LIC & LIT More education required.

I've been looking at a few of the statistics for some of the LICs & noticed that the price on most of them has been fluctuating up & down since 2015, most of them staying in the same or similar price range. I also understand the yield trap & that a dividend should increase in price as time goes by, but that doesn't really co-relate to what I have seen. The one that stands out, however is DJW, which has a good yield BUT both the dividends AND the share price seem to be in a downward spiral.

Is there something that I'm missing? Do any of these represent decent buying at this point in time? I know that there is more to look at besides the yield and the price. What else is important, and where do I find this information?

WHF - Yield 3.69%
Price $4.67
Dividend has remained at 0.17 since 2014


ARG - Yield 3.95%
Price $7.97
Share price has increased slightly each year.


AFI - Yield 3.93%
Price $6.10
Dividend has increased by 0.02 since 2014


BKI - Yield 4.48%
Price $1.63
Dividend has remained at 0.07 since 2014


AUI - Yield 4.04%
Price $8.53
Dividend has increased by 0.02 since 2014


MLT - Yield 4.04%
Price $4.65
Dividend has increased by 0.01 since 2014


DJW - Yield 6.13%
Price $3.26
Dividend has gone DOWN 0.06 since 2014

 

DJW was trading at a big premium to NTA (~40% over assests) a little while back and is now trading around NTA. DJW is popular for those seeking big divs, so it would make sense those same people won't pay a premium if the div is cut.

From memory DJW employs an options strategy to increase income (and pass it through as high dividends) that will (likely) under perform in a bull market yet hopefully holds up well in flat and falling markets.

 

Tens of thousands of views (on a property forum!) for posts about passive LIC investing might be an indicator of...something (hence why I linked to a long/short fund idea the other day).

Consider if US valuations goes to hell then...long term hold, I know.

DYOR, not advice, etc.

 

@petewargent It would be interesting if you could elaborate what you mean.
It seems you are you suggesting this is an indicator the market is overheated?

Of course a correction in the US stock market will bring worldwide markets down with it. It is hard to avoid unless you avoid long equities altogether.

DJW is coming down from a ridiculous premium after they announced a dividend cut. A pretty good yield though.
@skater bear in mind you can always go the easy option of the index (VAS) where you do not need to consider any of this premium talk. Beautiful in its simplicity.

 

Brave hearts... all good cost averaging until markets tank
Notice crickets since 60B drop a few weeks ago, anyone jumping in now has lost their marbles

Seriously.... eyes wide open

 

I guess my point was global stocks are overheated, big time in some cases, so everyone should at least consider what their plan is if the markets really cack themselves (you obviously have).

You'd be a very keen buyer of Aussie shares when forward PEs are nearer 10...mid-teens or above, only so-so.

Also, agreed re $VAS.

 

From a very reputable Hedge Fund Mgr. The LIC environment is unsuitable for such a Fund. Detailed in my previous posts.

Sometimes the best dry powder is plain old Cash!

 

I think you may understand this one..... timing is everything.... imagine buying at peak??? Would you do this with property... I sm thinking sit on your hands, dont do this timing is wrong with shares

 

While I appreciate markets may look overheated in some instances, it is a proven fact the majority will not time the market accurately. One only needs to look at the report posted by @Nodrog recently detailing the lack of outperformance of most professsional fund managers (with dedicated teams and whatnot) compared to the index over the long term especially. If market timing was an easy to implement strategy everyone would be doing it! Hell, I would have sold everything I own and pour it all in A2M @$2.
Also remember how 3-4 years ago there were countless posts about how the RE Sydney market had peaked? Well, turns out it wasn’t right.

Sure timing is great if you can pull it off consistently, but for the vast vast majority of retail investors this just isn’t gonna happen.

Sitting on the sidelines also has an opportunity cost.

 

Well......this is what I was trying to identify. I know there's still lots that I don't understand, but with what I DO understand, it doesn't appear to be right.

Are you saying I'm best to wait a while? Please be more specific.

 

We are back up above that point

Hi Peter

Given we are around a PE of 15 and with the US continuing new highs what do you see for Aussie stocks (some bargains ahead )

 

I think @Nodrog was referring to the long/short fund being discussed above.
This is not a call anyone can make accurately and repetitively. This really is something you have to decide for yourself. Do you want to wait in cash? Do you want to dip your toes? Do you want to go all in? Only you can answer this question.
One can wait for a correction, but its anyone's guess as to what the timing of it is going to be as well as the magnitude of the correction. Also consider that if it were to correct say 30% but after having another run of 20% you might be only marginally better off. Just too many variables. Hence why the DCA overtime is often recommended.
But anyway, it's all up to you and perhaps you can be one of the few to time the market in which case kudos to you!

 

All good! I really wish people wouldn't put confusing posts on a thread from a newbie. Talks of long/shorts are well above my knowledge range, but I AM hoping that someone can give me more of an indication of what to be looking for when making a purchase order, as per my original query.

 

I thought you would be an expert at short positions?

 

Yes, I've started. I've even registered a CommSec account. Just have to wait now for Hubby to verify his details.

 

Thankyou! That tells me a lot.

 

MTR. I've said this before and again I really don't want to cause any offence, but I think this needs repeating.

Your strategy of timing the market when it comes to shares is not sensible and can be downright dangerous for those without a lot of experience. With your own money, you can obviously do what you want, but I don't think it's fair for you to come on to other threads and sprout market timing when you don't really have the first clue about. It's fine to advice caution but to actively tell someone that they're crazy or have lost their marble if they want to employ a sensible DCA approach is irresponsible.

Again I'm sorry if this comes across as harsh but I really don't like people who don't have any experience in investing in shares sprout and give advice like they're an expert in it.

@skater. I think you're doing the right thing and taking your time to read up and understand thing is commendable. You're also doing a great job of deciphering through a great amount of information. As you have rightly identified, being comfortable with your investment is the main thing and is the thing which will allow you to keep to the plan in times of volatility.

 

No offence taken.

I am entitled to an opinion, and you are entitled to disagree who cares really??.

I was around when the share market crashed in 2008 and I do read lots of posts on share market.

We never stop learning, no one is an expert about anything really... main thing is to remember its just a forum and everyone has opinions like belly buttons we all have one.