Chris and Clem Meet Up #4
Chris met Clem on their usual, but not every, Friday night chit-chat down at the Golden Lion.
Chris greeted old Clem with an enthusiastic smile: "Hi Clem, great to see you. You're looking good".
"Yeah," replied Clem, "not bad for an old curmudgeon"
"Your words not mine" said Chris, "I'll get the first drinks in - usual?"
"Yeah, but I'll not consume too much, the doc reckons I should try and lose a bit of weight"
"The last time we met - two weeks ago, I think, you were full of suggestions for your SIPP. Did you ever do any spadework on finding more about your shortlisted companies?"
Chris replied, "I have done a little, but I've also been busy at work, they sent me down south on a job and I had to work last week-end, but I did a little research and also sat down with the Missus to discuss things"
"I also started a journal like I said I was going to"
"Great stuff" said Clem, "let's have a look at it."
Chris had started a journal to log all that he had logged about his SIPP and his income /expenditure.
His income/expenditure he also had on his computer as an Excel file, but copied the information into his journal as a hard copy and also as a means of showing Clem what he had done.
Also in his journal he started to do some research into the companies that he had placed on his "watchlist."
He pulled out his journal with his meeting with Clem and the old master was well impressed with the young man's commitment.
"Well" said Clem, it looks like you have really taken this providing for your retirement very seriously. I can't believe what a serious young man you are."
Chris replied: "It's all your fault. You got me started in this whole thing, now I can't seem to focus on anything but."
"Let me show you what me and my missus discussed over the past two weeks"
"OK" said Clem "What did you discuss with your lovely wife, Soo?"
Chris answered: "Clem, a lot of the time when we get the young 'un off to sleep we sit down and talk about what we plan to do."
"First it was about family. Do we want any more kids. We decided maybe one more - and then stop at that."
"Then we talked about where we live. Right now we have a modest mortgage and we wouldn't want to pay much more than what we already do. We also discussed the possibility of if a job came up that involved relocating - we would consider it. Usually, such offers come with a relocation package."
"In fact, I am looking. I have been for some time."
"Moving away from friends and family might be a wrench but we would do it if it improved our prospects. Especially if the job was a sizeable enough increase in salary."
"If no offers came along, then we might consider moving to a better house, in a slightly better area of town. Although where we are right now is good, we would not rule out a move."
"Such possibilities could improve both our incomings and our outgoings - increased salary and lower mortgage."
"Hmmm, said old Clem "No more Friday nights for the two of us"
"Oh, come on Clem, we are only thinking out loud. But it could happen."
"Another expense we looked at was utilities. It's the most obvious one to go for first. Soo looks after all that stuff and she's a whiz with computers and spreadsheets and all that stuff. I am O.K. too but she likes something to do in between looking after Charlie and all the housework."
"Perhaps when our family, be it just the one or any other kids, grow up, she will go back to work. She's a trained teacher. To be honest, another salary would be perfect, but right now, it's not to be."
"Sounds like you both have it all worked out." exclaimed Clem.
"So what research have you done on your SIPP and your shares watchlist?"
"A little bit" said Chris. "To be honest with you, I did dig out 5 years worth of past results for some of the companies but I didn't dig as deep as I might. I would have preferred to find information for the past 10 years. As an engineer, used to doing calculations, I like to look at trends - and a 10 year trend is better than a 5 year."
"Besides, I also got to thinking that with all this pandemic stuff going on, it will throw even good companies off course. We have a unique situation"
"Oh", retorted Clem "What's that then?"
Chris stuttered "I'm just an amateur learning the system, but it doesn't take too much thought to see that some shares have been over-sold."
"I know what you're going to say: that the market is always right. And I couldn't disagree with you on that, but please don't try to convince me that good companies are going to go bust. Companies like BT, ITV, Sainsbury, Melrose Industries, TUI Travel, Carnival Cruise Lines, Lloyds Bank, and many others."
"Surely, they will all recover. Maybe not this year. But next year, the year after even. The market as a whole, has already bounced back off its low point and Wall Street even more so."
"You know I bought BT shares a couple of weeks ago, and this week there were rumours of a take-over from KKR in the US. I cannot see BT being taken over, but I thought the same about GKN, and the UK Government allowed that to happen."
"Nothing would surprise me."
"I know you're going to scold me, but I dipped my toes into the market again this week and bought ITV and Lloyds Bank at 60p and 28p respectively. I ordered 5,000 in each. I'm in all of them for the long term. I'm not trying to pick the bottom, nobody can do that, but I'd like to think I may be getting a bargain."
"I realise that bank shares are not flavour of the month but Lloyds is a big player."
"I was also tempted to buy Cineworld. Their shares have rebounded over 100% recently. I still think that they have a lot more to go - even in the short term."
"But I didn't want to push things too far."
"How considerate of you" snorted Clem.
"Here is the research I did for BT Group." Chris showed six years' worth of figures to Clem.
"I know it's basic stuff" said Chris, "but I wanted to be seen as doing something."
"Like I said previously, I'd rather have 10 years of results to go on but 5 years is a good start."
"Now I'm certainly no Warren Buffett but even I can see a somewhat up-and-down set of figures. Five years ago, the earning-per-share for the year ending March 2016 were 28,5p. The following year, these dropped to 19,2p and then for the next 3 years increased, albeit slowly."
"And then, for the year ending March 2020 they dropped again to 17,5p. For sure they will take a tumble for 2021 due to Covid and all other things."
"I bought these shares before I did the research, and, on research alone they do not look an enticing investment. Profits are all over the place as well. But as I explained before, I bought them because I thought that the market had over-sold them. I know that is not a good enough reason - but what's done is done."
"I'll do the same kind of research for ITV and Lloyds this next week."
Clem paused for breath and said: "Chris, you have just broken all the rules with what you have just done. Can't you show just a modicum of patience?"
"Sorry Clem," Chris said "but I just felt that I couldn't sit back and watch good companies recover without my seeing some of the action. My only regret is that I will have missed the shares that rise the most - such as Cineworld and Carnival."
"Things will settle down, I don't have that much money left to spend. Although I'm working on saving on expenditure so I can put more each month into my SIPP"
"Clem, it's my birthday on September 12th. which is a Saturday, so let's meet up the night before. I might even let you buy me a beer or three."
"Sounds good," replied Clem "but let's not drink too much, Soo will want all your attention the next day and you'd better be up for it."
"O.K. it's a date. I'll try and get some more "proper" research done before then and find some more ways to save money on my spending. Every pound that I save will go straight into my SIPP account."
"Right then," Clem said "see you there."
And the two of them went their merry ways.