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

[Harley]

26 minutes ago, janch said:

Denis Healey in the Labour government tried it but many of the rich fled abroad.  IIRC there was tax of 90% at one point.  Hopefully our present lot won't be that dim.

Robbie Williams just bought a Swiss gaff, so I read in the Daily Rag!

[Harley]

6 minutes ago, nomadic said:

Harley mentioned missing the boat? Unless that's a personal thing, no one has missed the boat. Getting residency here is still very straightforward and you only need to show an income of €700* a month to get a 1 year residency visa, then 2 x 2 years and citizenship or permanent residency thereafter.

I love you @nomadic, I really love you!

[Transistor Man]

2 minutes ago, sancho panza said:

@Transistor Man or anyone else withknowledge of electricity production.Coal usage in China for the foreseeable.Surprising given that China is building mroe quickly than the West is depleting.).   

 

Those are Incredible numbers.

Some of these at least are using these Ultra-supercritical steam conditions (600+ deg C, 300 bar), and 46% thermal efficiency.

Requires some pretty advanced materials.

[nomadic]

2 minutes ago, Cattle Prod said:

There's a moving to Portugal thread in the Stealth forum, I think it's 500 posts for entry. Just to be clear: capital gains in UK accounts are taxed under NHR regime?

I have not spoken to an accountant here but the FB "experts" all seem to say that capital gains from UK accounts are taxed here, even under NHR. I assumed they wouldn't be and it's a headache, but going to seek some professional guidance.

[JMD]

1 hour ago, Harley said:

I assume a compliment combined with a good understanding of the real "classic" Harley ethos!

Yes a compliment.

Though i admit i don't always understand... for example, a few days back you wrote about '...grabbing some Asians'!! (though i accept that thought perhaps says more about me? - and do note no-one else here 'took the bait' and queried you about it!!)  

[Democorruptcy]

2 hours ago, Castlevania said:

The one thing I worry about is that to try and control inflation they whack up all taxes. So tax on capital gains; income taxes; dividends etc are all absurdly high. It’s what they did in the 1970’s and it follows the MMT playbook. 

There could a tax on unearned income again.

[Democorruptcy]

34 minutes ago, Cattle Prod said:

There's a moving to Portugal thread in the Stealth forum, I think it's 500 posts for entry. Just to be clear: capital gains in UK accounts are taxed under NHR regime?

DYOR etc

Quote

 

Capital gains deserve careful consideration. Under article 13, they are treated differently according to whether they originate from the disposal of immovable or movable property. While capital gains from the alienation of real estate may under the double taxation treaty be taxed in the country in which the property is located and will therefore be exempt in Portugal, capital gains from the alienation of other types of property (notably securities) are taxable only in the beneficiary's country of residence. As such, capital gains from the sale of securities will be subject to tax in Portugal, currently at a flat rate of 28%. Before becoming a non-habitual resident of Portugal, tax advice should therefore be taken by anyone who anticipates significant capital gains from the sale of securities.

https://www.belionpartners.com/portugals-non-habitual-resident-regime

 

 

[Noallegiance]

3 hours ago, JMD said:

Same here. Do you have a planned 'buy price' figure? i.e. A personal fair-value for each stock if/when BK strikes? I'm thinking keep it simple so can act/buy fast, at of course a price you already know you are happy to pay. So maybe something along the lines of buying a 1st ladder, then if further falls happen a 2nd ladder. However, i'm finding that deciding how much to buy at each ladder, while leaving some cash back in case of further falls, makes this 'planning'(?!) more complicated than i first anticipated. How are others approaching this, if at all?

   

I can't be that complex.

I plan on monitoring US yields come toward end of March onward. If it starts to tick up I'm going to keep my portfolio members as they are but shave off as much profit as I dare back toward initial investment levels.

Post-bust buys will depend on speed and depth for me. I'll follow the tried and tested old Chinese proverb at that point:

"If stock rine sropey down and fratten off, rook to buy."

 

[DurhamBorn]

4 hours ago, Starsend said:

This is the big one for me. There is a world of difference between having to go and work for the man in some shitty office with the Government taxing you up the arse and pottering around doing a bit of work when you feel like it and making sure you pay no tax.

The majority of people out there will be working until they drop dead. Many are really stressed about it but unable to understand how to take control of their lives so they can live free from being a rat on a wheel. Many of course are just stupid and spend all their money on bling and too lazy to save. I just don't understand how people can live with so little control over their lives.

