The Daily Routine.

I, like most of us, have a daily routine, which to a greater or lesser extent varies of course.
One of my routines is to switch on the power switch on the wall that powers the PC and to insert the bell “ringer” into the phone socket so when the ‘phone on my desk rings, I hear it. The ‘phone’s power itself, is on all the time and on a different switch. I then pick up the receiver and check whether or not a voice mail has been received. After this I switch on the PC. The first thing after it has “booted up” is to check the emails and delete the spam. My next task is to check the status of the BG blog and then to check on my shares (stocks to our Canadian & US readers). After this I check the website of the Bullshit Broadcasting Collective (https://www.bbc.co.uk/news) and then a source of informed wisdom, Doctor Richard North’s blog. After reading the learned doctor’s contribution to informed debate (http://eureferendum.com/blogview.aspx?blogno=87264), I decide on what to blog about or to prepare such later in the day or to give it a miss for that day.
Going back to the subject of my shares; today is a notable day. This is because on this day – after 4:30PM when the London Stock Exchange has stopped trading for the day – Shell will announce the £:US $ exchange rate they have used insofar as the dividend payable on their “B” shares is concerned. This is important (for me – and many others) as it will inform us exactly how much money we will receive on Monday 24th June 2019 – which happens to be an English quarter day, Midsummer’s Day.
Insofar as the share values are concerned, I enter the prices onto a spreadsheet I prepared which calculates their current values along with the level of capital gain or loss on each shareholding and the totals. One set of figures I pay particular attention to is the weighting. That is to say the percentage share – by current value – of the portfolio. This changes constantly as it is a function of the individual share prices.
Today the weighing was (it varies constantly) as follows:
Dunedin Income Growth Investment Trust (15.60%); Lloyds Bank (6.74%); Phoenix Group (32.16%); Royal Dutch Shell [B shares] (39.74%); SSE PLC (5.76%) ~ Total: 100.00%.
Now, ANY competent independent financial adviser looking at this portfolio would give the following advice most emphatically: “Spread the risk! Sell significant quantities of Shell and Phoenix and reinvest in other investment trusts.”
This would be sensible advice.
I would ignore it!
Why?
Because although spreading risk in terms of individual stocks is a sensible thing to do, one also has to spread the risk by investment sector and in this, my portfolio is more diverse than would first appear.
You will note Dear Reader that SSE at 5.76% of the portfolio is the smallest item. This is deliberate for not only is SSE paying over the top dividends (in relation to it’s profits) there is a substantial expropriation risk attached the shares in the form of comrades Corbyn and McDonnell. The next up from the bottom at 6.74% is Lloyds Bank. Lloyds is a very different company from SSE. It’s dividends are easily affordable and in August this year the dreaded PPI problem will be gone. Lloyds is very well managed and its the market leader in the UK banking sector. However, Lloyds’s fortunes are inevitably tied up with the fortunes of the UK economy for which it acts as something of a bell weather. As a result, the portfolio allocation is minor. At 15.60%, Dunedin Income Growth Investment Trust is the third stock by value in my portfolio. As it’s name suggests, it is an investment trust and is mostly (not wholly) invested in UK equities. It’s investment aim is also contained in it’s title. This places the Phoenix Group (32.16% – nearly a third) in second place. Phoenix Group was and still is a specialist closed life office. This is a company who manages life insurers who are no longer writing new business (insurance polices) but specialise in the efficient and profitable management of existing business, which by it’s nature expires over time. Phoenix Group has made numerous acquisitions, notably Abbey Life and most recently, Standard Life. The acquisition of Standard Life fundamentally altered the group’s business model as Standard Life did, does and will write new business (insurance polices). Phoenix Group is a very well run and profitable business that benefits from an experienced board of directors that “knows it’s onions” and I believe is fully aware of the Brexit dangers.
This of course brings us to the #1 (39.74%) shareholding; Royal Dutch Shell.
Now at this point I will disclose that I have already received advice from certain persons in the community in which I live as to what I should do with this shareholding that makes just under 40% or two fifths of my portfolio. These person have suggested – indeed urged most emphatically – that I divest myself of all these shares as the future they state lies in a zero carbon environment! They state that the greatest danger the planet faces is continued increases in CO2 emissions and that as a shareholder in an oil super-major, I am one of the principal culprits in threatening the continued existence of Life on Earth! Oh my!
This is of course complete bullshit! It is of course to be noted that one of the chief protagonists of this nonsense is of course the aforementioned Bullshit Broadcasting Collective!
These idiots imagine a future where petrol cars – such as my recently acquired 1.6 litre Kia Venga are replaced by electric cars using the lithium ion battery as a power storage device. Now, apart from the FACT that EVERY electric car supplied to European end users has a huge subsidy provided by the taxpayer for the cost of the battery – which otherwise would make the cars unaffordable to anyone other than HRH The Prince of Wales, Sir Richard Branson and Mr Elon Musk – there is another minor problem – a little planetary difficulty in fact!
You see when He created the Earth – along with the rest of the known universe – The Almighty in His infinite wisdom set the quantity of lithium at rather modest levels! What this means is that there is not enough lithium on the planet to provide human beings in their present and projected numbers with all the mobile telephones, tablet and laptop commuters as well as electric vehicles!
The unavoidable FACT is that the two most practical fuels available for individual and public road transport are diesel and petrol (gasoline). The deleterious effects of diesel emissions can be mitigated to a considerable extent by developing diesel technology to enable diesel engines to run on a bi-fuel mix of diesel oil and liquid petroleum gas (LPG) in the ratio of approx. 75/25%.
In addition, plastics will continue to be a major item that will continue to be produced. Plastic is made from crude oil. Whilst Lithium is in short supply, crude oil is not!
Another significant factor insofar as Shell is concerned is that crude oil is sold and therefore priced in the US $. This FACT to a very great extent detaches the performance of Shell from the UK economy, thus protecting me from the effects of the Brexit situation. Indeed, depreciation in Sterling’s value against the US Dollar boosts my income!
This is something I value, especially when looking at the prospect of the Buffoon in Downing Street!