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

[Castlevania]

I thought GSK’s consumer healthcare business had been or was to be merged with Pfizer’s?

[DurhamBorn]

1 hour ago, Castlevania said:

I thought GSK’s consumer healthcare business had been or was to be merged with Pfizer’s?

It has,but then will be listed on the market.

https://www.gsk.com/en-gb/media/press-releases/gsk-completes-transaction-with-pfizer-to-form-new-world-leading-consumer-healthcare-joint-venture/

[MrXxxx]

9 hours ago, Bricormortis said:

Re above, March 23rd is the one year anniversary of lockdown. They know public support is going to ebb away beyond that date.

I hope so as so far the great British public have been completely supine!

[sancho panza]

11 hours ago, Cattle Prod said:

We now have a 6% correction on WTI and 5% on Brent. Looking back at previous runs up, 7%-14% seems to be the range of most corrections. So we could already be half way there. I'm seeing some nicely bearish news creeping in to encourage weak hands to take profits like an Iran deal back on, and all the refineries knocked out in the US backing up crude stocks. US data will be a mess for the next three weeks or so, ideal to push people out. A couple more weeks like this will reset the weekly RSI which was giving me sell signals.

This weeks US data was pre-storm. Another big draw in build season, but what most people missed is that implied demand (as measured by products spplied) in the USA is back to normal, looking at a 1 year window. In fact, this week was higher than the corresponding week last year. We have to be careful with this, as there may have been Covid effects creeping into mid Feb last year, and comparing to 2018 would now be better. But it's within the noise. I don't know what they are doing in the US, but they are consuming as much petroleum as they ever did. Diesel is up by almost exactly the amount gasoline and jet fuel is down. When gasoline and jet fuel normalise, will diesel go back down? Maybe a bit, but I bet it won't fully retrace.

And the truth is finally being released (on Biden's watch, naturally), the UK will follow as it always does:

https://www.wsj.com/articles/well-have-herd-immunity-by-april-11613669731

So I'm hoping for more downside in the oil price in the next few weeks. There'll be a lot of noisy data coming out of the USA till they sort out the storm. But all through last year I said "demand is the big unknown for me"; it seems to be coming back far more quickly than I thought it would.

Edit:

I re read that and realise it's a bit short term trade-ey rather than macro-ey, not really my thing. I guess I feel that there is a shakeout coming, and wanted to offer my thoughts beforehand. Dyodd as ever

That's a fascnating piece from teh WSJ.I'll nick it for the sceptics thread.As you allude,now Trump's gone,teh WHO can drop the amplification count on PCR tests,case counts get discredited as a measure of covid success and Sleepy Joe gets to bank the credit.

It's itneresting what you say about US demand returning quicker.I do wonder if it's the fact that as less people fly,more people drive.

When you published your research on pullbacks in an oil bull,I was amazed that the pullbacks were so small.It's certainly due one.

11 hours ago, JMD said:

I am a fan of DH. However i note that DH mentions in his new video that he has redone his figures and now forecasts a q2 melt-up with sp500 going to 4,600+++. With the big market correction happening in the subsequent 6-months following said melt-up.                                                                         I use the word 'forecasts' because DH himself comments in video that other financial commentators are now beginning to join his thesis, but that in order to be right, you really need to get the 'timing correct'!! He's 100% correct in saying that about the timing, but as others have noted before - DH is a macro guy so why does he continue to make detailed calls? Especially as he keeps moving his own predictions forward every 3/6 months... so by his own definition, he is also wrong, wrong, wrong, then eventually right? Very frustrating.

I think you have to be careful judging DH by timings.As a commentator,you have to have sometimeframes to suggest.

But judging his analysis by the timing of his top/bottom calls is throwing out the baby with the bath water.His analysis-which I think is some of the best out there-tells you the route of travel but you have to work out the compass bearing and navigate the contours.

With macro calls,there;s a lot that can get in the way,not least Fed policy,no matter how suicidal.

[sancho panza]

10 hours ago, JMD said:

I noticed that 'our (so called) BBC' begun reporting only yesterday about the Covid panik-demic in terms of good news, declining death rates, etc. I was wondering/waiting for them to do this.

But I nearly fell off my chair last week when the Covid government briefings had Chris Whitty talking about living with the virus/herd immunity and 'acceptable levels of covid deaths' going forward. He even mentioned flu deaths being between 7-30,000/year, for comparison of how to frame the discussion.

The government stats say 120,000 people died 'with covid', which probably equates to at the very most half that number actually dying 'from covid', especialy if factoring in for how many of these mostly very old people would have succumbed alternatively to the flu in 'normal years', instead of corona. I also think that proper shielding of the vulnerable would have bought the numbers down by perhaps another 50%, so maybe to 30,000 deaths.

