[Simon Woods]

Thanks. No hard feelings I hope. All I was trying to say in essence was that when there is clearly a veritable Tsunami of heavy weight shorting by powerful hedge funds and the like (equivalent they say to over 25% of Carillion’s value and even now most of the shorters scarily have not yet closed their positions so they expect the stock to fall even further) going on against a particular stock for many months on end then there’s usually a good reason for it and it shouldn’t be ignored. Such facts are surely relevant in investing, even when taking the long view – in terms of research etc -to an expert such as yourself? It was not mere market noise but a very concerted attack on that particular stock putting investors at risk and we should have been warned of that. It merited special investigation. I agree and by and large support your investment approach (although not to the point of dogma) as I have said before but I was merely talking about that one stock…there was no need for us to have such a general debate on principles all of which I broadly accept anyway and btw the insults seemed to have been mutual to me – since you accused me of “innumeracy”! however please accept my apologies for the tone of some of my comments – I was and am nursing a significant probably permanent loss and was feeling sore. As for capital versus income, well we have lost both in the case of Carilion haven’t we – with a vengeance.

Ends.

[Simon Woods]

Thank you Stephen. I will let you have the last word on this and overlook your now overt condescension and leave it to others to pass their own judgments. Carillion is now quite dead in the water having lost over 70% in just three days and those you seem to despise so much including people within the Southbank stable believe that there is stil more to come before there is perhaps a buying opportunity. It could take a generation or more for such a share to recover,if ever. By the way stock picking is an art as much as a science in my ever so humble opinion. Unfortunately I suspect that there are some other Carillions out there waiting to happen and soon, even unto your HYPs.

[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

[Author]

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