Reply To: Carillion

[Simon Woods]

Dear Stephen,

Thanks for your detailed and inevitably defensive reply – I nevertheless accept the generality of the points which you made, of course. I have no wish to sell the shares and thereby crystallise my losses – its too late for that I fear – however all that we are left with now is..hope of an eventual improvement in value and hopefully even a dividend. By the way and with reference to the pscho-babble of “confirmation bias” sometimes its perfectly valid to sell shares from time to time even when holding long term. I did in fact have a 10% stop loss on Carillion for a while then forgot to renew it. Whoops.

I merely pointed out albeit rather bluntly that your past assessments in support of Carillion, bearing in mind that company’s indebtedness as a result, inter alia, of poor management by that company of its contracts, pension deficit etc etc – something which you say you abhor – were on the facts even at the time rather than with the benefit of hindsight, probably erroneous. Perhaps it was not just me who was “innumerate”. If so a small degree of contrition in the piece you posted yesterday about the Carillion debacle might have been in order and yes I realise that you are not an advisory service. As for myself: silly me – I should have realised that an over generous dividend unless its currency driven usually spells trouble coming down the line and acted accordingly.

“Strategic ignorance” like so many other approaches in this game has its limitations which by the way I must accept, however risk should never be discounted altogether and I believe that Carillion carried a lot of that and it should have been more clearly highlighted in my humble opinion. No doubt your paying subscribers will draw their own conclusions anyway.

As for the 9 years of the HYP you refer to – most of that time was post 2008 crash and in a market which as been mostly on the up since around March 2009.The next 9 years may well be a very different kettle of fish, I fear in my ignorance, of course.

Kind regards,

Simon Woods