Ok, i accept those are 'my own' questionable(?) figures, but i still think it interesting that my lowest covid figure overlaps with the highest flu stat figure. But i'll cut to the chase and suggest that the discussion now underway by Whitty+co, and begun last week, is really all about pacifying peoples increasing anger over the closure of the NHS, long waiting lists, increased deaths of all-age groups (though i expect suppression of this information). It is deeply ironic that the NHS has been bought to its knees by government policy meant to 'save the NHS' (Orwellian or what?). At the same time the economy has been almost destroyed. If people begin to cotton on to any of these subjects, they will become very-very angry... so now open the NHS sluice gates, and build some Boris hospitals double quick!!!

Ok this is a Covid related post, but relevant i think because helps examplify the type of casual, draconian, statist government thinking -and actions - we will all need to become accustomed to in future.  

The amazing thing about covid is that it's cut stroke admissions to ICU by 50%,heart attack admissions by 50% and penumonia admissions by 80%.

Some of the data the poltical elite have put out there is a really poor reflection of what's actually going on healthwise in our coutnry

7 hours ago, Hancock said:

Yes "long covid" will be a like a lottery win for the public sector. Strangely no "freelancers or contractors" will caught it.

I for one will love seeing the parasite class lose their non-jobs.

Spare a thought for the non jobs losing their parasites,

[sancho panza]

the red flags are getting warmed up

 

some are jsut getting their kit on

 

 

[DurhamBorn]

This deal gives a good idea on Commercial property,

https://www.thestar.co.uk/business/consumer/radical-new-future-for-the-moor-in-sheffield-under-new-owners-after-covid-forces-sale-3140740

That estate got £120 mill invested in it and New River got it for £41 mill.The asking price was £89 mill.

I wouldnt like to see the banks if they are looking at 50% to 75% falls in value,and this is a prime location.

I had a position in NRR as i thought they were very well ran, but even after tagging the bottom last year im down 18% after divis and cut the holding back.

Whats obvious is these are now being priced for the retail that will survive and turning the rest into flats etc.Massive hit to business rates,and the fact is councils are stuffed.Keep rates where they are most retail goes.So whatever they do massive falls in tax coming in.

[Ash4781b]

6 hours ago, DurhamBorn said:

This deal gives a good idea on Commercial property,

https://www.thestar.co.uk/business/consumer/radical-new-future-for-the-moor-in-sheffield-under-new-owners-after-covid-forces-sale-3140740

That estate got £120 mill invested in it and New River got it for £41 mill.The asking price was £89 mill.

I wouldnt like to see the banks if they are looking at 50% to 75% falls in value,and this is a prime location.

I had a position in NRR as i thought they were very well ran, but even after tagging the bottom last year im down 18% after divis and cut the holding back.

Whats obvious is these are now being priced for the retail that will survive and turning the rest into flats etc.Massive hit to business rates,and the fact is councils are stuffed.Keep rates where they are most retail goes.So whatever they do massive falls in tax coming in.

Thanks. The whole Council funding model is broken but Central Government are patching it up through grants and for others in worse shape direct financial intervention. There were four recent bailouts And then I think two more. I am surprised there have not been more but it is quite early days as support measures are still in place!

https://www.bbc.co.uk/news/uk-politics-56018438

The plan can’t be just to lots of commercial property into residential. Unless it’s a first mover thing and get out like bandits. ‘What cladding did we use again ?’

 

[sancho panza]

8 hours ago, DurhamBorn said:

This deal gives a good idea on Commercial property,

https://www.thestar.co.uk/business/consumer/radical-new-future-for-the-moor-in-sheffield-under-new-owners-after-covid-forces-sale-3140740

That estate got £120 mill invested in it and New River got it for £41 mill.The asking price was £89 mill.

I wouldnt like to see the banks if they are looking at 50% to 75% falls in value,and this is a prime location.

I had a position in NRR as i thought they were very well ran, but even after tagging the bottom last year im down 18% after divis and cut the holding back.

Whats obvious is these are now being priced for the retail that will survive and turning the rest into flats etc.Massive hit to business rates,and the fact is councils are stuffed.Keep rates where they are most retail goes.So whatever they do massive falls in tax coming in.

Fascinating post DB.

I did a google and apparently The Moor brought in £7mn in rents aka 5.8% gross yield.This a huge part of the problem in that psot 2008,projects based on this maths were possible because of QE/Zirp and wouldn't have been otherwise.

What were the banks lending on that thinking? What credit lines will they have to rein in to take the loss?Probably none in this bizarro world but the warning signs are there.

New River has a a sweet spot here in the next year to offload some resi property but beyond that,even assuming a 50% cut in rents holds(I suspect it will be worse),it's working off an 8.5% gross yield.If I was a retialer currently,I'd beoffering peppercorn rents and to pay the business rates.

