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

[Dogtania]

1 minute ago, Harley said:

"Love it, love it, love it"!  My operating thesis to a tee.  I would also add brittleness in addition to the ability to pass on (and maybe profit from) inflation.  Chains of every type may come under increasing pressure at such a turning so play safe?  Regarding your links narrative, I call them "degrees of freedom", drawn from my econ/polo/philo/theory/stats days: "Degrees of Freedom refers to the maximum number of logically independent values, which are values that have the freedom to vary, in the data sample".  They exist all over life.

Yeah this was super informative.  Really simple boils things down but equally something profound to think about.

I'm worried if there is a big bust coming whether I should be thinking about selling.  Selling half.  Or just holding through.  I'm inclined to hold but keep building a small amount of dry powder.  

It's hard though when you see mega printing and think surely better in an oil company, piece of silver.... Or just tins of food.  Sainsbury's had t-shirt for £2 yesterday FFS.  Made in bangladsh looked reasonable quality.  I don't want a t-shirt though but the point is it sometimes feels I'd be better owning than cash.

Yes if I had land etc I would be buying equipment etc no question.  I don't so what is second best... Equities I guess based on resources or fundamental services people need, as close to the source as possible ie oil extreme example like mentioned.

I guess a balance is best.  I saw David Hunter iirc reqoute himself a few days ago regarding a 60/70% bust across the board next year.  He's been quite accurate so far....

But I think folly for me personally to try to play the markets.

Other than bitcoin which I think I would like to try to punt in and out of.  Only one guy I know is interested, he's got a few more people involved in crypto but very much hodl, I said in a chat I wanted to just risk a small bit as was so volatile, he said just hold or you get 'rekt' I retorted doesn't matter if it goes down I'll rebuy, if it goes up and doesn't return with gravity so be it I'll be left with more toilet paper...I said in a few years could well be worth nothing anyway...silence😅

[Noallegiance]

I now see the bitter sweetness of the time we're entering. 

My work had been largely unaffected in a negative way and even seen growth because of 2020 events.

Due to the nature of the work and area of it I can't comment on detail, but things are now suddenly impacting us negatively to such an extent that a reduction in take-home and hours for everyone involved is about to begin.

The atmosphere has changed immediately. I'm surrounded by rabbit-in-the-headlights eyes. People complaining that they suddenly can't get by. The tide has gone out.

From what I can gather from body language, most people are relying on debt for their lifestyle (whether ostentatious or otherwise) and what's coming now and in the years to come is going to be ugly for these people.

I have a multi-faceted emotional reaction to this. I'm not sorry for them enough to remove my thoughts about living off debt. One makes one's choices. But to be in the presence of people who are now realising that they will genuinely struggle is a first for my lifetime and it smells awful. It also produces within me a validation for at least two-decades-worth of choices, even down to the woman I married and how lucky I am that she is like me on the things that truly matter.

It's a curious and potent mix of satisfaction, fear, pity, happiness and sorrow within me right now. For individuals, nation's and he wider world. So much to digest. So much to cope with. So much witnessed and yet to witness. And how to steer a course? A difficult challenge.

I hope everyone here has a decent end to the year and can ride the ugliness ahead with poise and determination. 

Shit's coming for a lot of people and even those not directly affected will see it and feel it.

[Loki]

50 minutes ago, Dogtania said:

But I think folly for me personally to try to play the markets.

I'm thinking of it as this is our "Tesla" moment (Even if you just open a few shorts at the targets we've spoken about on this thread).  Or some calls on silver.  Edit: I made £100 last week just by opening some - well 35,000 - EUR/USD swaps for a few days.

I love contrarian macro for the long haul of 10 years but I don't want to sit and watch potential mad gainz  pass me buy.  Anyone kicking themselves over Tesla or Bitcoin has an opportunity here, depending on your risk appetite of course.

[Popuplights]

49 minutes ago, Noallegiance said:

I now see the bitter sweetness of the time we're entering. 

