Credit deflation and the reflation cycle to come (part 2)

[Harley]

42 minutes ago, Loki said:

A lot of us bought in March

A grumpy day for me then!  I will submit my resignation later as I wish to spend more time with my losses!

[Boon]

1 hour ago, Loki said:

Not really for this thread but the lack of rioting over mass removal of rights, criminalisation of normal activities, destroying of businesses and families over the casedemic tells me we are nowhere near rock bottom. People are too comfy mentally and physically. Doesn't sound rock bottom to me.

They might have a whinge but for the most part they all just do as they are told.

You know, that was my thought as well. Too many behaviours can be justified with the pandemic as an excuse.

I do suspect though that time is coming. I don't think people will riot in the cold, all you'd have to do is literally freeze them out and they'd get bored.

Under warmer weather and with no furlough payments there may be a sizeable amount of unhappy people.

[Talking Monkey]

10 hours ago, DurhamBorn said:

Its a huge problem especially for bigger portfolios.The answer is gilts and treasuries,but only for the short term.I think we need to turn the threat to what to do if/when oil hits $65 so we are ready between that and $80.I might just trim a lot by 30% or do nothing.Lets get there first.

I've thought about what to do as oil, S&P and DXY approaches targets we've discussed here, my thoughts are to gradually move to treasuries so as to have 25% in treasuries as S&P moves between say 4100 to 4500, accelerating the rotation as it moved towards the upper bound. If the S&P continues past 4500 I would increase the pace and would be 50% treasuries if the S&P was at 4750. Beyond this point I would continue rotating and further increase the pace with a max of 70% treasuries. I would keep lower tranches of all big oil, some potash, and most of the telcos.

Looking at Tesla and it's parabolic move a broader market parabola seems a distinct possibility, utterly insane stuff

[Bobthebuilder]

53 minutes ago, 5min OCD speculator said:

Some of us walk that thin line between genius and insanity

Most of my friends and family think I am a bit mad / oddball, but I am the first one they phone up when they need help or need something fixed. It makes me laugh really.

[Loki]

1 minute ago, Cattle Prod said:

Good point Loki. Poll tax riots were a sign of a healthier society and democracy in my view.

Healthier in the sense it wasn't the stagnant, homogeneous 'swamp' (To steal a phrase) we have now.

At least there was some spirit in people.

[Green Devil]

Max on top form, of spectacular interest is the graph he shows of bitcoin against m2 money supply.

Definatlely worth your 44mins coffee/lunch break watch.

 

[Democorruptcy]

11 hours ago, DurhamBorn said:

Its a huge problem especially for bigger portfolios.The answer is gilts and treasuries,but only for the short term.I think we need to turn the threat to what to do if/when oil hits $65 so we are ready between that and $80.I might just trim a lot by 30% or do nothing.Lets get there first.

What's the ticker for those gilts and treasuries?

[supernaut]

Really not in a position to add anything to the thread. Im a novice in terms of all this so just trying to learn so very much a lurker still.

I did follow the ethos of the thread and was buying in small amounts pre march and then really did pile in on the march lows and was 17 k down at one point. Now 25k up so thank you everyone who posts.

I come from a successful betting arbitrage background so used to cashing out for some profit or letting things run once original stake guaranteed. The higher the odds the more likely i just let things run in the hope for a bigger pay off as costs too much in liability to guarantee profits . 

Long winded way of saying I'm not sure how to play it going forward with the talk of the BK. As I understand the areas we are all mainly invested in should withstand a BK event better and come out of it better . But I'm seeing some gains could be released to buy in further if BK.

That's my dilemma but useful to have more experienced views.

[Green Devil]

4 minutes ago, supernaut said:

Really not in a position to add anything to the thread. Im a novice in terms of all this so just trying to learn so very much a lurker still.

I did follow the ethos of the thread and was buying in small amounts pre march and then really did pile in on the march lows and was 17 k down at one point. Now 25k up so thank you everyone who posts.

I come from a successful betting arbitrage background so used to cashing out for some profit or letting things run once original stake guaranteed. The higher the odds the more likely i just let things run in the hope for a bigger pay off as costs too much in liability to guarantee profits . 

Long winded way of saying I'm not sure how to play it going forward with the talk of the BK. As I understand the areas we are all mainly invested in should withstand a BK event better and come out of it better . But I'm seeing some gains could be released to buy in further if BK.