8.5% sounds great but say we get inflation somewhere between either you or Luke Gromens slightly higher projections in the next 5-10 years,thsoe IR's will toast retial some more in terms of both costs and income.

Long way to say that those councils that bought CRE in the last five to ten years are toast.

https://www.cityam.com/aberdeen-standard-offloads-largest-property-fund-asset/

The Moor, which houses retailers including Primark, Debenhams, Dorothy Perkins and H&M, reportedly generates around £7m each year in rent.

[sancho panza]

2 hours ago, Ash4781b said:

Thanks. The whole Council funding model is broken but Central Government are patching it up through grants and for others in worse shape direct financial intervention. There were four recent bailouts And then I think two more. I am surprised there have not been more but it is quite early days as support measures are still in place!

https://www.bbc.co.uk/news/uk-politics-56018438

The plan can’t be just to lots of commercial property into residential. Unless it’s a first mover thing and get out like bandits. ‘What cladding did we use again ?’

 

It's weird ,the four they name aren't the usual suspect eg Spelthorne which means there's even more bad news out there.

I've said this before but these councils need reorganisning for the modern world.Leicesterhire has something like ten district councils plus county and Leicester city.All have chief execs on £150k plus and reams of hangers on picking up fat salareis for doing next to nothing.

Even a very close firend who's a right lefty was saying the other night that they coukd do it with one council.We could save tens of millions a year.

Let's have a look at Harbought District council,200 employees and resposnible for

'Each district council covers a smaller area and provides more local services, including council housing, local planning, recycling and refuse collection and leisure facilities.'

Obviously, a lot of workers are employeed by the contractors.But still,no reason why the County council couldn't run the lot.

94,000 residents according to WIki.Here's the slary structure.It's eye watering.

file:///C:/Users/capta/AppData/Local/Temp/CMT_structure_January_2021.pdf

[JREWING]

Link text

13 hours ago, DurhamBorn said:

It has,but then will be listed on the market.

https://www.gsk.com/en-gb/media/press-releases/gsk-completes-transaction-with-pfizer-to-form-new-world-leading-consumer-healthcare-joint-venture/

VIR GSK

 

Mr Durham.

Heard about this a bit back. Why I went in so big. This thing might resume normal levels soon. 

Could be a nice little long term hold.

They are about to announce that the phase 3 trials with the COMET-iCE COVID-19 trials with VIR Bio have been successfully concluded, this means they have developed the antibodies to both stop Covid and act as a vaccine.
VIR have just put out a announcement after the bell in America which ties GSK into investing a £120m and the price will be set for the shares by a weighted average of the price the shares trade at following the announcement of the conclusion of the trials.

[Ash4781b]

7 minutes ago, sancho panza said:

It's weird ,the four they name aren't the usual suspect eg Spelthorne which means there's even more bad news out there.

I've said this before but these councils need reorganisning for the modern world.Leicesterhire has something like ten district councils plus county and Leicester city.All have chief execs on £150k plus and reams of hangers on picking up fat salareis for doing next to nothing.

Even a very close firend who's a right lefty was saying the other night that they coukd do it with one council.We could save tens of millions a year.

Let's have a look at Harbought District council,200 employees and resposnible for

'Each district council covers a smaller area and provides more local services, including council housing, local planning, recycling and refuse collection and leisure facilities.'

Obviously, a lot of workers are employeed by the contractors.But still,no reason why the County council couldn't run the lot.

94,000 residents according to WIki.Here's the slary structure.It's eye watering.

file:///C:/Users/capta/AppData/Local/Temp/CMT_structure_January_2021.pdf

I think Central bailed them all out . It will be buried but out there. This might also mean a power grab from the centre. And we have seen quite a lot of centralised control recently. That seems to be the way it’s going (Labour too)

[Jesus Wept]

How does the market value a company? Which companies share price look expensive based on their most recent profits? 

Leta have a look at GSK.

£12.18 a share.

Market cap £61.14bn

Glaxo made profits of:

£7.8bn in 2020

£6.9bn in 2019

and revenue and growth is predicted (has been) ‘pretty strong’.

So it’s share price is valued at 8 x yearly profits which are expected to increase.

Is this typical? Or just for the pharmaceutical sector? 
 

 

So look at BP...

How does Glaxo compare to BP ?

Well BP is 273p a share - so valued at a similar price to Glaxo at a £55bn market cap today.

BP makes a profit of about £7 billion in 2019 

This is similar to Glaxo so valued in a similar way at 8x yearly profits

So let’s take a look at Shell (1347p)

RDSB market cap £105bn

Makes a profit of £12bn in 2019 (falls to £4bn in 2020 as a Pandemic and exceptional), but again is valued AGAIN at about 8x 2019 profits.

So these 3 big companies are valued at TYPICALLY 8 x times yearly profit. Is that typical for well established companies making the same profits? 8 x seems to be the recurring sweet spot in the current market climate.