My work had been largely unaffected in a negative way and even seen growth because of 2020 events.

Due to the nature of the work and area of it I can't comment on detail, but things are now suddenly impacting us negatively to such an extent that a reduction in take-home and hours for everyone involved is about to begin.

The atmosphere has changed immediately. I'm surrounded by rabbit-in-the-headlights eyes. People complaining that they suddenly can't get by. The tide has gone out.

From what I can gather from body language, most people are relying on debt for their lifestyle (whether ostentatious or otherwise) and what's coming now and in the years to come is going to be ugly for these people.

I have a multi-faceted emotional reaction to this. I'm not sorry for them enough to remove my thoughts about living off debt. One makes one's choices. But to be in the presence of people who are now realising that they will genuinely struggle is a first for my lifetime and it smells awful. It also produces within me a validation for at least two-decades-worth of choices, even down to the woman I married and how lucky I am that she is like me on the things that truly matter.

It's a curious and potent mix of satisfaction, fear, pity, happiness and sorrow within me right now. For individuals, nation's and he wider world. So much to digest. So much to cope with. So much witnessed and yet to witness. And how to steer a course? A difficult challenge.

I hope everyone here has a decent end to the year and can ride the ugliness ahead with poise and determination. 

Shit's coming for a lot of people and even those not directly affected will see it and feel it.

Totally agree. People living on debt are in for a world of hurt. Spend wisely, buy quality, avoid keeping up with the Joneses ( not that anyone on here is like that!) We will weather the coming storm. 

[Loki]

@Noallegiance great post.  I'm not seeing it so much just yet, no-one I know is struggling for work and the trades are rammed.

I do wonder though if this Christmas will be looked back at fondly despite the year of maddening crowds. 

[Barnsey]

Just want to chime in and also thank everyone for all the hugely helpful and insightful info and thoughts over the months and years. Whilst I've had to cash out of my reflation investments for the house deposit it's been a huge education and at least I didn't lose money throughout this chaos.

It's been a great education so far and hope this very unique thread continues as things pick up pace next year. Something tells me our path may not be as linear as hoped but ultimately our instincts will prove right overall. Be careful out there as we enter the "portfolio optimisation" phase of this crisis in 2021.

Mutant strain emergency lockdown announcement at 4pm today.

[wherebee]

I'd say one thing to consider re inflation proofing your life are clothes.

 

I remember when a pair of jeans was a major purchase.  Noone under 40 will think of clothes as something to budget for.  If you are unlikely to change your size much, buying 3-4 pairs of good quality jeans or trousers, and a bunch of tshirts and shirts, could be very sensible.

We filled up on socks and underwear at the start of the pandemic due to supply chain fears for australia.  I think we will double dip, stick them in a suitcase, in sealed packets, and leave them until needed.  

I could see the days of cheap clothing for the west being over.

[Loki]

13 minutes ago, Barnsey said:

Something tells me our path may not be as linear as hoped

Agreed, we're not immune from the market hurting the most people it can.  One of durhamborn's sayings that stuck with me.

Hopefully it buys us flowers afterwards though, unlike the others! 

[Harley]

1 hour ago, wherebee said:

I'd say one thing to consider re inflation proofing your life are clothes.

 

I remember when a pair of jeans was a major purchase.  Noone under 40 will think of clothes as something to budget for.  If you are unlikely to change your size much, buying 3-4 pairs of good quality jeans or trousers, and a bunch of tshirts and shirts, could be very sensible.

We filled up on socks and underwear at the start of the pandemic due to supply chain fears for australia.  I think we will double dip, stick them in a suitcase, in sealed packets, and leave them until needed.  

I could see the days of cheap clothing for the west being over.

