Proposal for our way forward

Discussion of the proposed Cashback Investment Club

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garindan
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Proposal for our way forward

Post by garindan » Wed Mar 20, 2019 12:01 pm

All,

Apologies this has been so long coming. I have been very busy but I won't linger on that point...

I just wanted to summarise what I think has happened with the Club and what changes we have seen over the past few years of our existence.

History
Over our existence I think we have done OK but with one major exception, which has blighted the whole picture. Carillion really shafted our performance. I don't think it was our fault - all shareholders were misled. Would could have bailed earlier, but even that would only have saved ~50% of the holding. Either way you look at it this loss produced a very sour taste for Club members and will have put others off joining.
Our other investments have performed well in the majority, by the time we have sold. This is shown by all the blue "positive" results of sales in the past investment report. We are still holding a small number of shares that are in the red but you cannot expect every share to be well in the black all the time. Investment is not easy.
So Carillion aside we would be up overall by a fair margin. The reality is we are down by a fair margin due to the collapse of that company.

Investment choice problems
This has been a real issue for us all the time. We've struggled to have much member input for suggesting potential purchase options. The same members are generally the ones who make suggestions. There has been a fair amount of unfortunate commentary about this, polls, being too led by the few and other things. I guess being a dispersed Club of members who have never met in person is the cause, as solutions to problems and agreements to move forward are often best tackled in person. We have had less of the "we're all in this together" community than I had hoped for.

Changes
When I discussed creating the Club with Richard we were both of the opinion the investment strategy should be low risk and not lead to the purchase of high risk shares that result in a big loss. The reality is we took a conservative low risk approach and we suffered a big loss. Since then we've seen a change in mindset to see if we could back a higher risk share for a greater return.


So with the above said I think the challenges we need to overcome are:

- how to approach getting from portfolio we have now to the one we need to have
- getting a simplified way to have a shortlist of share investment choices
- how to get more member contribution
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garindan
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Re: Proposal for our way forward

Post by garindan » Wed Mar 20, 2019 12:29 pm

- how to approach getting from portfolio we have now to the one we need to have

Our current portfolio breakdown is as follows:

~ £2400 original investment in 4 shares worth less than this on paper (inc.dividend)
~ £600 in a higher risk share
~ £1150 original investment in 2 shares worth more than this on paper (inc.dividend)
~ £2350 in cash
- Share Centre Shares originally worth ~£200

I would propose that we sell the two shares where we are in overall profit. We'd add another ~£1100 to the cash total. This would give us nearly £3.5k to spend on new shares.

I don't see the need to sell any other shares at this point in time as over three thousand to spend is quite enough for the moment, to get any new process up and running. We draw a line under these shares and consider when to sell them at a later point in time as and when necessary.

Selling process
We need to put in place a new process, along similar lines to how Richard has presented in the past, for all new shares purchased and Medica that we currently hold. This would mean a monthly poll for each share to decide if we hold or sell. I think this might be worth doing very early in the month on a set date, say the 1st of the month. Any shares purchased in the previous month would not be voted on until the following month. Each poll would only be open for 24hrs.

Buying process
If we have cash available we also need to hold a poll to purchase new shares. I would suggest we increase our investment to ~£1000 per purchase and that we aim to hold no more than 5 shares in total at any one point (shares noted above excluded, Medica included). We purchase no more than 2 shares per month. If we have more money available it will be held over to the following month. If we (hopefully) end up having too much rolling over we should consider increasing purchase thresholds at that point in time. Buying polls will be held 2 weeks after the selling polls, say the 15th of the month. Each poll would only be open for 24hrs.

The question is whether we set any limits on our new shares or if our selling process is sufficient?
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garindan
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Re: Proposal for our way forward

Post by garindan » Wed Mar 20, 2019 12:36 pm

- getting a simplified way to have a shortlist of share investment choices

It is clear we are inept at being able to do this ourselves and it has only caused disruption in the past. We need a solution that removes the selection process to an external source of suggestions.

We are to have a maximum of 2 purchase polls per month. In this case we need two sources of suggestions - a preferred source and a secondary source, the latter used when a second poll is required. The sources of the suggestions we can decide in a separate thread.