That's my dilemma but useful to have more experienced views.

One thing ive found quite useful in managing risk and letting you profits run is assume you are going to have to pay tax on the profits. If you exit at a profit, you have to pay tax at 20%. This is how the crypto space works. If you take a profit you pay tax if its above 12500. Its a big disincentive to sell. What this tends to do is force you to cut your losers (which are not liable for tax), then let your profits run. Its been spectacular for me. Its forced me to hold winners and allows me to cut losers. It also carries over well to stock investments. Try it!

[DurhamBorn]

23 minutes ago, Democorruptcy said:

What's the ticker for those gilts and treasuries?

IBTL for treasuries,gilts lots to choose from.Ishares UK gilts All stocks index,Vanguard also have a long duration gilt index fund.Legal and General etc also have cheap gilt funds,but id be avoiding the insurance companies in a BK.

[supernaut]

Pre March I was dipping into the market but on a low level as the majority of my free cash flow was tied up in arbitrage. When march hit I had a lot more time all of a sudden and a decent bank roll. 

In January last year I had a great month as I piled in one particular bet at 12/1 and it came in full underlay on the exchanges just to get my stake back. That one bet netted me 6.5k so I did feel confident keep buying the oils and others on the lower lows . 

Unfortunately for me the 3 month lockdown meant when june came around that particularly arbitrage angle was gone for me and I cant see it coming back on that scale 

[DurhamBorn]

@Cattle Prod its a very difficult call.I expected the Fed to print hard after a crash,and also that they would be late.However due to the nature of the spark they were able to inject quickly.The other side of that is they havent printed anywhere near enough to stave off financial dislocation.It could be we see sector rotation though.David etc talks about 70% falls,but they are all looking at the US bubble stocks.BT already fell 75%.Vod fell 60%,BAT fell 57%,Bp 65%,Repsol 70% etc etc.

What David is seeing is massive financial dislocation.In other words key parts of the economy going under.Banks,insurers etc etc followed by derivatives blowing up catching out lots of other companies.Anyone can go bust if they cant re-finance debt and whatever happens its likely only the big boys will have access to capital.Vod yes,Talktalk no sort of thing.

I think massive damage will be done if the BK hits,but mostly outside of our sectors.We do need to remember though most companies go bust in the recovery,not the smackdown.

[Harley]

12 minutes ago, DurhamBorn said:

IBTL for treasuries,gilts lots to choose from.Ishares UK gilts All stocks index,Vanguard also have a long duration gilt index fund.Legal and General etc also have cheap gilt funds,but id be avoiding the insurance companies in a BK.

Defo worth visiting Justetf.com and comparing all the available bond ETFs.  Lots of info about their trade volumes, sampling v replication v derivative methodology, market caps, portfolio analysis (including durations), lending policies, etc.  I picked the largest and most liquid and spread things around, especially since most lend out (to banks, etc of all people!).  I hold long and short.  I wish Vanguard did a better range. 

[Hancock]

1 hour ago, Cattle Prod said:

It comes from the Fed watching us all go nuts, adding velocity to the equatiom,inflation tick up and they start to taper without enough liquidity in the system.

If they need 10 Tn more on their balance sheet, they can't inject that once the crisis is over. But they can once makets crash again. (presume you mean can't)

So the BK signal for me will be Fed actions. Question is, will it be walking toward the punch bowl, picking it up,or taking it away that triggers it?

The counter argument to that is that because the Dems have control now, they just inject the required liquidity anyway, party or not. If they do this, perhaps we could bypass the BK do you think @DurhamBorn?

Thanks, thats pretty much what i thought, the BK is reliant on the FED stopping printing a little too early. And the Fed may stop printing too early should inflation hit sooner than they think.

But there may not be a BK should the Dems spray everyone with money.

Need to keep things simple for my old brain.

 

[Castlevania]

58 minutes ago, Democorruptcy said:

What's the ticker for those gilts and treasuries?

IBTL for long dated US-T’s

https://www.ishares.com/uk/individual/en/products/272124/ishares-usd-treasury-bond-20-yr-ucits-etf

[Harley]

25 minutes ago, DurhamBorn said:

.......It could be we see sector rotation though.David etc talks about 70% falls,but they are all looking at the US bubble stocks.BT already fell 75%.Vod fell 60%,BAT fell 57%,Bp 65%,Repsol 70% etc etc.