I have a car full of clothes and stuff for the charity shops after a clear out way back this year before the first lockdown.  Decided I need another look to check!  I've also been buying iron on knee patches and that iron on Wonderweb stuff!  Also been re-purposing stuff like old wood which looks really good once cleaned up (made a nice large outdoor cupboard).  About to fix my dehumidifier in my new workshop (another summer project completed).  Pig in sh*te me!

[Harley]

2 hours ago, Noallegiance said:

I now see the bitter sweetness of the time we're entering. 

My work had been largely unaffected in a negative way and even seen growth because of 2020 events.

Due to the nature of the work and area of it I can't comment on detail, but things are now suddenly impacting us negatively to such an extent that a reduction in take-home and hours for everyone involved is about to begin.

The atmosphere has changed immediately. I'm surrounded by rabbit-in-the-headlights eyes. People complaining that they suddenly can't get by. The tide has gone out.

From what I can gather from body language, most people are relying on debt for their lifestyle (whether ostentatious or otherwise) and what's coming now and in the years to come is going to be ugly for these people.

I have a multi-faceted emotional reaction to this. I'm not sorry for them enough to remove my thoughts about living off debt. One makes one's choices. But to be in the presence of people who are now realising that they will genuinely struggle is a first for my lifetime and it smells awful. It also produces within me a validation for at least two-decades-worth of choices, even down to the woman I married and how lucky I am that she is like me on the things that truly matter.

It's a curious and potent mix of satisfaction, fear, pity, happiness and sorrow within me right now. For individuals, nation's and he wider world. So much to digest. So much to cope with. So much witnessed and yet to witness. And how to steer a course? A difficult challenge.

I hope everyone here has a decent end to the year and can ride the ugliness ahead with poise and determination. 

Shit's coming for a lot of people and even those not directly affected will see it and feel it.

Inflation is similar - great to start with.  Be careful, people will turn on others come the time.  Time to be "grey".

[Loki]

17 minutes ago, Harley said:

Inflation is similar - great to start with.  Be careful, people will turn on others come the time.  Time to be "grey".

A mate of mine keeps insisting I should buy (Edit: well, lease.  Same thing innit as far as most are concerned) a flash car.

The affordability or desire is here nor there - with what we think is coming why the hell would I want a big arrow pointing at me?

My car is 11 years old...and (Gun metal) grey. I own every square cm of it.

[Harley]

8 minutes ago, Loki said:

A mate of mine keeps insisting I should buy (Edit: well, lease.  Same thing innit as far as most are concerned) a flash car.

The affordability or desire is here nor there - with what we think is coming why the hell would I want a big arrow pointing at me?

My car is 11 years old...and (Gun metal) grey. I own every square cm of it.

https://www.youtube.com/watch?v=H3Wz7fC7tOY

A starter.  7:37 covers cars!  There are financial equivalents.

[Dogtania]

2 hours ago, Loki said:

I'm thinking of it as this is our "Tesla" moment (Even if you just open a few shorts at the targets we've spoken about on this thread).  Or some calls on silver.  Edit: I made £100 last week just by opening some - well 35,000 - EUR/USD swaps for a few days.

I love contrarian macro for the long haul of 10 years but I don't want to sit and watch potential mad gainz  pass me buy.  Anyone kicking themselves over Tesla or Bitcoin has an opportunity here, depending on your risk appetite of course.

Ah, maybe one day I'll learn 🤔 don't trust myself enough to the potential exposure etc right now.  Unfortunately.  As if I had learned or studied I agree could well be a good time...

My thinking being say for Tesla, surely it's seem as such a sure thing by so many that it should be relatively cheap to bet against (ie. Lots of upside).

Bitcoin, used to be a bugbear but maybe worked out for the best, not having bought when I intended back when I first discovered TOS and randomly coming across, seeing it as inherently deflationary (to my potential benefit), but didn't end up persevering as a bit of hassle buying (still is if you ask me, not to physically own, but the whole concept - but that's my failing).

