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

[MrXxxx]

5 hours ago, JMD said:

Hope I have described this (at least partially) adequately?

Understand completely what you mean, and it has got me thinking...I think your idea 'has legs' as long as you spread across several companies within each sector, or maybe follow the same approach but use sector specific ETF's to maximize diversity/'financial safety' within the sector at the expense/benefit of either not making/losing maximums.

Edit: Just seen @Harley's comment above regarding sectors ETF's and feeling pretty smug :-)...I have obviously absorbed more from this forum in the last two years than I realised! :-)

[MrXxxx]

4 hours ago, geordie_lurch said:

Yep I agree with everything there and have been trying to emphasise this massive shift in this thread for months. Zerohedge have been on this story for a long time too as you can read here with the following text from a recent WSJ article about it being the game changer...

"The money itself is programmable. Beijing has tested expiration dates to encourage users to spend it quickly, for times when the economy needs a jump start."

Also note EVERY single transaction is 100% trackable and they can tell you where and therefore pretty much what you can spend it on. Been caught protesting against the Government or not taken your 6 monthly 'vaccine' booster - they could freeze or reduce your digital pounds until you comply

So then if you can live frugally you could stock pile bought assets and trade/barter them on a Black market...although they would probably have a "If you get caught trading outside the system you can be jailed for ten years and/or fined up to £10000"

[Harley]

6 minutes ago, Cattle Prod said:

I don't see how the 30yr can go up much more. At least for now

That's 30Y bond yield or price?

[Harley]

17 minutes ago, MrXxxx said:

Understand completely what you mean, and it has got me thinking...I think your idea 'has legs' as long as you spread across several companies within each sector, or maybe follow the same approach but use sector specific ETF's to maximize diversity/'financial safety' within the sector at the expense/benefit of either not making/losing maximums.

Edit: Just seen @Harley's comment above regarding sectors ETF's and feeling pretty smug :-)...I have obviously absorbed more from this forum in the last two years than I realised! :-)

I took my 10 preferred industries and looked at the key financials for the top 15 international companies in each industry.  I then selected the best 3 to 5 out of each 15 with a view to buying initial stakes in each and laddering in when technically cheap.  But I just didn't feel happy with the list of companies and not knowing what I was missing being so blinkered.  So I moved to opening my net to see what got caught and taking it from there.  Let the market take me where it wants to go. I finally became a value investor seeking total return!  I may have stuck to it though if there were quality ETFs instead.

[Harley]

18 minutes ago, Cattle Prod said:

Yield. Gonna make financing US deficit expensive.

Yep.  Per my earlier post about a potential approaching technical top in the 30Y UST yield, using ticker TYX.  Overbought momentum, descending triangle chart pattern, and negative candles (esp. Ashi).

PS:  TradingView seems fixed, even faster.  Plus a new desktop version (not that splash screen shows the correct version!).

[Mapper]

1 hour ago, MrXxxx said:

So then if you can live frugally you could stock pile bought assets and trade/barter them on a Black market...although they would probably have a "If you get caught trading outside the system you can be jailed for ten years and/or fined up to £10000"

Felix Zoulaf mentioned it in the recent video posted here. People in EE countries queing up for whatever was in the shops. When I saw that as a kid I thought it was just because there were limited quantities of goods. But he pointed out it was also to get their hands on ANYTHING that was for sale, so they could trade with it later.

It will happen, despite potential penalties.

Right, I'm off to stock up some of them new fangled 'nylons' I've been hearing about. The ladies are gonna love 'em I reckon!

[JMD]

6 hours ago, Harley said:

I used sector themes in the past and a guy was interviewed on Palisades radio a while back doing as you describe with sector ETFs (but moving wholly between them every few months).  I was going to look at doing the same as it had great appeal but he had access to better (US) ETFs.  I once looked at using exemplar companies from each sector as proxies but ditched that per my reasoning below.

All that though was for my equity asset class. A lot of literature out there about the importance of asset classes first and foremost.  Ideally one will compensate the other and top slicing to maintain the allocations will reduce portfolio risk (volatility).  So Equity, Bonds, PMs (or hard assets) and cash.  The £1m question though is what allocation model to choose and that depends on your objectives (e.g risk v return tradeoff).

