Woodford is the Reason you should no longer Buy and Hold

Thrugelmir

Super_saver wrote: »

I think you'd find holding can also be hugely profitable e.g. Warren Buffet's investment philosophy.
Read the 'Intelligent Investor' by Benjamin Graham.

Everybody now copies his ideas. Fads are like fashion. The art is to be contrarian. Even if it means waiting a while.

iglad

talexuser wrote: »

And I've only just read a Trustnet article saying that those managers who churned stock often never beat the buy and hold managers because of costs accumulating and harming profits. Same principle may apply to churning funds often, it is a form of trying to time the market?

The real question is how long do you give a fund once it starts underperforming, and that is not an absolute because of the different reasons for underperformance, is it the manager, the sector, specific stocks, external macro influences etc etc?

For information I dumped Woodford when my gain went from 40% to 30%, looked at some of his holdings for the downward path, and decided that 10% a year was good enough to get out.

I agree churning is far too costly so it's not what I adhere to. However as you stated how long do you hold if it starts underperforming and what are the reasons. All very valid indeed and you most certainly did the right thing with Woodford. Long term investors with BGA will have some huge profits under their belts and no doubt they can afford 1yr of poor performance but how about 2 or 3 years?

Prism

iglad wrote: »

BGA only invests in 41 funds and 10 of those account for 50% of the portfolio, so can anyone tell me what the other 31 companies they have invested in? I'd be interested to know about these small caps.

Here you go, page 21

https://www.bailliegifford.com/en/uk/individual-investors/literature-library/funds/oeics/icvc-long-form-annual-interim-reports/baillie-gifford-overseas-growth-funds-icvc-annual-report-april-2019/

OldMusicGuy

Thrugelmir wrote: »

The art is to be contrarian. Even if it means waiting a while.

Wasn't that Woodford's whole sales spiel.....? Part of the reason I invested in Woodford was his contrarian approach in the past, but I didn't like his stock picking in the present.

Audaxer

I think some of the mainstream ITs, that have a history of increasing dividends every year for decades, are buy and hold investments for many retiree portfolios. A lot of ITs seem to have been around for much longer than similar funds, so although they are said to be slightly higher on the risk scale than funds, some people may consider them a 'safer' long term option than similar funds?

Thrugelmir

OldMusicGuy wrote: »

Wasn't that Woodford's whole sales spiel.....? Part of the reason I invested in Woodford was his contrarian approach in the past, but I didn't like his stock picking in the present.

Should have capped the fund. Like Buffett when you reach a certain size you become the market. Buying or selling influences price changes. Every market maker knows the score.

Far easier as an individual investor. Trading in smaller quantities to build a reasonable holding on price weakness.

bowlhead99

iglad wrote: »

I wish them all the best of luck as they are now below 50p per share, that's a share which will be going nowhere in the next 10 or 20 years.

You seem to have a habit of writing off investments as being useless if you have personally lost money with them or if you've seen them do worse than some alternative option in a short time period.

It's probably better to invest in funds rather than single companies to minimise the scale of potential losses, but if you only want to invest in things that are currently going up the fastest, it seems like you'll never be satisfied with the potential of what you have.

iglad wrote: »

BGA only invests in 41 funds and 10 of those account for 50% of the portfolio, so can anyone tell me what the other 31 companies they have invested in? I'd be interested to know about these small caps.

I did link the annual report in my answer to your various BG American points in your other thread last month when you had asked the exact same question about what else it held beyond its top ten.

https://forums.moneysavingexpert.com/showpost.php?p=76083510&postcount=22

bostonerimus

I'd say Woodford is the reason you should never invest in funds like those run by Woodford; it has nothing to do with buy and hold.

Alexland

Audaxer wrote: »

A lot of ITs seem to have been around for much longer than similar funds, so although they are said to be slightly higher on the risk scale than funds, some people may consider them a 'safer' long term option than similar funds?

A closed ended IT can hang around for years regardless of performance as there is no easy way to liquidate them. A dissatisfied IT investor would just sell their units onto someone else for whatever they will pay. An open ended fund is under more pressure to perform to maintain enough AUM to be viable. So I don't put much weight on how long the trust has been operating. They are both investing in asset classes where over the long term you would need to really screw up (eg Woodford) to do badly and not produce some growth.

Alex