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


spunko

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9 hours ago, Hancock said:

Why is the consensus on here that there will be a BK?

I'm not convinced....the FED control the strings BUT we have lots of crystal ball gazers hence the success of youtube etc

The FED roadmap should be all you're interested in

9 hours ago, Hancock said:

Quite easy to see where we are now as being as close to rock bottom as possible.

yes I understood you meant rock bottom society BUT the markets have hit new highs, it's a paradigm that doesn't make any sense* which makes the markets so fascinating :)

*actually it does it terms of BRRRRRR which is why the FED is the only game in town......just ignore all the eCONomists talking turkey :P

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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.

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11 hours ago, Yellow_Reduced_Sticker said:
Look...I'm NOT the sharpest pencil in the box, (buying at the TOP mostly lol xD ) ....HOWEVER, logged in HL today to read a secure message, AND see my portfolio is UP now by 32%! :o
 

So there you go, when the stock market is buoyant any idiot can make money...

...funnily enough my HL account was up by exactly the same % today, are you sure you weren't looking at my screen by mistake, or perhaps you have been listening to my buying tips? :-) :-) :-)

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M S E Refugee
16 minutes 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 am considering selling up in the Spring as people become more optimistic that there is a route out of this mess.

Once many people realise that they have no job to go back to then the shit will hit the fan.

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18 minutes ago, Loki said:

but for the most part they all just do as they are told.

I saw a right pair of clowns yesterday, fucking enormous, the fat bitch had taken a weird turn in the shop.....then outside when the fat cunt got in his car, albeit a very small one, you could see it leaning over....incredibly funny but incredibly sad at the same time.....then I had a conversation with some 'intelligent' old hag who says Dr Raoult is mad, obviously following government orders......always good to get out and about on the bike to discover what the useless cunts are getting up to :Jumping:

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2 minutes ago, M S E Refugee said:

I am considering selling up in the Spring as people become more optimistic that there is a route out of this mess.

Once many people realise that they have no job to go back to then the shit will hit the fan.

Can't argue with that.  A lot of us bought in March when everyone was panicking so I see no harm in realising gains when people are thinking everything is fine.  

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15 minutes ago, 5min OCD speculator said:

I'm not convinced....the FED control the strings BUT we have lots of crystal ball gazers hence the success of youtube etc

The FED roadmap should be all you're interested in

yes I understood you meant rock bottom society BUT the markets have hit new highs, it's a paradigm that doesn't make any sense* which makes the markets so fascinating :)

*actually it does it terms of BRRRRRR which is why the FED is the only game in town......just ignore all the eCONomists talking turkey :P

Exactly right and its why most economists are worth jack shit.The macro position relative to the Feds actions are most of the game for a roadmap,everything else is cross market work.In a modern economy liquidity is everything and you go from there.The problems are that as you mentioned the CBs have partnered with government to keep handing out freebies to half the population so they are dumb enough to allow the 1%,or even 0.1% to pillage everything.They got away with it during the great dis-inflation as technology and a billion chinese working for low wages meant they could keep increasing money supply,but not inflation.On the surface.Of course someone working in a factory should be able to buy around double with his labour than he can,but he doesnt know that.He doesnt really understand he is paying for the family next door to sit at home,the council to promote useless managers into none jobs,the state to employ more and more jobs.

I repeat it,but i really want people to understand this.The game changes once inflation runs because they cant print into an inflation cycle,or more they cant print once its running hot.Then governments will face big structural deficits with the CB out of the bond markets.They might might be able to print a bit at the long end,but the short end will be closed to them.

The .1% flooded the media with the stories and a narrative pushing down inflation loving areas.They have convinced a dumb public to buy the sunlit uplands and liquidity inspired forever growth while they will of been buying the oilies at multi generation lows.

There was a mass are people appearing on this thread in March and April crying and scared and i got a bit sick of seeing people moaning they were down 10%/20% when they should of been buying steady across the sectors this thread had explained for over a year.I actually nearly thought it was time to leave the thread,but it has too many superb people adding to it for that.

We have lots of work ahead,but i dont think we could of done much better than we have for people so far.

For someone off their head on mushrooms half the time you have a superb knowledge of how the macro and CBs work ;)

 

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10 minutes ago, DurhamBorn said:

For someone off their head on mushrooms half the time you have a superb knowledge of how the macro and CBs work ;)

Some of us walk that thin line between genius and insanity.....I'll be off to talk to Buddha have a good one!

PS it's not mushrooms :Jumping:

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8 minutes ago, DurhamBorn said:

There was a mass are people appearing on this thread in March and April crying and scared and i got a bit sick of seeing people moaning they were down 10%/20% when they should of been buying steady across the sectors this thread had explained for over a year.I actually nearly thought it was time to leave the thread,but it has too many superb people adding to it for that.

I'm glad you didn't leave forever, you might want to plan a hiatus in advance for next year... xD

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Democorruptcy
8 minutes ago, 5min OCD speculator said:

Some of us walk that thin line between genius and insanity.....I'll be off to talk to Buddha have a good one!

PS it's not mushrooms :Jumping:

I like a lot of music made by people like that. They produced their best stuff when they were doped up on the edge. Look at Bowie! Can you sing at all? :Jumping:

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9 minutes ago, Democorruptcy said:

I like a lot of music made by people like that. They produced their best stuff when they were doped up on the edge. Look at Bowie! Can you sing at all? :Jumping:

Please don't encourage him. He's already said he doesn't care what people think.

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Democorruptcy
4 minutes ago, CVG said:

Please don't encourage him. He's already said he doesn't care what people think.

He's away digging through the DVD collection of his live music performances....

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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!

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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.

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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

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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.

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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.

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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.

 

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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?

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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.

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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!

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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.

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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 

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@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.

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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. 

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