I stopped using sector allocations for my equity portfolio for a number of reasons:

. the loss of quality sectors ETFs due to KID

. a concern about arbitrary sector classifications (e.g. PM miner royalty companies, etc  in "Financials")

. I have no way of knowing if the macro talk about which sector is actually correct

. I was running out of good companies in my macro preferred sectors

. I learnt how to screen for companies and got access to the right tools to do it relatively easily

I now let the data lead me with my screens.  So bottoms up rather than top down.  If the sectors are correct, they will come up in my screens.  However I tread very carefully and typically ignore companies I catch but are in the sectors I don't like (after validating their sector categorisation). 

Each to their own and I would use sector ETFs to trade, moving between them as their technicals change if I had a access to quality sector ETFs.  I guess the above just shows how investing is a personal journey, constantly evolving to seek better alpha.

PS: I do sense check my actual portfolio sector (actually next level industry) allocations now and then to ensure no bunching.

Thanks Harley for the detailed reply. I agree with the points you make. Have you considered using the 'momentum fund' site below? It provides weekly performance trend analysis stats on sectors and also for the funds within those sectors. All are UK accessible funds. Looks low risk/reward, has been running over 10 years, and appears 12% is the average investor return. It does cost £35/month, but get first 2 months free and can cancel anytime. The investors appear to be very inexperienced type investors, so could be scope for upping the average return. I am currently mainly waiting out for BK(?!), but may seriously consider "going saltydog' for say a year to test run (founder is ex navy, hence name, started scheme 20 years ago and operated strategy for just his own portfolio initially until 2010)                                    https://www.saltydoginvestor.com/home-more/

[Rave]

On 11/04/2021 at 00:43, JMD said:

DB, you mention land-value tax policies - I think these could be operated to make land speculation unattractive, is that what you mainly meant? That is to say I don't think they would raise much in terms of being a wealth tax because the wealthy would find ways of 'hiding' property

How do you think they'll hide it then, put a bit of camouflage netting over it and then tell the tax man "no land here mate"?

 

On 11/04/2021 at 00:43, JMD said:

for example tracts of land could be utilised as working farms/forestry(for lumber)

Not only could they be used for farming or forestry where that is possible, they mostly will be, because the alternative will be paying tax on an unproductive asset. A Land Value Tax encourages efficient use of land by discouraging hoarding.

 

On 11/04/2021 at 00:43, JMD said:

and put in trust for next generation to inherit. 

As my facetious point above alludes to, the great beauty of LVT is that land cannot be hidden, and so it doesn't matter who owns it. If the owner doesn't pay the tax due on it the government simply requisitions it.

 

On 11/04/2021 at 00:43, JMD said:

Anyway isnt most wealth of the rich held in stocks and company ownerships?

Maybe, but that isn't what's stopping the working man getting ahead- it's being priced out of a home that's doing that. We can always create more stuff, and hence more wealth. We can't create more land, that's why we should have a mechanism for sharing the land we do have out fairly.

I cannot stress enough that it is the Land Value Tax that will restore economic fairness, not the Universal Basic Income. And it follows that introducing a UBI without a LVT would be utterly bonkers- the money will immediately be captured by rent seekers if there's no mechanism to stop them.

[Viceroy]

On 11/04/2021 at 03:02, DurhamBorn said:

Currency and the way they declare divis,they are yielding 5% on the ADR at the moment i think,Telefonica about 7%.

TIMB have net cash,no debts,i think Telefonica is the same.They are using the cash to buy Oi Groups mobile business.Iv been buying both heavily.I bought some Card Factory at 33p they got sold last week,that went into TIMB and i sliced a few other companies.I want a few more of both,but iv set two ladders rather than simply buy all at these levels.

I think the whole industry outside of the US is structurally undervalued.