What David is seeing is massive financial dislocation.In other words key parts of the economy going under.Banks,insurers etc etc followed by derivatives blowing up catching out lots of other companies.Anyone can go bust if they cant re-finance debt and whatever happens its likely only the big boys will have access to capital.Vod yes,Talktalk no sort of thing.

I think massive damage will be done if the BK hits,but mostly outside of our sectors.We do need to remember though most companies go bust in the recovery,not the smackdown.

Ah the anatomy of a B(urger) K(ing)!

This is it.  Is it worth playing the nuances or is it a slap across everyone's faces?  And you've mentioned sectors and company attributes (size, debt exposure, derivative exposure).  What about markets like the US v UK v Europe v Russia v HK v Japan, etc?  I'm feeling any dislocation will result in another tectonic notch in a realignment between the West and East.  The question is will that be by some geos relatively avoiding a BK and/or recovering better from a common BK?  And if it's worth the bother rather than broadly liquidating and going into bonds, any other nuances (e.g. asset classes such as PMs, crypto, commodities, real estate)?

[NogintheNog]

1 hour ago, Green Devil said:

Max on top form, of spectacular interest is the graph he shows of bitcoin against m2 money supply.

Definatlely worth your 44mins coffee/lunch break watch.

 

Wondered when someone would post this. The most salient point is at 17 minutes....

[NogintheNog]

I have a Bitcoin strategy. During any period where I buy gold, I buy 5-10% of that trade in Bitcoin, before I buy the next tranche of Gold.

[Green Devil]

4 minutes ago, NogintheNog said:

Wondered when someone would post this. The most salient point is at 17 minutes....

My favourite bit is when she asked how much bitcoin do you own. And his response. 

[NogintheNog]

3 hours ago, Loki said:

Not really for this thread but the lack of rioting over mass removal of rights, criminalisation of normal activities, destroying of businesses and families over the casedemic tells me we are nowhere near rock bottom. People are too comfy mentally and physically. Doesn't sound rock bottom to me.

They might have a whinge but for the most part they all just do as they are told.

I agree but with a caveat. Imagine if our government, in fact all western governments hadn't come into the employment markets with 'Furlough', or whatever you want to call it for each country.

Would people have done what they were told then.....???

[NogintheNog]

1 hour ago, Cattle Prod said:

So the BK signal for me will be Fed actions. Question is, will it be walking toward the punch bowl, picking it up,or taking it away that triggers it?

I think it's the point where inflation starts throttling the economy, and with the amount of liquidity in the pipes as DB says we are a way from a BK in my mind. At 80-100 WTI I'll be watching what the fed does

[Democorruptcy]

54 minutes ago, DurhamBorn said:

IBTL for treasuries,gilts lots to choose from.Ishares UK gilts All stocks index,Vanguard also have a long duration gilt index fund.Legal and General etc also have cheap gilt funds,but id be avoiding the insurance companies in a BK.

IBTL is more speculative than what I meant. That's not to say you cannot make money if you time it right. Like this year if selling reflation stocks in Jan to buy it ready for the covid dip. Then selling IBTL on the day we announced our lockdown (and the governbankment cash help). It would have been bad news if you had bought it on the actual bad news lockdown day, for "safety".

 

 

[Don Coglione]

1 hour ago, Green Devil said:

Max on top form, of spectacular interest is the graph he shows of bitcoin against m2 money supply.

Definatlely worth your 44mins coffee/lunch break watch.

 

Why can't BTC, or all cryptos, be rendered illegal at the stroke of a legislator's pen?

Edit: I have only listened to the first half of this podcast so far.

[M S E Refugee]

1 hour ago, DurhamBorn said:

but id be avoiding the insurance companies in a BK.

Funnily enough I was wondering what to do with them, I have done really well with Unum, Legal&General and Met Life.

I have only a small position in some Insurance Companies so I may cash out of them and wait for the BK.

[Green Devil]

43 minutes ago, NogintheNog said:

I agree but with a caveat. Imagine if our government, in fact all western governments hadn't come into the employment markets with 'Furlough', or whatever you want to call it for each country.

Would people have done what they were told then.....???

Furlough fits in with the plan of great inflation. They arent going to end it until summer 2023 at the earliest.

Money printer goes Brrrrrrrrrrr.