Of course this ‘market cap valuation (share price) depends (‘should be’ factoring in the markets prediction) on potential growth and expansion (or the opposite). 
 

Amazon made profits of about £17bn in 2020 and is valued at £1670 billion, that’s about 100 x it’s profit for 2020.

Tesla made profits of about £1 billion pounds in 2020 ** and is valued at £766 billion, that’s about 766 x it’s profit for 2020
 

** That’s me being generous and rounding up.

I have just checked Rio Tinto as I need more exposure to big miners.

Its valued at a market cap of £80bn and made £8bn in 2020. This values it at about 10x profits of 2020.
 

Again it’s share price gives it a market cap in that range of 6-10x average yearly profits.

But prices of metals are predicted to surge  multiple times so profit is predicted to soar.
 

These are all back of a fag packet market calculations. 

So should I buy Tesla and / or Amazon or Rio Tinto? Are these tech stocks overvalued? 🤔 

I have just seen a post above from @sancho panza saying there are red flags in the metal sector share prices - copper and other metals hitting ATHs - are the miners peaking or is this just the start? 

 

Just for fun I tried valuing Argo bitcoin miner. 

If it manages to make 2000 BTC a year and makes a profit of £30,000 on each one that gives it a yearly predicted profit of £60 million.

It is valued currently (300p a share) at a market cap of £1 billion which is 16x potential Profits for 2020. Assuming BTC price stays at $55,000.

So the market seems to be betting on a BTC price of $80-100,000 for this to have market cap / profit ratio of 8-10.

I thought the Argo market cap looked ‘bubbly’ but compared to Amazon and Tesla it looks positively conservative.

What are your thoughts on these valuations? I know people look at eps and P/E ratios etc. But this market cap to profits ratio looks a fairly good simple way of valuing a company and whether it’s share price is astronomically out of the ball park..... 

 

Still time to buy the likes of these miners / metal processors... what do you guys think? Why I didn’t buy these miners 8 months ago I don’t know? (Actually I do ... I put all my money into RDSB, and BP, silver etc and Argo. Should never have sold FCX (copper miner) up 300% since.

 

I need to look up BATs and IMB later to see how there market cap compares to their yearly profits. Unless @DurhamBorn you have them to hand off the top of your head? How do you value a company? I think generally I see myself as a ‘value investor’ as opposed to a growth speculator (Argo excepted!). 

 

[CVG]

32 minutes ago, Vendetta said:

How does the market value a company? Which companies share price look expensive based on their most recent profits? 

Leta have a look at GSK.

£12.18 a share.

Market cap £61.14bn

Glaxo made profits of:

£7.8bn in 2020

£6.9bn in 2019

and revenue and growth is predicted (has been) ‘pretty strong’.

So it’s share price is valued at 8 x yearly profits which are expected to increase.

Is this typical? Or just for the pharmaceutical sector? 
 

 

So look at BP...

How does Glaxo compare to BP ?

Well BP is 273p a share - so valued at a similar price to Glaxo at a £55bn market cap today.

BP makes a profit of about £7 billion in 2019 

This is similar to Glaxo so valued in a similar way at 8x yearly profits

So let’s take a look at Shell (1347p)

RDSB market cap £105bn

Makes a profit of £12bn in 2019 (falls to £4bn in 2020 as a Pandemic and exceptional), but again is valued at about 9x 2019 profits.

So these 3 big companies are valued at 6–10 times yearly profit. Is that typical for well established companies making the same profits?

Of course this ‘market cap valuation (share price) depends (‘should be’ factoring in the markets prediction) on potential growth and expansion (or the opposite). 
 

Amazon made profits of about £17bn in 2020 and is valued at £1670 billion, that’s about 100 x it’s profit for 2020.

Tesla made profits of about £1 billion pounds in 2020 ** and is valued at £766 billion, that’s about 766 x it’s profit for 2020
 

** That’s me being generous and rounding up.

I have just checked Rio Tinto as I need more exposure to big miners.

Its valued at a market cap of £80bn and made £8bn in 2020. This values it at about 10x profits of 2020.
 

Again it’s share price gives it a market cap in that range of 6-10x average yearly profits.

But prices of metals are predicted to surge  multiple times so profit is predicted to soar.
 

These are all back of a fag packet market calculations. 

So should I buy Tesla and / or Amazon or Rio Tinto.

I have just seen a post above from @sancho panza saying there are red flags in the metal sector share prices - copper and other metals hitting ATHs - are the miners peaking or is this just the start? 

 

Just for fun I tried valuing Argo bitcoin miner. 

If it manages to make 2000 BTC a year and makes a profit of £30,000 on each one that gives it a yearly predicted profit of £60 million.

It is valued currently (300p a share) at a market cap of £1 billion which is 16x potential Profits for 2020. Assuming BTC price stays at $55,000.