We should set a timeframe from when the suggestions are taken from. My belief is we should take it from 3-6 months prior to the poll. The suggestions can then be reviewed by us all, so see how well they have performed and if there is potential for us to gain - with votes cast accordingly.

There should be a maximum of 3 choices per poll, with a none of the above option. Any polls that do not result in an investment will have their funds rolled over to the next month.
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garindan
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Re: Proposal for our way forward

Post by garindan » Wed Mar 20, 2019 12:40 pm

- how to get more member contribution

Members will need to have greater activity in the new process, as there will be up to a maximum of 7 polls per month - 5 selling and 2 buying. In reality I hope we'll have 3-4 but time will tell. The companies up to vote for in the buying polls can be published as soon as the selling polls have ended. This will give members nearly 2 weeks to review the companies, post helpful information and share their thoughts for discussion on the forum before the buying poll opens. This will hopefully encourage far greater contribution than we currently have.
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garindan
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Re: Proposal for our way forward

Post by garindan » Wed Mar 20, 2019 12:42 pm

I'd locked this topic whilst I put down all my recommendations. I'm now unlocking it and hoping you will all dive in with your thoughts so we can get to a point where we can take a good plan forward.

Let's discuss :thumbup:
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pieman
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Re: Proposal for our way forward

Post by pieman » Wed Mar 20, 2019 3:29 pm

Having read the above posts - I agree with what Garindan is saying.

Just an idea for picking shares....

As we are not experts - perhaps it would be useful if each member did a weekly post of the shares 'tipped' in their newspaper and magazine of choice.

This would then allow us to

a) Spread the work load
b) Give a broad picture of what shares people think may rise.

Then, after a given time - we could vote on whether to sell an existing share and buy a 'tipped' one.

Of course tipsters may know, no more than us - but it may give a wider range than before .

Also some of the tips may be for short term rises, but that is something we may need to consider if / when we vote.

Thoughts?
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garindan
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Re: Proposal for our way forward

Post by garindan » Wed Mar 20, 2019 3:45 pm

pieman wrote:
Wed Mar 20, 2019 3:29 pm
Just an idea for picking shares....

As we are not experts - perhaps it would be useful if each member did a weekly post of the shares 'tipped' in their newspaper and magazine of choice.
I appreciate your reply. It is another option.

I don't think I'd be in favour though, as the reliance is back on the membership to do this work, which is exactly what I am trying to solve as an issue. I predict the reality would be some would and some wouldn't, most wouldn't, and in that case we'd be as stuck as we are now.
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Re: Proposal for our way forward

Post by AAAlphaThunder » Wed Mar 20, 2019 5:02 pm

+1

Let's get this show on the road...
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Re: Proposal for our way forward

Post by burwin » Fri Mar 22, 2019 1:11 pm

garindan wrote:
Wed Mar 20, 2019 3:45 pm
pieman wrote:
Wed Mar 20, 2019 3:29 pm
Just an idea for picking shares....

As we are not experts - perhaps it would be useful if each member did a weekly post of the shares 'tipped' in their newspaper and magazine of choice.
I appreciate your reply. It is another option.

I don't think I'd be in favour though, as the reliance is back on the membership to do this work, which is exactly what I am trying to solve as an issue. I predict the reality would be some would and some wouldn't, most wouldn't, and in that case we'd be as stuck as we are now.

I agree with Garindan, I dont have time to read and present stock picks, I will vote and comment when possible. I do have my own stocks and shares and hold/sit on them more often than this club as I usually invest for longer term gain. I joined the club to do/see something different so happy with any "other" investment style. I suspect most of us are time poor and hence a suggestion of an independant source (please not the Motley fool) would be a good idea.
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Re: Proposal for our way forward

Post by an6ypan6y » Fri Mar 22, 2019 1:55 pm

Thanks for the hard work Garindan and broadly speaking I like the proposal.

You have highlighted the issue of group communication being poor and not as unified as one would like to see. Would it not be possible to hold occasional conference call type meetings to thrash out key decisions or simply to draw members closer and encourage cooperative thinking.

Just a thought on the selling process:
"This would mean a monthly poll for each share to decide if we hold or sell."

Would you plan to only sell the most popular (or un-popular) share in this vote -else we could end up flogging the entire portfolio in a single month.
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