I came across these articles for today's homework. Thx for the tips DB

https://seekingalpha.com/article/4417956-top-contrarian-idea-buy-brazil-stocks

https://seekingalpha.com/article/4418552-ignore-and-t-buy-telefonica-brasil

[Barnsey]

 

[jamtomorrow]

5 hours ago, Rave said:

How do you think they'll hide it then, put a bit of camouflage netting over it and then tell the tax man "no land here mate"?

 

Not only could they be used for farming or forestry where that is possible, they mostly will be, because the alternative will be paying tax on an unproductive asset. A Land Value Tax encourages efficient use of land by discouraging hoarding.

 

As my facetious point above alludes to, the great beauty of LVT is that land cannot be hidden, and so it doesn't matter who owns it. If the owner doesn't pay the tax due on it the government simply requisitions it.

 

Maybe, but that isn't what's stopping the working man getting ahead- it's being priced out of a home that's doing that. We can always create more stuff, and hence more wealth. We can't create more land, that's why we should have a mechanism for sharing the land we do have out fairly.

I cannot stress enough that it is the Land Value Tax that will restore economic fairness, not the Universal Basic Income. And it follows that introducing a UBI without a LVT would be utterly bonkers- the money will immediately be captured by rent seekers if there's no mechanism to stop them.

So with an LVT, would there be an "allowance" so to speak? Seems like there would need to be some notional untaxed allowance per-citizen or per-household to cover basic housing needs.

I can see that getting "political".

Like, dividing notional value of UK "land" by # households gives roughly £250,000 per household. I found that surprising, seeing as it includes commercial/industrial/agriculutural land in the numerator. I was expecting a bigger number.

Where's a proper Georgist when you need one?

[jamtomorrow]

7 hours ago, Mapper said:

But he pointed out it was also to get their hands on ANYTHING that was for sale, so they could trade with it later.

Or use it later.

I'm already doing this, and I blame this thread. Ordering a spare part for something or other? And does it look like one of those complex supply chain items? Chances are I'll need another in 2 or 3 years - so order 2 or 3 and carry a bit of stock.

Starting to look like Del boy's flat here.

More seriously, got me wondering whether and how this applies all the way up the scale? Does this spell the end for the just in time mania? Short JIT logistics, long massive f***ing warehouses?

[Sugarlips]

17 hours ago, Yellow_Reduced_Sticker said:

 

YES mate ! Great TIP of yours marketplace...just this week i bought a pair of chest-waders for £15 + £5.76 shipping (forget the perv stuff guys  this is for my fishing!)

 

Anyway contacted the seller for the brand name & top part pic, well f*** me ol' boots, these waders are EXPENSIVE to buy new, even if you could get them they would cost around £90! AND...the best part is they are BRAND-NEW and they fit like a snug glove!

 

Here's my 10 STAR TIP on buying from marketplace:

 

If ya new to faceache - join with a new email and change 1 letter in ya surname - in the personnel settings lock everything.

[this is if you DON'T want to get into friends finding you and basically wasting time!]

 

NOW Important stuff, MOST sellers say they WON'T ship...

 

SO...DON'T haggle!

However, if you send 'em a NICE message, 8 times out of ten they WILL!

AND here's the kicker ...YOU can get: up to 10 kg Maximum Weight sent for a measly - £5.76p (power tools anyone?!)

 

Maximum Length 0.65 m Maximum Height 0.5 m Maximum Width 0.5 m Max Length+Girth 1.65 m

 

USE: parcel2go.com

 

It's the cheapest option, and YODEL on it do the £5.76p (I've used these 4 times so far and perfect parcel arrives in 3 days)

 

 

BTW, House around the corner is being sold, so hence a skip outside, well you can guess that yours truly was there at the OPEN!

 

WHILE I was rummaging in the skip (fed up knocking on the door to ask now as they all say YES) ...a mid-20's foxy smiling girl came out the house to see what i was up to, anyway got chatting and as i couldn't reach all the down in the bottom of the skip to grab some stuff out...to help me out she went indoors to get me a broom handle! (I know what ya thinking @nirvana)

 

YOU wouldn't believe what folks throw out, i got a newish prestige pressure cooker, it just needs a clean these are £40 quid new!