My biggest fear has always been having to work and not being able to because there is no work. The way the world is going that's a big risk for a lot of people. Image the stress of £3k per month fixed outgoings and being in and out of work, fuck that.

 

Thats exactly what i left school to in the mid 80s in the north east.No work,no money,everything had shut.It was a superb education though on how to make difficult situations work.Finding out where Rothmans dumped their reject fags was the big one,stripping them all down and selling the baccy.Its ironic,but i bought some Hanson Trust with funds from that baccy and they owned Imperial Tobacco.

Its right people consider how much is enough etc and its very difficult,but one thing for certain we dont have enough of is time.

[geordie_lurch]

As I have mentioned a few times on here I really think we should all be watching what happens with the digital yuan as I think it's the blueprint all central banks are going to use to move us over to fully trackable Central Bank Digital Currencies: here via zerohedge but also carried by Reuters below

Quote

As Reuters reports this morning, "SWIFT, the global system for financial messaging and cross-border payments, has set up a joint venture with the Chinese central bank’s digital currency research institute and clearing centre, in a sign that China is exploring global use of its planned digital yuan."

Actually, not just "exploring" but thanks to year of testing and partial rollouts, Beijing is about to become the first country in the world set to launch the digital yuan, and with both the IMF's and SWIFT's blessing, it's now just a matter of months if not weeks.

As the report details, every key Chines currency regulator is part of the project:

Other shareholders of the Beijing-based venture include China’s Cross-border Interbank Payment System (CIPS) and the Payment & Clearing Association of China, both supervised by the People’s Bank of China (PBOC), according to public information.

The new entity, called Finance Gateway Information Services Co, was established in Beijing on Jan. 16, and its business scope includes information system integration, data processing and technological consultancy, according to the website of the National Enterprise Credit Information Public System. This also means that China is well ahead of the curve when it comes to adoption of ISO 20022, the global "standard" that will ensure a uniform rollout of digital currencies across the world as paper currencies are banned and as the entire world goes under the de facto control of a handful of central banks, making politicians obsolete.

As a reminder, according to tentative estimates for the rollout of ISO 20022, which is the required universal transaction standard which will make payment in digital currencies possible, we are looking at a 2022 launch date, although China may be looking to go live as soon as this year.

In a recent report, HSBC said that China's digital currency "will help increase oversight of money flows, while also raising the efficiency of cross-border payments and facilitate yuan internationalization" but what it will really do is make money laundering virtually impossible as every single currency transaction will be trackable in real time.

I agree with this commenter over there...

"Elites and their governments worldwide have been working on and planning this together for years.

It's all about control, as usual...and about having the ability to operate a "Universal Basic Income" to keep the masses of proles sedated and paid-off.

Their objective is nothing less than to change the nature of "money" from an uncontrolled, decentralized physical currency (with vestiges of a commodity base) to a completely trackable digital or plastic token which will be issued only by central governments and which can be withdrawn or invalidated at will."

[sancho panza]

59 minutes ago, Transistor Man said:

 

Those are Incredible numbers.

Some of these at least are using these Ultra-supercritical steam conditions (600+ deg C, 300 bar), and 46% thermal efficiency.

Requires some pretty advanced materials.

Any chance you could be more specific TM,in laymens terms if you can.

Any chance you can explain why they're 'super critical' and give us some background on why China still seems reliant on coal? Which advanced materials would they need and why?

[nirvana]

1 hour ago, nomadic said:

Getting residency here is still very straightforward and you only need to show an income of €700* a month to get a 1 year residency visa, then 2 x 2 years and citizenship or permanent residency thereafter.

* Or savings for 12 months expenses.

 

Ace post dude! Does that mean you only need to show a bank account with €8400 in it?

There's a thread on Portugal BUT it's in the 'special part' and you only get in there when you achieve 500 likes so keep it up! Are you down south? There is at least one funky dude here who was down there in his camper van. Do you cycle? I'm in South West France and I keep thinking about nipping down for a few bike rides and a splash in the sea 

How much is 1000 square meters or so of land? And is it easy to knock up a wooden hut to live in?

Bom dia!

PS everyone give @nomadica thumbs up to get his street cred up 

[CVG]

1 hour ago, Harley said:

A top discussion today on planning.  We need the full chain on this thread to fully address the macro.  That is from macro, to asset allocation, to sectors (and other sub-asset classes) to individual investments, all governed by our individual risk-reward profiles based on many things, but including how close we are to drawdown.