So the market seems to be betting on a BTC price of $80-100,000 for this to have market cap / profit ratio of 8-10.

I thought the Argo market cap looked ‘bubbly’ but compared to Amazon and Tesla it looks positively conservative.

What are your thoughts on these valuations? I know people look at eps and P/E ratios etc. But this market cap to profits ratio looks a fairly good simple way of valuing a company and whether it’s share price is astronomically out of the ball park..... 

 

Still time to buy the likes of these miners / metal processors...

 

You may want to set up a watchlist portfolio in investing.com to monitor stuff like this. It's crazy, yes.

[Yadda yadda yadda]

Different factors in different industries.

Pharmaceuticals

How long before their main drugs become generic? What does the pipeline look like?

Oil

Erroneously or otherwise people factor in political risk. Part of why we tend to like them. We think the political risk is overblown as the alternatives aren't practical at present. It is understandable why people are reluctant to give high valuations to businesses that may face Government intervention or competition from new tech.

Tech businesses

These are priced on hoped for growth and speculation. Way overvalued in my opinion as interest rate risk applies on debt for many. The predicted future might never arrive in the way that is hoped for.

Argo

BTC price risk. Cost spiral/competition risk that competitors will keep spending more and more on mining machines.

 

It all comes down to risk, future expectations and an element of speculation. Eight times profits is cheap is you think those profits will be maintained. At least it is whilst interest rates are so low.

[DurhamBorn]

1 hour ago, sancho panza said:

Fascinating post DB.

I did a google and apparently The Moor brought in £7mn in rents aka 5.8% gross yield.This a huge part of the problem in that psot 2008,projects based on this maths were possible because of QE/Zirp and wouldn't have been otherwise.

What were the banks lending on that thinking? What credit lines will they have to rein in to take the loss?Probably none in this bizarro world but the warning signs are there.

New River has a a sweet spot here in the next year to offload some resi property but beyond that,even assuming a 50% cut in rents holds(I suspect it will be worse),it's working off an 8.5% gross yield.If I was a retialer currently,I'd beoffering peppercorn rents and to pay the business rates.

8.5% sounds great but say we get inflation somewhere between either you or Luke Gromens slightly higher projections in the next 5-10 years,thsoe IR's will toast retial some more in terms of both costs and income.

Long way to say that those councils that bought CRE in the last five to ten years are toast.

https://www.cityam.com/aberdeen-standard-offloads-largest-property-fund-asset/

The Moor, which houses retailers including Primark, Debenhams, Dorothy Perkins and H&M, reportedly generates around £7m each year in rent.

The best thing they could do would be to have set up amortising loans so that their is no re-finance risk.Like you say that is the main problem.Rates shooting higher eating up all free cash then insolvent.Like you say it will be interesting to see if NRR can shift the resi part onto other developers quickly and get back a big chunk of the capital.

[DurhamBorn]

52 minutes ago, Vendetta said:

How does the market value a company? Which companies share price look expensive based on their most recent profits? 

Leta have a look at GSK.

£12.18 a share.

Market cap £61.14bn

Glaxo made profits of:

£7.8bn in 2020

£6.9bn in 2019

and revenue and growth is predicted (has been) ‘pretty strong’.

So it’s share price is valued at 8 x yearly profits which are expected to increase.

Is this typical? Or just for the pharmaceutical sector? 
 

 

So look at BP...

How does Glaxo compare to BP ?

Well BP is 273p a share - so valued at a similar price to Glaxo at a £55bn market cap today.

BP makes a profit of about £7 billion in 2019 

This is similar to Glaxo so valued in a similar way at 8x yearly profits

So let’s take a look at Shell (1347p)

RDSB market cap £105bn

Makes a profit of £12bn in 2019 (falls to £4bn in 2020 as a Pandemic and exceptional), but again is valued AGAIN at about 8x 2019 profits.

So these 3 big companies are valued at 6–10 times yearly profit. Is that typical for well established companies making the same profits? 8 x seems to be the recurring sweet spot in the current market climate.

Of course this ‘market cap valuation (share price) depends (‘should be’ factoring in the markets prediction) on potential growth and expansion (or the opposite). 
 

Amazon made profits of about £17bn in 2020 and is valued at £1670 billion, that’s about 100 x it’s profit for 2020.

Tesla made profits of about £1 billion pounds in 2020 ** and is valued at £766 billion, that’s about 766 x it’s profit for 2020
 

** That’s me being generous and rounding up.

I have just checked Rio Tinto as I need more exposure to big miners.

Its valued at a market cap of £80bn and made £8bn in 2020. This values it at about 10x profits of 2020.
 

Again it’s share price gives it a market cap in that range of 6-10x average yearly profits.

But prices of metals are predicted to surge  multiple times so profit is predicted to soar.
 

These are all back of a fag packet market calculations. 