Have small bit of that maidsafe that I've mentally put into being my 'bitcoin'.  Probably will crash and burn, or what I mean is if it does I don't mind.... The team behind aren't some money grabbing invisible entity but dreamers (potentially not good for me either).

Around to bitcoin though I'm quite interested in just trying to buy and sell.  Seems to easy... Probably for a reason.  But the volitity seems quite big.  We'll see.

Going back to betting against does seem like it's not just reality but luck you need.   Tesla and a belief in them can go on a lot longer than your position is able to remain solvent I think.  

But maybe with this coming possible big crash it's the ideal time like you say?!   Something so stretched and worth so much, maybe just has further to fall.  Wool suddenly pulled from people's eyes and en masse to the exit.  

I know your maybe not specifically meaning just Tesla as an option but with them right now seems maybe they are even propped up by the US government.  So many other factors in play.

The silver gains etc have been nice and maybe years to come bit of oil upside too.  Idk a compounded 10% return for a few years would be ok, I don't want to be greedy 😅

 

[Loki]

35 minutes ago, Harley said:

https://www.youtube.com/watch?v=H3Wz7fC7tOY

A starter.  7:37 covers cars!  There are financial equivalents.

Nice find!

[King Penda]

4 hours ago, Noallegiance said:

I now see the bitter sweetness of the time we're entering. 

My work had been largely unaffected in a negative way and even seen growth because of 2020 events.

Due to the nature of the work and area of it I can't comment on detail, but things are now suddenly impacting us negatively to such an extent that a reduction in take-home and hours for everyone involved is about to begin.

The atmosphere has changed immediately. I'm surrounded by rabbit-in-the-headlights eyes. People complaining that they suddenly can't get by. The tide has gone out.

From what I can gather from body language, most people are relying on debt for their lifestyle (whether ostentatious or otherwise) and what's coming now and in the years to come is going to be ugly for these people.

I have a multi-faceted emotional reaction to this. I'm not sorry for them enough to remove my thoughts about living off debt. One makes one's choices. But to be in the presence of people who are now realising that they will genuinely struggle is a first for my lifetime and it smells awful. It also produces within me a validation for at least two-decades-worth of choices, even down to the woman I married and how lucky I am that she is like me on the things that truly matter.

It's a curious and potent mix of satisfaction, fear, pity, happiness and sorrow within me right now. For individuals, nation's and he wider world. So much to digest. So much to cope with. So much witnessed and yet to witness. And how to steer a course? A difficult challenge.

I hope everyone here has a decent end to the year and can ride the ugliness ahead with poise and determination. 

Shit's coming for a lot of people and even those not directly affected will see it and feel it.

No it’s fun I am a horrible cunt but even I know every decade or so we get a recession it’s been obvious we are due a big one like the 1930s.4 years ago was the wake up call to get your house in order ie brexit which was predicted at the time to decimate the uk.Covid is a black swan no one could have predicted the time of .so if you’ve got a huge mortgage 2 loaned cars on your drive and maxed out credit cards tough fucking shit .you should have thought about brexit and positioned yourself accordingly 

[DurhamBorn]

https://swarajyamag.com/insta/big-boost-for-indias-energy-independence-reliance-and-bp-find-gas-in-asias-deepest-offshore-field

These fields will supply 15% of India's growing gas demand by 2023,growing into the biggest run up in gas prices ever i expect.

The reason BP and others are pushing green energy in the west is so they can learn all about it while they make the real money east.BP is very well placed for India in both supply and growing ICE use and fuel supply.

[janch]

7 hours ago, MrXxxx said:

2. There is never a right time/always more to read, so get started now and `learn on the job`rather than waiting.

This is me.  I would probably have left my cash in the bank/NS&I if I hadn't discovered this thread and followed it.  I plunged in not at the best time and bought the worst (cannot be named) share first.  I still have it as I can't bring myself to sell the losers and it may yet recover or be bought out. It was a baptism of fire but I've carried on and learnt so much plus it's a new interest.  I held on in March and didn't panic when any other novice may well have given up.  So a big thankyou to all on here and especially @DurhamBorn.  You helped me keep my nerve.  Having a road map means it's much easier to get a feel of the direction of travel than just buying random shares here and there. 

