richard@imutual wrote:What would help is if those who have voted against could summarise which of the items 1-5 are they opposed to, and what alternative proposal they'd like to see in each case (I know garindan and beachboy have already commented at length, but summarising in the above form would be helpful)
This will help to draft an amended proposal if necessary
Been a bit delayed - apologies
So as I said - I'm not necessarily against all points but my personal view is you are proposing to:
- change the process of how we buy and sell shares through altering how polls are formatted, when they run and for what reason
This is not the problem as far as I see it. The problem we have had has primarily been caused by:
- picking the wrong shares beyond what we previously agreed (NCC was not FTSE250 for example)
- picking substantially shorted shares (Carillion, ITV, Greene King)
- irregular, at best, review of trading for shares held and general "lack of ownership" from the club
- difficulty in selecting shares to purchase, which have often been suggested by officers and only a couple others when there are 16 members of the club
- we have also been misled by both NCC's board and Carillion's board but we'll see no joy from following this particular line of inquiry further, as it is a take it on the chin kind of situation for the small investor
To your proposal:
1. Set a maximum number of different investments that the club should aim to hold. (to be agreed separately)
So the way we had originally intended to run things was having a number of longer-term investments, and a smaller number of shorter-term investments. Setting numbers for both, as we had originally intended would be my favoured choice. A blanket number, without thought to the composition of the portfolio seems a regressional step to me. Also - how do we deal with adding to existing shares? Is that against the rules? The "Carillion effect" has tarnished investing further in the same share but in the process outlined in the proposal we could have as much money in the club kitty to invest in a single go as two separate purchases at a previous time.
2. At regular, fixed intervals (to be agreed separately), we hold two parallel votes; a new stock to buy and one to sell (unless at that time we hold less than the maximum agreed above, in which case no sell vote is necessary).
Firstly, I know why you want to do this, so I appreciate where you are coming from with the sentiment. However, there are other means to achieve it, in my opinion. My big concern is we end up selling shares we have bought for the long-term and lose sight of any kind of share portfolio plan. This could well turn the club towards more fruity quick gain shares, to look at moving on for the next vote etc... I see this as more effort for the officers rather than less. If we control sales using limits agreed before purchase then we can do away with voting to sell, unless some event has happened that should make us re-consider something we had agreed, like we did with Carillion, for instance. The result of the poll is immaterial in that case, it was the calling of it that is the example.
My preferred route would be to look at why shares were bought again - for long-term income or shorter-term gain. In some cases we might find a share has potential for both. Set targets for each that will automatically kick in if prices hit the right point and determine what our threshold of pain is for each short-term investment. We need to have a separate discussion about how we look at long-term investments really. It is not the same animal.
3. Each decision will be a straight choice between 3 stocks. No "If price reaches X" or "None of the above"
I don't have a problem with three stock choices for votes. I am in two minds about a none of the above option. See next point for price...
4. Once the voting has closed, we execute the "sell" decision first and then use the proceeds, plus whatever cash is in our account, to invest in the "buy" stock. These actions take place immediately at whatever is the prevailing price
Price to buy is more down to picking sensible shares to begin with, but if they are for shorter-term gain I would suggest some kind of price fluctuation threshold need to be put in place to stop us buying a share that has done its money before we buy. If they are longer-term for income it is not so much of a concern, in my opinion.
5. We automatically apply a standard "stop loss" to all purchases e.g. 20% below purchase price.
The stop:loss point is covered in point 2 above.
To finish - I feel we can change processes for voting and put dates in calendars all we want but unless we tackle the core problems we have the results will most likely be "more of the same" as has been suggested sticking with the old would do. We do need change but we need to change the parts that will have a direct result in changing how we work as a club to produce more positive results.