didn't build his portfolio correctly and it is a large setback costing him years.

He bought into the idea (promoted by the financial sales industry) that he had the skills to pick a star manager ahead of time or, for just a 'small' fee, they would tell him. Mix in a touch of greed and gullibility and all sense went out of the window.

Lots of disciples on this board are all too happy to comment on 'flavour of the month' this and 'top of the league table' that and perpetuate the myth. I can see why - nobody likes to attribute one iota of investing success to luck and, of course, diversification is so so unsexy.

"Flavour of the month" or fashion investing, as it is more commonly known, is an issue but that is one driven by the media and marketing and inexperienced investors looking at past performance alone.  Investing, if done properly, is typically quite boring and mundane.  It should not be viewed as something exciting.

I agree. Investing should be a long term, boring activity. I haven't touched my portfolio for the last five years and didn't do very much to it for the 20 years before that either. Woodford got trapped in tactical investments and that's always risky.