However I am also trying to grow my meagre pot so have branched out a bit from the contrarian approach.  I have  two "green" holdings: INRG and IEM which so far are growing nicely and I figured it can't hurt to follow sentiment with the herd for a time at least while the green agenda is being pushed so hard.

So I guess that makes me a shizophrenic investor (new category?) as I also have faith in the reflation approach and the majority of my shares fall into this camp. 

I have a couple of consumer staples which don't seem to be doing much Tesco and Diageo and as soon as they turn positive I will probably cash in and use the proceeds elsewhere.  I've learnt some pretty basic things like seeing when the dividend is due and how much it is etc.  So it's a balance because their dividends would maybe amount to quite a lot over say 20 years.

My worst mistake so far was to try and jump on the Covid bandwagon and I bought a (luckily) small amount of Genedrive GDR right at the top thinking it could rocket.  Hopefully I won't do this again. 

I just heard they've cancelled Christmas.  Words fail........

Happy New Year to all and this thread and the rest of Dosbods (thanks@spunko)can keep us sane.

[Noallegiance]

Tier 4!

Hands up who thinks Andrew Bailey received a phone call this morning?

[MrXxxx]

14 minutes ago, janch said:

I have a couple of consumer staples which don't seem to be doing much Tesco and Diageo and as soon as they turn positive I will probably cash in and use the proceeds elsewhere.  I've learnt some pretty basic things like seeing when the dividend is due and how much it is etc.  So it's a balance because their dividends would maybe amount to quite a lot over say 20 years.

My worst mistake so far was to try and jump on the Covid bandwagon and I bought a (luckily) small amount of Genedrive GDR right at the top thinking it could rocket.  Hopefully I won't do this again. 

Couple of [rhetorical] questions regarding this:

1. Why did you buy Tesco and Diageo?

2. So GDR didn't rocket but did you buy it as a short-term trade or a long-term hold, and which one of these two approaches do you consider you are [or were] when you bought it?

[Loki]

30 minutes ago, Noallegiance said:

Tier 4!

Hands up who thinks Andrew Bailey received a phone call this morning?

In what way? An excuse for more stimulus?

[Noallegiance]

3 minutes ago, Loki said:

In what way? An excuse for more stimulus?

No no Boris was just wondering how he got his hair so flat.

[leonardratso]

2 minutes ago, Noallegiance said:

No no Boris was just wondering how he got his hair so flat.

its obviously all the slime hes applied so that anything bad can slide off him.

https://www.dailymail.co.uk/news/article-9069515/Bank-England-chief-Andrew-Bailey-tried-remove-report-savings-scandal.html

[DurhamBorn]

3 hours ago, Cattle Prod said:

This is an example of when I said not to worry about missing out on regions or territories, that if you buy the large integrated companies, they will have a piece of all the best projects around the world. Reliance wouldn't have a clue how to find that, let alone drill it in 2000m of water (not easy). So they partner up with BP. They were probably invited in. You'll see the big western oil companies pop up again and again. They are miles ahead in tech and skills.

This is the key isnt it.Companies like BP,Repsol etc have hundreds of years old cultural connections.Its simply the Raj in India.Reliance will trust BP and its an easy sell.BP are clever enough to know they have to look like the junior partner and take a junior slice.Repsol do the same in South America etc.Drilling gas in 2000m of water is something else.

On paper it looks like BP are the smaller partner,and that suits them.They are also running out a huge fuel station network in India.Obvious where their oil is going to be going.