 

After i walked away looking like a 1970's coal-man...i went back last night around 7pm, blimey they cleared the garage out, tools, nuts, bolts screws, nails, even special tools like threading taps with and extension for spark plugs, so the guy must of been a mechanic/engineer, @Harley would be drooling over this stuff for his Scrapheap Challenge ...anyways grabbed as much as i could, but left the complete miter saw stand, going to get that tonight...

 

Actual photo of YRS researching last night

 

...sorry couldn’t resist 

you’d love it down under the amount of stuff left in the front gardens is amazing, tbh I don’t remember the last time we bought any new household goods

17 hours ago, Yellow_Reduced_Sticker said:

 

YES mate ! Great TIP of yours marketplace...just this week i bought a pair of chest-waders for £15 + £5.76 shipping (forget the perv stuff guys  this is for my fishing!)

 

Anyway contacted the seller for the brand name & top part pic, well f*** me ol' boots, these waders are EXPENSIVE to buy new, even if you could get them they would cost around £90! AND...the best part is they are BRAND-NEW and they fit like a snug glove!

 

Here's my 10 STAR TIP on buying from marketplace:

 

If ya new to faceache - join with a new email and change 1 letter in ya surname - in the personnel settings lock everything.

[this is if you DON'T want to get into friends finding you and basically wasting time!]

 

NOW Important stuff, MOST sellers say they WON'T ship...

 

SO...DON'T haggle!

However, if you send 'em a NICE message, 8 times out of ten they WILL!

AND here's the kicker ...YOU can get: up to 10 kg Maximum Weight sent for a measly - £5.76p (power tools anyone?!)

 

Maximum Length 0.65 m Maximum Height 0.5 m Maximum Width 0.5 m Max Length+Girth 1.65 m

 

USE: parcel2go.com

 

It's the cheapest option, and YODEL on it do the £5.76p (I've used these 4 times so far and perfect parcel arrives in 3 days)

 

 

BTW, House around the corner is being sold, so hence a skip outside, well you can guess that yours truly was there at the OPEN!

 

WHILE I was rummaging in the skip (fed up knocking on the door to ask now as they all say YES) ...a mid-20's foxy smiling girl came out the house to see what i was up to, anyway got chatting and as i couldn't reach all the down in the bottom of the skip to grab some stuff out...to help me out she went indoors to get me a broom handle! (I know what ya thinking @nirvana)

 

YOU wouldn't believe what folks throw out, i got a newish prestige pressure cooker, it just needs a clean these are £40 quid new!

 

After i walked away looking like a 1970's coal-man...i went back last night around 7pm, blimey they cleared the garage out, tools, nuts, bolts screws, nails, even special tools like threading taps with and extension for spark plugs, so the guy must of been a mechanic/engineer, @Harley would be drooling over this stuff for his Scrapheap Challenge ...anyways grabbed as much as i could, but left the complete miter saw stand, going to get that tonight...

 

Actual photo of YRS researching last night

 

...sorry couldn’t resist 

you’d love it down under the amount of stuff left in the front gardens is amazing, tbh I don’t remember the last time we bought any new household goods

[feed]

6 hours ago, Rave said:

As my facetious point above alludes to, the great beauty of LVT is that land cannot be hidden, and so it doesn't matter who owns it. If the owner doesn't pay the tax due on it the government simply requisitions it.

Maybe, but that isn't what's stopping the working man getting ahead- it's being priced out of a home that's doing that. We can always create more stuff, and hence more wealth. We can't create more land, that's why we should have a mechanism for sharing the land we do have out fairly.

I cannot stress enough that it is the Land Value Tax that will restore economic fairness, not the Universal Basic Income. And it follows that introducing a UBI without a LVT would be utterly bonkers- the money will immediately be captured by rent seekers if there's no mechanism to stop them.

So how much does the Queen pay for the 39 acres of Buckingham Palace 
How much does Scarborough pay for his 5000 acre estate  
What about the Aristo land held under the nation trust, or the crown estates.