I see the point of the macro as more "tilting at windmills" as the saying goes.  It probably won't change my asset allocation model (the Permanent Portfolio (Plus!) in my case) but has great impact on the sub-asset classes (and their holding currencies).  For example, within equity, which sectors, within bonds, which type of bonds (government versus corporate, index or not, etc) and within PMs, maybe a need to consider other "hard asset" categories such as true commodities (where possible) and even crypto.  But in all honesty, that only works for me because most of my bonds portfolio consists of some NS&I inflation linked bonds, which I accept are not real bonds in the Permanent Portfoilo sense (given their fixed price).  It would be a real test of faith to invest all the allocated funds in bonds if I didn't have these.

What kind of asset allocation models are people following and what sub-categories are within them?

Another aspect I follow is the idea of the floor versus upside approach as a means to optimise risk-reward.  See the net for more but the floor portion of your portfolio is to cover essential expenditures (as documented!) so needs to be low risk, so likely a lower return.  The upside portion is whatever is left after the required floor funds and covers more discretionary ("fun") expenditure.  So by it's nature it's OK to take on more risk for higher returns in the upside portion.  So for me this this portion covers trading and more risky total return investments.

The challenge for me is to align a Permanent Portfolio (or whatever) with the Floor/Upside approach.  To me the Permanent Portfolio results say it's a good basis for the floor fund as I approach drawdown - lower risk (standard deviation of returns) and a decent expected return.  I'm currently torn between using funds/ETFs for the equity portion versus individual shares.  I'll probably stick with funds/ETFs for the risk-reward even though I can (for now) perform better but also to cover the risk of me being wrong, rubbish at stock picking, etc.  The real killer has been the whole KID issue which restricts the option to use more sector specific ETFs in my floor fund, again to tilt at the windmills.  I currently follow a more regional split which the available ETFs do support.  The biggest benefit of Brexit to me would be the end of the KID and access to all those lovely worldwide sector ETFs they have in the US!

Again, the whole modeling exercise kicks in on framing the upside portion of things.  I have a reasonable idea of what income I need and my available funds.  From that I get the required risk profile.  That tells me what and how hard to trade/invest.  So again the top down modelling approach gives you the parameters to work to at the lowest (investment) level. 

Finally, a mistake/confusion of mine has been to draw lines according to wrapper/container (SIPP, ISA, Trading Account, etc) as this automatically restricts asset allocations, etc.  I now just see these as wrappers and use each one according to their specific advantages and keep a separate tally of what's invested where (via a simple spreadsheet).

Alternatively, you could just stick your finger up your bum and hope for the best!

I'm building a Golden Butterfly portfolio.

https://portfoliocharts.com/2015/09/22/catching-a-golden-butterfly/

I'm aiming to hold 40% in stocks and heavily leverage the information on this site to select them (thank you all).

I'm slowly building my Long Term Gilts understanding that they are superexepnsive right now. I expect them to fall in price rapidly as inflation takes off.

For Short Term Gilts proxy I just use cash, easy access savings, premium bonds, etc.

My Gold holding includes Silver, Physical, Vaulted, ETF and miners.

I'm trying to get most into my ISA's and so I'm restricted to moving £40K per year at a time from my cash holdings.

My 'floor' is my early retirement pensions. The portfolio provides the icing between now and state pension age.

The question about how to automate it before I go doo-lally plagues me. I'm thinking that I'd like to get to around 300K in ISA's holding my long term gilts and dividend paying stocks. Then when I hit state pension age I'll stop playing around with the portfolio and just set the ISA's to payout dividends to my bank account without caring about things getting out of balance. I'd welcome some better suggestions!

 

[JMD]

1 hour ago, Harley said:

A top discussion today on planning.  We need the full chain on this thread to fully address the macro.  That is from macro, to asset allocation, to sectors (and other sub-asset classes) to individual investments, all governed by our individual risk-reward profiles based on many things, but including how close we are to drawdown.

I see the point of the macro as more "tilting at windmills" as the saying goes.  It probably won't change my asset allocation model (the Permanent Portfolio (Plus!) in my case) but has great impact on the sub-asset classes (and their holding currencies).  For example, within equity, which sectors, within bonds, which type of bonds (government versus corporate, index or not, etc) and within PMs, maybe a need to consider other "hard asset" categories such as true commodities (where possible) and even crypto.  But in all honesty, that only works for me because most of my bonds portfolio consists of some NS&I inflation linked bonds, which I accept are not real bonds in the Permanent Portfoilo sense (given their fixed price).  It would be a real test of faith to invest all the allocated funds in bonds if I didn't have these.

