I saw an interesting video with Terry Smith the other day and, as usual, I found myself agreeing with most of what he said. One thing in particular stood out though. He said,
"we're paid 1% for the overall return that we deliver, and part of that overall return is, hopefully, masterly inactivity; providing the emotional stability to do nothing once we've got the right holdings".
The same general idea applies to that other popular fund manager, Neil Woodford. His average holding period is six years, compared to an industry average of just 8 months. Jumping in and out is just not part of the plan.
This matters to me because one of my goals with UK Value Investor is to help people to think more about the long-term value of the companies they own, rather than focusing too much on what's happening today.
The dividend cut from RSA is a good example of this damaging short-term focus, with fund managers quoted left, right and centre saying how much they were against the cut, even though the CEO thought it would improve shareholder returns in the long-term. This seemed like a topic worthy of an article, so here it is:
Is the RSA dividend cut a good reason to sell?
This week RSA cut its dividend by more than 30%, and the reaction from Mr Market was instant and obvious – shares fell by around 14%, sending shock waves of disbelief out across the investing landscape... Read the rest of this article >>
Have a read and see what you think. I think it's possible that the dividend cut could actually be a good thing in the long run.
Have a good weekend,
John Kingham
Editor, UK Value Investor
Email: john@ukvalueinvestor.com
PS. To find shares with the best combination of high yields and steady growth, try UK Value Investor risk-free for six months - Find out more >>
PPS. You can now get £100 off full price tickets to the London Value Investor conference using discount code UKVALINV123 - More about the conference >>
Note: I provide information for investors who can make their own decisions. I do not provide financial advice. You should seek a professional advisor if you think you need one. Please remember that the value of investments and their income can fall as well as rise.
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