So should I buy Tesla and / or Amazon or Rio Tinto.

I have just seen a post above from @sancho panza saying there are red flags in the metal sector share prices - copper and other metals hitting ATHs - are the miners peaking or is this just the start? 

 

Just for fun I tried valuing Argo bitcoin miner. 

If it manages to make 2000 BTC a year and makes a profit of £30,000 on each one that gives it a yearly predicted profit of £60 million.

It is valued currently (300p a share) at a market cap of £1 billion which is 16x potential Profits for 2020. Assuming BTC price stays at $55,000.

So the market seems to be betting on a BTC price of $80-100,000 for this to have market cap / profit ratio of 8-10.

I thought the Argo market cap looked ‘bubbly’ but compared to Amazon and Tesla it looks positively conservative.

What are your thoughts on these valuations? I know people look at eps and P/E ratios etc. But this market cap to profits ratio looks a fairly good simple way of valuing a company and whether it’s share price is astronomically out of the ball park..... 

 

Still time to buy the likes of these miners / metal processors... what do you guys think? Why I didn’t buy these miners 8 months ago I don’t know? (Actually I do ... I put all my money into RDSB, and BP, silver etc and Argo. Should never have sold FCX (copper miner) up 300% since.

 

I need to look up BATs and IMB later to see how there market cap compares to their yearly profits. Unless @DurhamBorn you have them to hand off the top of your head? How do you value a company? I think generally I see myself as a ‘value investor’ as opposed to a growth speculator (Argo excepted!). 

 

I look at if the cycle will help them or not first.Once that road map is done i wait until sentiment on the sector is horrid,then i start buying.Im interested in what the assets should produce IF my macro road map is right.

Growth and value can be sentiment more than reality.Some areas can leverage inflation,but they also leverage dis-inflation.Thats why the likes of Telcos will boom with some inflation,because it flows direct to free cash,10% increase in prices might lift VODs free cash by 25%.It will probably lower Teslas profits because all the bits going in have gone up 11%.

[Jesus Wept]

1 hour ago, CVG said:

You may want to set up a watchlist portfolio in investing.com to monitor stuff like this. It's crazy, yes.

 

52 minutes ago, Yadda yadda yadda said:

Different factors in different industries.

Pharmaceuticals

How long before their main drugs become generic? What does the pipeline look like?

Oil

Erroneously or otherwise people factor in political risk. Part of why we tend to like them. We think the political risk is overblown as the alternatives aren't practical at present. It is understandable why people are reluctant to give high valuations to businesses that may face Government intervention or competition from new tech.

Tech businesses

These are priced on hoped for growth and speculation. Way overvalued in my opinion as interest rate risk applies on debt for many. The predicted future night never arrive in the way that is hoped for.

Argo

BTC price risk. Cost spiral/competition risk that competitors will keep spending more and more on mining machines.

 

It all comes down to risk, future expectations and an element of speculation. Eight times profits is cheap is you think those profits will be maintained. At least it is whilst interest rates are so low.

 

40 minutes ago, DurhamBorn said:

I look at if the cycle will help them or not first.Once that road map is done i wait until sentiment on the sector is horrid,then i start buying.Im interested in what the assets should produce IF my macro road map is right.

Growth and value can be sentiment more than reality.Some areas can leverage inflation,but they also leverage dis-inflation.Thats why the likes of Telcos will boom with some inflation,because it flows direct to free cash,10% increase in prices might lift VODs free cash by 25%.It will probably lower Teslas profits because all the bits going in have gone up 11%.

Once again gents the little nuggets and info I get on this thread is invaluable. Thank you. Reading this thread and othes on Dosbods has been extremely fortunate. My wife complains a little that I am always on my phone - I now tell her I am working and have ‘earned’ more ‘on here’ then I do in my day job. She looked at her ISA the other day and now understands. Stupidly I put all my OWN ISA profits in hers as I thought when you sell you couldn’t buy more over your £20k allowance - haha ..... what an idiot. Now she ‘has more than me’ in her account. Shit. 
 

Maybe it’s luck (probably is), but I take all this information in ....and then process it in my head and it churns about and ‘out pops some good decisions’. Thing is I am totally unable to articulate it. 
 

I am still sticking to buying in OPTIMiSM and when I see value in high dividend stocks. (Also have a  little BTC, Tobacco, GSK and Military Arms) in terms of other sector investment. 
 

The thing is Telecoms looks like the only OPTIMiSM C sectors that hasn’t gone up by 100% ++ . Is there still any value in the other sectors?

Oil

Potash (i Had to let SDF/K&S go).

Telecoms (yes I think so)

Miners

Industrials / Infrastructure 

Silver

Metals (Au, Pt, Cu, Pa)

Commodities

A big part of me just wants to stop buying now and build a big cash pile for the 2020-21 and 21-22 ISA allowance and SIPP and wait for what do you guys call it .... “ THE BIG KAHUNA”... before the inflation driven rise over the rest of decade. 
 