Proposing an LVT in a country where the majority of the land is owned by an Aristo class who have been claiming rent on it for a millennia and 4/5's of our legal and political system is in place to maintain that status quo, is absurd.

All an LVT would do in a country with a land owning monarchy is add an additional tax burden on to the lower class. And as for don't pay an LVT and the state takes ownership.  Congratulations you've just developed a tool for the landed to take ownership of what little land there is that they don't already own.   

Dissolve the monarchy, repeal the enclosure acts, until then an LVT is an utter fantasy.  

[DurhamBorn]

7 hours ago, Viceroy said:

I came across these articles for today's homework. Thx for the tips DB

https://seekingalpha.com/article/4417956-top-contrarian-idea-buy-brazil-stocks

https://seekingalpha.com/article/4418552-ignore-and-t-buy-telefonica-brasil

Notice Steve Kaplan comments under the 2nd article.The reason Brazil is so cheap is currency,and its crucial people understand the risk of that.We are buying ADRs so sterling v dollar,and the ADRs are dollar v real.One of the reasons Telcos have sold down South American holdings is currency risk.However being a contrarian the fact their currencies have done so badly is another plus.They are commod currencies and should do well in a steady reflation.

 

[Harley]

8 hours ago, JMD said:

Thanks Harley for the detailed reply. I agree with the points you make. Have you considered using the 'momentum fund' site below? It provides weekly performance trend analysis stats on sectors and also for the funds within those sectors. All are UK accessible funds. Looks low risk/reward, has been running over 10 years, and appears 12% is the average investor return. It does cost £35/month, but get first 2 months free and can cancel anytime. The investors appear to be very inexperienced type investors, so could be scope for upping the average return. I am currently mainly waiting out for BK(?!), but may seriously consider "going saltydog' for say a year to test run (founder is ex navy, hence name, started scheme 20 years ago and operated strategy for just his own portfolio initially until 2010)                                    https://www.saltydoginvestor.com/home-more/

Apologies for the long posts but it helps me straighten things out and if things were that easy the professionals wouldn't work all the hours they do!

Thanks for the link.  I had a skim and will go back for a closer look as this is my style:  momentum investing.  Way back I read up on things like the Turtle Traders and Danielle Parks' book "Juggling Dynamite" (hilarious if you tried searching for that in the past!).  Plus many other momentum advocates.  I say I'm now a value investor, but I still play momentum when I talk about technicals.  I only buy a value stock when the technical momentum indicators show a good probability sustainable uptick from a low.  I do the same for trading, but then ease up on the value criteria.  My issue, like others is when to sell!  I like the top slicing approach you mention, or when I find better opportunities. 

Given what you're saying I think you might find this very interesting (ignore the title!):  Chris Vermeulen and his Best Asset Now (BAN) strategy.  I liked it a lot.  It's like I used to do but it involved US ETFs so I got really stuffed when KID came along (and I looked for alternatives).  However thanks to you I had a re-listen and noted his comment about using options which are allowed in the UK.  He has a service and website but a bit pricey and I can DIY.

PS: Lynn and Danielle - go you ladies, good on ya!

[Harley]

39 minutes ago, DurhamBorn said:

Notice Steve Kaplan comments under the 2nd article.The reason Brazil is so cheap is currency,and its crucial people understand the risk of that.We are buying ADRs so sterling v dollar,and the ADRs are dollar v real.One of the reasons Telcos have sold down South American holdings is currency risk.However being a contrarian the fact their currencies have done so badly is another plus.They are commod currencies and should do well in a steady reflation.

 

How often is a stock purchase as much a currency play!  I looked at the Brazilian Real when you mentioned those stocks and thought the same:  Been in the oversold zone (momentum wise) for a long time now and maybe a topping pattern starting to emerge.

 

[CVG]

27 minutes ago, Harley said:

"Juggling Dynamite" (hilarious if you tried searching for that in the past!)

I used to model billions of rows of data. Looking for new insights I searched for "Big Models". I confessed my sins to my manager before HR contacted me.

