National Grid switched on!

National Grid 889.5p

Hmm a bedrock of my portfolio. National Grid appears to riding the crest of an analyst induced wave at the moment to a point where, on 16.2 and 15.4 times earnings (1 and 2 year), they feel a little inflated given the increasing prospects of the economy and the pressure being applied to the BoE to look at cooling the London centric housing market.

Any higher than the current price (without the foundation that time and earnings would give it), into the 900p range, and I would suggest it is in the kind of inflated acquisition price range that utilities are often taken out at by companies/pension funds looking for secure predictable bond like investments for the very long term!

Analysts seem to be quietly promoting NG for its quiet utilitarian qualities and distance from current political debate, which gives a perceived security to its inflation linked dividend.
On that basis I expect the shares to come back to the low 800p range, which makes it tempting to trade from the top then back in at a lower price should my thinking be correct.
Something that I have done with National Grid in the distant past!

I certainly wouldn't want to to be adding at this price although the forecast 5% dividend yield does still suggest there is value at the current price..hmm a disparity I think.

But, trading in and out would go against my philosophy of the past few years and possibly tempt me back into the short term trading mentality of much of the markets, a behaviour I have fought strongly to remove from investment strategy.
Funny if the share price was to have stayed within that low 800p price range I wouldn't even have considered trading them for what is ultimately a small margin even considering that if overbought at 889.5p they could then be oversold to say.... 741p which could give 20% ignoring the ex dividend date of 4th June.

Anyway, I've looked at it, I've made myself aware of it, and my expectation that NG will fall back in the short term, and will try to stick to my philosophy of working to a longer term horizon than the market's analysts and traders.