Question is .... is it coming? Will it come? Will BTC collapse or a TESLA pin pop the tech bubble? Will all that cash in those asset bubbles just find a home in OIL and the COMMODITY PRICE sector?

Will the inflationary rise just keep going until a BK end of decade ?

I wish I knew. Maybe best option is to leave what I have in for now and build cash so I have 50% in cash and 50% in stock market. Hedge my bets so to speak.

@CVG that link you sent me - awesome - cheers ! 

[King Penda]

2 hours ago, sancho panza said:

It's weird ,the four they name aren't the usual suspect eg Spelthorne which means there's even more bad news out there.

I've said this before but these councils need reorganisning for the modern world.Leicesterhire has something like ten district councils plus county and Leicester city.All have chief execs on £150k plus and reams of hangers on picking up fat salareis for doing next to nothing.

Even a very close firend who's a right lefty was saying the other night that they coukd do it with one council.We could save tens of millions a year.

Let's have a look at Harbought District council,200 employees and resposnible for

'Each district council covers a smaller area and provides more local services, including council housing, local planning, recycling and refuse collection and leisure facilities.'

Obviously, a lot of workers are employeed by the contractors.But still,no reason why the County council couldn't run the lot.

94,000 residents according to WIki.Here's the slary structure.It's eye watering.

file:///C:/Users/capta/AppData/Local/Temp/CMT_structure_January_2021.pdf

Stoke council constantly try’s to gain control of the Staffordshire moorlands and Newcastle council they defend themselves by saying they have assets and are ran better by themselves.ie hinting stokes inept with money and would sell of there assets and still concentrate there efforts on Stoke only. Basicly forgotten about

[Heart's Ease]

 

Are we heading into a new commodities ‘supercycleince the beginning of the year commodity prices have been surging, leading a number of banks to declare the start of a new “supercycle” for the assets.

Bankers at Goldman Sachs were the first off the line, declaring that the Covid-19 had created the right structural conditions for the same kind of multi-year price growth last seen in the 2000s.

Read more: Rio Tinto to pay record $6.5bn dividend after ‘robust’ year

The last couple of weeks have seen copper touch heights not seen by the red metal in nearly a decade, while platinum – a crucial element in the catalytic converters used in cars – is lingering around its highest price since 2014.

And while gold enjoyed a massive rally last year as investors sought safe haven assets during the stock market carnage, 2021 could prove silver’s year – it has even attracted the attention of Reddit’s merry band of bedroom traders, fresh from their “Charge of the Light Brigade”-style assault on Wall Street’s hedge funds.

All this led to a good couple of weeks for those investors backing the FTSE’s mining giants, which one by one set out new and attractive dividend policies.

On the back of its best set of earnings since 2011, Rio Tinto, for example, proposed the highest dividend in its 148-year history of 400p a share.

But despite the promising start to the year, economists are divided as to whether the rapid charge will continue.

What is a ‘supercycle’?

The UN defines a “supercycle” as a “decades-long, above-trend movement in a wide range of base material prices” which follows from a demand shift.

 

 

The most recent example of this came in the first decade of the 21st century, with the rapid industrialisation of the so-called BRICs – Brazil, Russia, India and China – sent demand surging.

However, the onset of the 2008 financial crisis put something of a dampener on things, with only China delivering the growth anticipated.

Read more: Glencore reinstates dividend after slimming down debt

With prices having plunged last year as the coronavirus pandemic shut down industrial activity, the resurgence of some economies – in particular China and the US – has now sent prices soaring again.

 

 

This, in combination with a newfound urgency for countries to get hold of precious metals crucial for net zero technologies, has raised hopes that prices could continue their stratospheric rise.

But will the surge continue, or, as others think, run out of steam within a couple of years?

Macro moves

For Jon Deane, former JP Morgan MD and now chief executive of commodities trader Trovio, the macroeconomic environment is primed for such a supercycle.

Before the Open: Get the jump on the markets with our early morning newsletter

“One of the only levers governments have left to drive the Covid recovery is fiscal policy – and that means government spending on things like infrastructure, and that will lead to a naturally inflationary scenario pushing prices up”, he said, citing the Biden administration’s $1.9 trillion stimulus package and China’s Belt and Road Initiative (BRI) as examples.

“Then, you add the immediate demand for materials to the supply constraints caused by the pandemic as nations try to adjust their processes for import and export, and that again pushes prices in destination markets up again.”

In his native Australia, for example, Deane said that aluminium prices had jumped 300 per cent over the course of the year due to new costs related to getting the metal through customs and onto construction sites.

Finally, he said, more fiscal spending will see a weaker dollar. “That alone is going to put a bit under commodity prices of things like gold, silver and platinum as stores of value”, Deane added.

