The club's future - a proposal

[garindan]

I am not trying to be deliberately obstructive but would just like to understand the rationale because all I can see at the moment to support it is that is 'easier' to process.

To be fair I suggest it will be even more onerous to get to the point of having chosen three shares to vote to buy (given my comments previous) and decide which three of the existing shares to sell (again see previous) and not actually more efficient at all, hence my reservation in one angle.

It also doesn't take into account holding any shares for income as they can just be chosen to be sold when "some of us get fed up with them losing paper value" and neglect to remember why we have them in the portfolio. We then just become a quick profit sale kind of club which I worry about as the risks of losing money are even higher than holding for income and seeing the prices fluctuate over time... FTSE100 is not the best place to select a share that is going to make us a quick buck.

To be honest, concluding within a week has been possible in most if not all our votes, as the ones I have started I have also manually ended/locked the results. I'm not sure how long underdog's polls have taken as I wasn't really in the state of mind to realise that.

If we look at the effect of having purchase thresholds it has actually saved us money. We have bought shares on a number of occasions when the initial offering price post the end of a poll has been above that agreed and waited until it has fallen back to a better price.

The long and short of it for me is we need to improve:

a) The process of suggesting shares - to buy based on some agreed parameters, such as strict FTSE100 & FTSE250, no shorted shares, company reports have been read and balance sheets checked for impending debt of doom etc... so we can do our best to avoid the NCCs, Carillions, TRUs, Maplins, Carpetrights and so forth.

b) Agree on why shares put forward are being so, what would trigger a sell if we held them (might not just be a stop:loss setting... but perhaps a profit warning or something similar), what our goal for the share is to exit etc...

c) We need to have ownership of our shares by members - I'd suggest each share we collectively own is "owned" by two members, who will promise to keep abreast of news, developments and read the key reports from those companies when published. This would make us far more aware of events and chat affecting our money. Those members could then provide periodic updates or notify the club members if some urgent consideration needs to be made.

Hindsight is a great thing but I think we should consider the way forward in light of what past decisions we have made as it is probably not having strict enough parameters and lack of monitoring that have led to some of the bad decisions we have made.

I also think we should see where the common ground is among members to suggest what they like and dislike about any of the stuff mentioned so far.

[richard@imutual]

Well, I don't think my proposal precludes your a, b and c

I'll let other members weigh in with their thoughts, but just a few quick ones of my own in response..

It also doesn't take into account holding any shares for income as they can just be chosen to be sold when "some of us get fed up with them losing paper value" and neglect to remember why we have them in the portfolio.

Surely that's something we can weigh up in our "sell" decisions? We might buy something for income but then a few months later, we might want to sell it again due to mounting concerns over its prospects. Look at the track record of our club in buying "income shares"; dividends have been far outweighed by capital losses. This might not have been the case had we been forced to consider selling existing stocks on a regular basis

FTSE100 is not the best place to select a share that is going to make us a quick buck.

. Our investment strategy and our decision process are two different things. I do have some thoughts I'd like to share on this subject but I want this thread to stay focused on our "process".

I'd suggest each share we collectively own is "owned" by two members, who will promise to keep abreast of news, developments and read the key reports from those companies when published.

.

I worry that this kind of thing just won't work in an online club. You inevitably get a majority of members who are happy to sit back and just vote when the time comes, and then others who are really keen and will want to monitor all our shares, not just one. Plus even the keen ones will sometimes find their interest waning or personal/work life preventing their full participation. We don't want a process which can fall apart if one or two key individuals are required to provide regular input.

concluding within a week has been possible in most if not all our votes

It's not just the vote, it's the whole process from suggesting investments to actually making the trade. Take the recent examples of our purchases

After a long period of inactivity, underdog took the initiative in early July and created this thread:

Our next investment...

After extended discussion, underdog again took the initiative and created this poll on 27 October

POLL: Royal Mail v BT Group v Aviva v Legal & General v Vodafone

Just to be clear, this is in no way a criticism of any individual. I'm grateful for underdog doing this because otherwise we probably would have continued to sit on cash. And the various polls and topics would have taken him a lot of time to create and manage; time we have no right to expect from him. But I think the process is unsatisfactory in several respects..

- It took months from when we first started considering shares to making a purchase
- Why those 5 shares? The criteria aren't clear
- The vote structure was complex and voting for 2 out of 5 means we could buy a share that only a small number of members have voted for
- I only saw one comment about the merit of any of the 5 shares in that thread (the one about the BT pension fund). I've no idea what reasons were behind everyone's voting, and had nothing to go on

Then hot on the heels of this one, we had a similar poll started on 10 November

POLL: UK Commercial Property Trust v JD Sports v Inmarsat v Barclays

Again, it's not entirely clear how we ended up with those 4 choices and in that thread there was absolutely no discussion of the respective merits of these shares (it was mostly an argument about the process!). There may have been such discussions in earlier threads, but how many people will have looked back at that as part of making their decision? And the analyses could well have been out of date by the time we came to vote

We then had another poll about setting some kind of "moving tracker" on Barclays, whose finer points still escape me. The poll ended on 21 December but for various reasons its result has still not been fully implemented.

Does anyone else thing that the above is far from ideal and could be improved by the process I've outlined?

[garindan]

Does anyone else thing that the above is far from ideal and could be improved by the process I've outlined?

I am all for us developing a better way to do things, that's for sure. If you can outline how your process would help my concern, below, it would be helpful as in truth I can't get past understanding how it could at the moment:

To be fair I suggest it will be even more onerous to get to the point of having chosen three shares to vote to buy (given my comments previous) and decide which three of the existing shares to sell (again see previous) and not actually more efficient at all, hence my reservation in one angle.

At present it seems to me this has double the amount of potentially protracted discussions needed (one about selling choices and the other about buying choices) before twice as many polls as before. If you can explain how things would work to make it more efficient and less onerous on a small number of members I'm all ears!

[blythburgh]

At present it seems to me this has double the amount of potentially protracted discussions needed (one about selling choices and the other about buying choices) before twice as many polls as before.

I assume you would agree that there is a point at which we can hold too many different stocks, and so as a club we should have a number in mind as to what maximum number of investments we should hold at any one time. I think it's around six, others may think it's higher but that's a separate debate

Once we reach that agreed number then every time we buy a stock we also need to sell one. In our old club, we would vote on a stock to buy one month and vote on one to sell the following month. I see two problems with this; firstly it requires everyone's attention on a more regular basis. And secondly it means that after selling, we sit on cash for a while until the next buying decision

So it's better IMO to hold both votes at the same time.

As to how we decide on which stocks to vote on, the exact process can be discussed in a separate thread. But, for instance, we might have a rota and each time we have three members who all have to nominate a stock to buy and (if that would take us above our maximum) one to sell. They would have to give reasons (perhaps completing a template of set questions), and that would be linked to from the voting thread

This can all be scheduled in advance, so the three members know by what date they need to make these nominations. And the rest of us know in what week the discussions and voting will take place. So we can make sure we allocate time to give proper consideration

[richard@imutual]

Right well in order to move forward, I've started a poll on this at viewtopic.php?f=23&t=82631