What kind of asset allocation models are people following and what sub-categories are within them?

Another aspect I follow is the idea of the floor versus upside approach as a means to optimise risk-reward.  See the net for more but the floor portion of your portfolio is to cover essential expenditures (as documented!) so needs to be low risk, so likely a lower return.  The upside portion is whatever is left after the required floor funds and covers more discretionary ("fun") expenditure.  So by it's nature it's OK to take on more risk for higher returns in the upside portion.  So for me this this portion covers trading and more risky total return investments.

The challenge for me is to align a Permanent Portfolio (or whatever) with the Floor/Upside approach.  To me the Permanent Portfolio results say it's a good basis for the floor fund as I approach drawdown - lower risk (standard deviation of returns) and a decent expected return.  I'm currently torn between using funds/ETFs for the equity portion versus individual shares.  I'll probably stick with funds/ETFs for the risk-reward even though I can (for now) perform better but also to cover the risk of me being wrong, rubbish at stock picking, etc.  The real killer has been the whole KID issue which restricts the option to use more sector specific ETFs in my floor fund, again to tilt at the windmills.  I currently follow a more regional split which the available ETFs do support.  The biggest benefit of Brexit to me would be the end of the KID and access to all those lovely worldwide sector ETFs they have in the US!

Again, the whole modeling exercise kicks in on framing the upside portion of things.  I have a reasonable idea of what income I need and my available funds.  From that I get the required risk profile.  That tells me what and how hard to trade/invest.  So again the top down modelling approach gives you the parameters to work to at the lowest (investment) level. 

Finally, a mistake/confusion of mine has been to draw lines according to wrapper/container (SIPP, ISA, Trading Account, etc) as this automatically restricts asset allocations, etc.  I now just see these as wrappers and use each one according to their specific advantages and keep a separate tally of what's invested where (via a simple spreadsheet).

Alternatively, you could just stick your finger up your bum and hope for the best!

Many interesting thoughts there Harley. Hope you get some interesting feedback from the 'wise wizards' that occupy here.

Not sure about your '...tipping at windmills' remark though. You might have SanchoPanza's 'boss' D. Quixote on your back about that casual comment!?!

 

For me though i was particularly taken by what you said, if i have understood you correctly, about buying funds because i thought you had been against buying the funds. However, recently you've written a lot about not being able to find value stocks at decent prices, so maybe that is the reason for change? 

I ask because that reasoning would certainly chime with me because after my own investigations - though not quiet finished delving into the equity sectors - i am thinking that (apart from the pm's, oil, telecoms, and other reflation sector stocks, which i already very-very happily own) - i will need to take another look at the fund managers. I had previously kinda ditched the idea of using funds, however i have concluded that it is too difficult/impossible task for me to allocate entirely to only individual stocks. And i guess there are 'obviously'(?) sectors such as asia/em's/small caps and others, where exposure to these (hopefully) future growth sectors can only be got (by the average retail investor, in terms of skill, effort and platform access) by buying the relevant funds. 

 

[Transistor Man]

52 minutes ago, sancho panza said:

Any chance you could be more specific TM,in laymens terms if you can.

Any chance you can explain why they're 'super critical' and give us some background on why China still seems reliant on coal? Which advanced materials would they need and why?

The efficiency of a thermal power plant can be increase by using higher temperature steam. 

In addition, depending on its temperature and pressure water can be a solid, liquid, vapour, gas..... or - at high enough temperature and pressure - a supercritical fluid.

This state is neither liquid nor gas. 

In a conventional power plant, effort is made to stop steam from condensing towards the end of it’s flow through the turbines. 

If you use super critical steam, you don’t have to worry about steam condensing. Improving the efficiency of the power conversion cycle.

The temperature and pressure limits for a power plant are set by the materials used in the steam generator. 

The key components of the superheater and reheater in these new plants will be nickel-based superalloys. 

So, higher operating temperature and pressure equals more efficiency, less coal use per MWh. And it can make a big difference.

But requires mastering some very advanced materials technology. 

[MrXxxx]

8 hours ago, feed said:

Also need to consider that managing a portfolio in your 50’s or 60’s is one thing, 70’s another.  Any physical or neurological decline and you could have a real problem at those figures.