Correcting course

But, says Cailin Birch, global economist at the Economist Intelligence Unit, doesn’t necessarily mean a multi-year growth cycle.

“It’s going to be another wild year for commodities, that’s for sure”, she said. “But apart form in a couple of areas, the conditions aren’t there for a supercycle”.

Read more: Exclusive: Cyprus-focused miner set for London float

“The current surges are part of the initial rebound. Markets are currently awash with capital because of optimism about the bounce back and quantitative easing, and that capital is surging for returns.

“But though some economies like China and the US are doing well, many others have months if not years to go before they get back to pre-pandemic levels. So I expect the current enthusiasm to wear off somewhat in the coming months.”

That’s not to say, however, that prices are likely to fall again, Birch adds. “It’s notable itself that we expect the new prices achieved over the last quarter to be sustained over the coming years, especially for those metals used in the industrial sector.”

Article ends with a bit of fence sitting from the journalist but interesting to see what's being pumped out.

[Jesus Wept]

11 minutes ago, Heart's Ease said:

 

Bankers at Goldman Sachs were the first off the line, declaring .......

THe Bankers at GMS were the first to predict the start of a commodity super cycle.... ? 

Well that’s bollocks for starters.... we all know it was @DurhamBorn.....

Anyway ....

.....should I be buying Rio Tinto, BHP, Glencore et al.... ? Or wait until a pull back BK ? 

[geordie_lurch]

22 minutes ago, Vendetta said:

....should I be buying Rio Tinto, BHP, Glencore et al.... ? Or wait until a pull back BK ? 

You should all be sticking a little in bitcoin itself not people or companies mining it

If you had done so, even just a few weeks ago when myself and others were chatting about it in this thread, when it pulled back to around £23,000 (after hitting £30,000) you would have just about doubled your fiat money already as it's just gone over £40,000

Thinking of it just as another stock or even digital gold might make it easier for some on here to invest in?

I still think a Big Kahuna is coming but trying to time it is exhausting so I'm trying to do my best to let my shares tick over for the time being. However come the new tax year in afew weeks I will be looking to put more cash into my ISA to buy many more of the same shares we have all been buying for the long term dividends 

[Jesus Wept]

44 minutes ago, geordie_lurch said:

You should all be sticking a little in bitcoin itself not people or companies mining it

If you had done so, even just a few weeks ago when myself and others were chatting about it in this thread, when it pulled back to around £23,000 (after hitting £30,000) you would have just about doubled your fiat money already as it's just gone over £40,000

Hmmmm ? Argo went from 71p to 320p from 21st January. That’s 300%. Many of us started off at 10p or less in Bitcoin last summer, (In the miner as opposed to the coin - greater leverage). For some it’s gone up 50x yes 5000%.

Much better than BTC direct. 😃

[Hancock]

 

2 hours ago, DurhamBorn said:

The best thing they could do would be to have set up amortising loans so that their is no re-finance risk.Like you say that is the main problem.Rates shooting higher eating up all free cash then insolvent.Like you say it will be interesting to see if NRR can shift the resi part onto other developers quickly and get back a big chunk of the capital.

Brits have been ripping off dumb Brits who think you cant go wrong with pwopertee, this time in Germany.

https://www.telegraph.co.uk/investing/news/15bn-germany-property-scandal-leaves-british-savers-facing-financial/

Love they way they are called "savers" as opposed to "thick cunts".

[DurhamBorn]

35 minutes ago, Hancock said:

 

Brits have been ripping off dumb Brits who think you cant go wrong with pwopertee, this time in Germany.

https://www.telegraph.co.uk/investing/news/15bn-germany-property-scandal-leaves-british-savers-facing-financial/

Love they way they are called "savers" as opposed to "thick cunts".

Im sort of both ways on this.On the one hand i have no sympathy for people who put their lifes savings into one company,one get rich quick scheme.Tough.However the other side says these people are victims of fraud and also a useless FSA/FSA and government.They do everything they can to fleece experienced people from moving their final salary pensions by allowing IFAs to charge massive fees yet do nothing to stop these kinds of huge fraud,or at best gouging fees from people.Then again everywhere iv worked i can count on one hand the amount of people who understand finance,most havent a clue,and i mean zero.There is a reason its not taught in school.CBs and government of course with their zero rate policies.

This cycle will really hit people who use IFAs and are in 40/60 type funds as most are.The fees are around 2.1%pa with an IFA.I had to transfer a final salary pension,and to get it done i had to act like i only had a vague understanding and that i wanted them to manage it.They did the transfer and were going to put it in to what was roughly Vanguard funds and charge 1.5% on top of the platform fees,fund fees etc pa.It was in the platform (Transact) for around 10 minutes in cash before Hargreaves launched a transfer into my Sipp so blocking them investing.They werent best pleased