[Harley]

10 hours ago, Mapper said:

Right, I'm off to stock up some of them new fangled 'nylons' I've been hearing about. The ladies are gonna love 'em I reckon!

My new trading service is nearly ready to go live. 

One final decision:

Or:

Or:

[Talking Monkey]

On 10/04/2021 at 01:36, JMD said:

The great Felix Zulauf. Brilliant description of our 'new normal' economic paradigm. Well worth the hour listen.

Great interview, really interesting stuff. 

[DurhamBorn]

3 minutes ago, Harley said:

How often is a stock purchase as much a currency play!  I looked at the Brazilian Real when you mentioned those stocks and thought the same:  Been in the oversold zone (momentum wise) for a long time now and maybe a topping pattern starting to emerge.

 

Exactly.Those currencies are inflation currencies hence suffering for a decade/cycle.They suffer the double hit.Economy struggles and the currency.Of course it reverses in an inflation leaning cycle.People think tech has meant more developed economies will always outperform now,but thats not true IMO.They will get hit double in an inflation.Corned beef goes up 10% plus another 10% for currency.The seller gains both increases in buying power relative.Simplistic example,but i find simple transactions are what are magnified across economies once the macro points that way.

The 4th biggest telco in Brazil went under and the others have carved up the assets.Another tail wind for price increases going forward.

Iv sold a lot of my potash after huge runs and slowly placing a lot of that into Brazil.

 

 

[Harley]

1 hour ago, DurhamBorn said:

Notice Steve Kaplan comments under the 2nd article.The reason Brazil is so cheap is currency,and its crucial people understand the risk of that.We are buying ADRs so sterling v dollar,and the ADRs are dollar v real.One of the reasons Telcos have sold down South American holdings is currency risk.However being a contrarian the fact their currencies have done so badly is another plus.They are commod currencies and should do well in a steady reflation.

 

I hold the ETF LTAM but not enough.  Been waiting for a pullback.  51% in Brazil (partly through holding the iShares Brazil ETF!).  0.73% fees, 1.73% yield, but price to book of 2.08.  Can I do better if I cherry pick and can buy (only with ADRs as none of my brokers have direct market access)?

 

[Harley]

13 minutes ago, Talking Monkey said:

Great interview, really interesting stuff. 

Honest, I never listened to this before my post!  I'm massively behind on my podcast listening!

[M S E Refugee]

18 minutes ago, DurhamBorn said:

Exactly.Those currencies are inflation currencies hence suffering for a decade/cycle.They suffer the double hit.Economy struggles and the currency.Of course it reverses in an inflation leaning cycle.People think tech has meant more developed economies will always outperform now,but thats not true IMO.They will get hit double in an inflation.Corned beef goes up 10% plus another 10% for currency.The seller gains both increases in buying power relative.Simplistic example,but i find simple transactions are what are magnified across economies once the macro points that way.

The 4th biggest telco in Brazil went under and the others have carved up the assets.Another tail wind for price increases going forward.

Iv sold a lot of my potash after huge runs and slowly placing a lot of that into Brazil.

 

 

I have a small amount in Adecoagro, do you think they are worth a punt?

[Harley]

39 minutes ago, DurhamBorn said:

Exactly.Those currencies are inflation currencies hence suffering for a decade/cycle.They suffer the double hit.Economy struggles and the currency.Of course it reverses in an inflation leaning cycle.People think tech has meant more developed economies will always outperform now,but thats not true IMO.They will get hit double in an inflation.Corned beef goes up 10% plus another 10% for currency.The seller gains both increases in buying power relative.Simplistic example,but i find simple transactions are what are magnified across economies once the macro points that way.

The 4th biggest telco in Brazil went under and the others have carved up the assets.Another tail wind for price increases going forward.

Iv sold a lot of my potash after huge runs and slowly placing a lot of that into Brazil.

 

 

Without telling are you getting in to many more Brazilian stocks than VIV and TIMB?  ADRs, ETFs, funds, etc?

I just ran a screen for Brazilian companies listed on the US markets:

Plus a few additions on other exchanges (e.g. Spain but interestingly not Portugal).