I think this is a good point, and why I think its worth keeping a small DB pension (if you have one) rather than transferring it..use it as a `safety net` alongside state pension, and invest with your DC/SIPP.

[Chewing Grass]

2 hours ago, sancho panza said:

SHANGHAI - China put 38.4 gigawatts (GW) of new coal-fired power capacity into operation in 2020, according to new international research, more than three times the amount built elsewhere around the world and potentially undermining its short-term climate goals. 

BBC giving it the full on whinge treatment about the UK opening a coal mine and compromising its 'greenness' as world leader in exporting its manufacturing to other less green countries without explaining that its coal for making very high quality steel in blast furnesses, not burning it to elektwicity.

[MrXxxx]

7 hours ago, CVG said:

Get a wife and double them!

 

...and then watch her walk away with all your hard work when she discovers Juan on holiday and divorces you :-) :-) :-)

[MrXxxx]

7 hours ago, Harley said:

It is a worry as £12.5k personal income tax allowance plus £12k CGT allowance is plenty for me to live off.  It's just getting that £12k of gains which is the hard one!

I assume for the latter its small US stocks rather than divi paying UK stocks?

[MrXxxx]

7 hours ago, Harley said:

Portugal was/is a tax planners paradise!  I always thought the city boys just liked the golf until I was told about the 10 year tax holiday which includes beneficial pension stuff.  All a bit iffy now with Brexit.  I missed the boat there as it was the top place on my list (after a visit, the last being as a kid and getting food poisoning).  Plan B is a nomad life.  Brexit and covid - you'd think they are trying to keep me here!  I've lived everywhere and while I'm a happy Brit, it was a shock coming back here and that has not changed, especially with the latest ratcheting down.  Good on you!

You and me both Harley...let's hope `the door is not firmly bolted`...this alongside my financial planning are my concerns/worries at the moment.

[Errol]

3 hours ago, nirvana said:

 

 

Great song. Back when music was actually good and people could sing well.

[sleepwello'nights]

6 minutes ago, Errol said:

Great song. Back when music was actually good and people could sing well.

Fell a lot today after dipping all week.  

[Hancock]

49 minutes ago, Chewing Grass said:

BBC giving it the full on whinge treatment about the UK opening a coal mine and compromising its 'greenness' as world leader in exporting its manufacturing to other less green countries without explaining that its coal for making very high quality steel in blast furnesses, not burning it to elektwicity.

I occasionally work on the offshore windmills, prior to them being fixed into the bottom of the sea.

They're made with cheap Chinese steel that is then shipped to the Middle East where barely skilled Indian labour is flown in to knock them up (very badly). 

From there they're shipped to Holland for further inspection at which point they realise they standard of welding etc.. is not up to spec.

At which point they fly over a hundred or more Brits to inspect them, re-weld them, which obviously involves scaffolders, painters, managers, etc... Then after months of arguing about money someone gives the go-ahead to drop them in the N Sea.

This has been going on for at least a decade.

No wonder our steel industry is on the death bed.

[Bobthebuilder]

1 hour ago, Transistor Man said:

In addition, depending on its temperature and pressure water can be a solid, liquid, vapour, gas..... or - at high enough temperature and pressure - a supercritical fluid.

This state is neither liquid nor gas. 

Thanks for that. You often make my day with random stuff that I should already know. Had a read up on it, amazing really that they don't teach this shit in schools.

[DurhamBorn]

12 minutes ago, Hancock said:

I occasionally work on the offshore windmills, prior to them being fixed into the bottom of the sea.

They're made with cheap Chinese steel that is then shipped to the Middle East where barely skilled Indian labour is flown in to knock them up (very badly). 

From there they're shipped to Holland for further inspection at which point they realise they standard of welding etc.. is not up to spec.

At which point they fly over a hundred or more Brits to inspect them, re-weld them, which obviously involves scaffolders, painters, managers, etc... Then after months of arguing about money someone gives the go-ahead to drop them in the N Sea.

This has been going on for at least a decade.

No wonder our steel industry is on the death bed.

Exactly.The BBC is probably one of the biggest dangers to this country.The media as a whole is disgusting.That mine in Cumbria is very high quality met coal for steel making,not the sort that comes to the surface just behind my back garden.I kid you not,the Durham coal seam comes to the surface just behind my house,hence being surrounded by old drift mines.

The woke left has worked its way into all our institutions.Years ago the real working class left would of fought back against such rubbish,but not anymore.Working class people getting decent paid jobs,its an outrage.