[DurhamBorn]

On the subject of BP this is another great move from the company,

https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bp-acquires-majority-stake-in-largest-us-forest-carbon-offset-developer-finite-carbon.html

I think as the cycle develops natural carbon offsets will really grow.They are the lowest cost solution,and a no brainer.Planting and protecting forests is an easy sell,and provides huge bi-diversity gains on top of carbon storage.BP has made a great move here and i expect this new company to end up a great profit provider to BP.As a shareholder im very happy that my capital is seeding and taking control of this.

I was a bit worried that BP might be going all woke,but what im seeing is fantastic oil and gas finds alongside really good strategic investments in new energy.

Im full to the gunnels but if i wasnt id be still buying at any price under £3.50.They are going over £10 +divis in the cycle i think.Minimum.

[JMD]

15 hours ago, Cattle Prod said:

Thanks for that post, and @JMD. I get the "crisis go to waste" idea, but I've really been struggling with "why" and to "what end". The quoted bit is food for thought. I can see they needed cover to dump in liquidity, but they could have done that after a stock market crash which was going to happen anyway. Why deliberately cause so much pain? I read yesterday that calls to the NSPCC were up 80% this year which made me very angry.

So its a case of sociopaths or idiots? Probably both, I'd say. I still think most of them don't understand that there is no pandemic any more. There are hardly any scientists or engineers in government, and I've met these PPE Oxford types, they wouldn't have a clue how for example check the assumptions going into a graph. Or think critically/logically at all really. They think like all the world is a linguistuc game. Thats why you see them laughing and sniggering to each other off camera. 

That's not to say there isn't also a bunch of sociopathic wankers in there stirring it up, not caring who gets hurt.

Good point on deaths caused by lockdown going into excess death curve, unfortunately. I brought that up with my MP to, expect that. So far, it's barely visible. I expect we'll be above range next year as cancers, heart disease, and stroke take their toll. But there won't be the sharp parabola you see in Feb-May. That was a sharp, short epidemic. There is none now.

I didn't see the control the population element coming, frankly. I really didn't think it would be accepted so easily, it's terrifying. I decided the best thing I could do is keep focussed on accumulating capital as best I can till I can get out. Money is the only way left to freedom, and there will be increasingly less people who have it. I think there is a short window left to get family resources in the door, just a few years left. That's why this thread is a godsend, even if we are anonymous, it's good to know you're not alone.

Must say i don't know the why, or to what end, as unfortunately I'm not that insightful. But I do remember that Boris Johnson initially mocked any hint of controls saying 'it is an Englishman's right to go to the pub' or something similar. He then did a 180, so something 'strange'(?!) happened there. But I shall eagerly await Michael Green's take on the global government responses, ie all Western nations used the same policies, plus apropos this thread it is Green's macro investment focus I'm more interested in. My only personal thoughts so far are that the control instinct coming from government chimes with the authoritative tendency emerging from the younger generations, both left and right, so we should expect more of the same to follow I think. I did previously state that I'm not looking at this through conspiratorial eyes, that wasn't meant as a feeble/easy get out by me - moreover I'm actually quiet sanguine about all this!                                                                                                                 ...Maybe such a 'wild statement' demands some explanation... It is also an opportunity to give some end-of-year thoughts - vis a vis Harley's excellent suggestion - anyway I posted couple weeks back how my macro view had begun to crystallise this year - mainly I must say because of this excellent thread keeping me sane knowing that others had similar concerns, motivations, etc. And also due of course to DBs epic investment thesis, and which gives me hope that an investment novice like me can hopefully secure, maybe evan grow, my wealth through the coming cycle. But also philosophically, Neil Howes Fourth Turning generational cycle theory, helps i find puts things into context for me. The theory is somewhat derivative (every culture has a similar alagory to tell) but Howe's recent interviews and his excellent narrative explanations show I think it's continued contemporary relevance (he also has a new book out next year). That book might not work for everyone but I find I'm no longer so shocked by events that I would have formerly considered as being totally mad or inexplicable. Anyway just some thoughts... as they (the Chinese no less!) say, interesting times...