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


spunko

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3 hours ago, leonardratso said:

UKOG seems to be trending a bit last few days, I believe they bought a new box of matches to add to the company balance sheet as an asset, still, as a punt for a minnow, it might be worth a bitcoin type punt.

I've added this to the Shares thread...........sorry if I'm treading on your toes!

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18 hours ago, MrXxxx said:

There are a couple of major companies that do these student accommodations (Unite (UTG) is one), surely you could short these?

thanks MrX for that great tip.

Looks like since its salad days back in 2015, its just been treading water ref. its balance-sheet. However, its share price has shot up since 2015, despite the SP provided research (thanks SP) stating it has also been offloading assets - whether this 'strategy' is good for the company or just good for its directors...? 

Anyway, given the student-accommodation-market fundamentals, looks a 'great' company to short.

This is my uneducated view - what do others think/look out for, re potential company shorting?      

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8 hours ago, DurhamBorn said:

Already happening,the reflation stocks iv been buying all running higher,some quite hard.Overvalued sectors exposed now though.

DB, I get the value to be found in some European infrastructure type companies / or those European companies with a large global exporting side to their business, but are you also buying similar US? I assume the US is far too expensive and that you wouldn't touch until after correction, but just wanted to clarify.  

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1 hour ago, Agent ZigZag said:

I wonder if housing is a long term inflation hedge within a government led economic cycle. Looking into the future I am seeing it as a potential burden unless your home provides a yield to cover the cost of taxation against it. With this in mind my current house that I bought a while back was a very large probate sale. I rewired it so that it was zoned  at ground, first and second floors in order that it can be easily converted it into three flats for rental and build a bungalow in the rear garden for my family thereby still enjoying where I live

ZigZag, great post as it chimes in part with the questions I have begun recently to ask myself. I realise this is not a property thread, but my situation is that I plan to cash in my defined-benefit pension next year, taking the max. cash lump sum permissible. However I don't intend to retire, instead my aim is to semi-retire by selling up my mortgage free home and relocating to the north of England where I hopefully can buy a property that can also provide me with an income.

Although I am actively investing, as per this thread's main topic of discussion, etc. and will definitely continue to hopefully grow my sipp/isa for future draw-down/income use, I also know that I don't have the skills to successfully invest substantial savings in order to provide my main income. Therefore, my thinking is because we all need to live somewhere, why not buy a residential property that is also capable of generating an income.

The best idea I can think of so far is a residential property configured as (one or more) holiday lets. I believe that as foreign travel/flights become more expensive,  domestic holidaying will once again become popular. I understand that in the right location (ideas anyone?) the potential income of holiday lets is very good. I also understand that property based small businesses can borrow relatively easily (via business loan), so although I don't need to borrow, I could take advantage of potentially 'inflating the loan away' along with high inflation. But are there I wonder other alternatives to holiday lets?   

Given the topic of this thread, the 'financial dilemma' I think I have with the looming debt deflation, is how best to deploy a substantial 'investment(?)' into property, albeit an income producing property, with the understanding that however this is done the buyer is looking at a capitol depreciation. To be clear, I am not asking for property investment advise (that would be silly/insulting to this thread, as we all know what's ahead!) - but I am seeking (dreaming?) to escape the grind of daily employment. I accept I am in a fortunate position of having the cash funds to explore this alternative and would be very grateful for peoples views (whether positive or negative, as big decision for me so all info. valuable).

 

Sorry for long question, but what would others do? Perhaps some contributors here are already doing something similar or perhaps they are aiming to persue different line of business/work they consider will do well in the years ahead?    

     

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3 hours ago, JMD said:

DB, I get the value to be found in some European infrastructure type companies / or those European companies with a large global exporting side to their business, but are you also buying similar US? I assume the US is far too expensive and that you wouldn't touch until after correction, but just wanted to clarify.  

Iv bought some US stocks,this is many of my holdings today,including US stocks.Only ladder one in them all,so not really happy about them shooting higher,but ladders remain in place for any pull backs.

refl.JPG

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1 hour ago, JMD said:

Sorry for long question, but what would others do? Perhaps some contributors here are already doing something similar or perhaps they are aiming to persue different line of business/work they consider will do well in the years ahead?    

     

I suppose this will depend on competition in your area but one thing I've been surprised about recently is how busy storage container places are. I've had first hand experience of it because this year I've put my house stuff in one. I was nearly running out of time to find one because all 3 in the town were full. They all had waiting lists and I got lucky because I just happened to call in to check the progress as someone handed their keys in and I queue jumped. While I've been visiting it I've got chatting to some of the other container users and it seems that because council rates are so high and people are selling online - they are keeping stock of various things in containers instead of shops. I spoke to one bloke who has 20 on the go serving his various online businesses. It seems like money for old rope for people who have a bit of room for some.

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2 hours ago, JMD said:

Sorry for long question, but what would others do?

I have no idea if this is a good business venture or not, but I came across it while retirement planning.

Buy some old (large) farm buildings up north and provide a recreational vehicle storage facility. Here owners can park up their beloved campers etc out of the damp and wet weather, while they are not using them.

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19 minutes ago, CVG said:

I have no idea if this is a good business venture or not, but I came across it while retirement planning.

Buy some old (large) farm buildings up north and provide a recreational vehicle storage facility. Here owners can park up their beloved campers etc out of the damp and wet weather, while they are not using them.

Every farmer ive ever met does that, boats, motorhomes, etc, also storage for car dealers to leave newish high mileage cars in store for a year to level the milage out a bit.

One farmer i knew turned a cow shed into a air rifle range at £10 a head per session, seemed very popular.

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35 minutes ago, Bobthebuilder said:

Every farmer ive ever met does that, boats, motorhomes, etc, also storage for car dealers to leave newish high mileage cars in store for a year to level the milage out a bit.

One farmer i knew turned a cow shed into a air rifle range at £10 a head per session, seemed very popular.

Those airsoft rifle things at fairgrounds are really popular with kids.Loads of them lining up to play when i was on Yorkshire coast a month back.Must be them all playing Call of Duty.You would think the elite were getting the young to think war is cool and you get to go off with all your mates for a laugh,hmmm.

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2 minutes ago, Cattle Prod said:

Watch rates closely - I think the encashment value is inversely related to bond prices. You'll get a big payout now (40x? 50x?) because bond yield is so historically low. I have no idea if that will change by next year, but as the rest of your plan depends on that, keep a close eye. Anyone else? Think I have this right?

I agree,but its a very personal thing.Id say it might be a good idea for people to go over to the pension threads for this.If rates go to 6% id expect the transfer values to be cut in half.I also expect the doors to be shut by trustees at some point,or once recession hits schemes offer much lower amounts to transfer.Remember as well if scheme goes from RPI uplifts to CPI as many are that will see a big cut.

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I think this is relevant here:

https://www.ft.com/content/d28b9f98-d2fb-11e9-8367-807ebd53ab77

Citi tip gold to hit $2000, hmmm - reverse shoe-shine moment?

This leads to a question I have always pondered - analysts from the large financial institutions appear daily across the main-stream media, spouting their views on which way companies, indeed economies, might move. Never are they held to account but, based purely on the amount of time I used to spend in hotel rooms with CNN or Bloomberg as the only English language channel, these analysts usually turned out to be wrong. Why are they never called to account? Is it deliberate complicity by the media to allow the big-boys to pump their own book, then dump it when enough shoe-shiners have moved in?

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Currently on holiday in deepest Cornwall and managed to pick up nine sovereigns today at a local auction at about £15 to £20 under the market rate. This included a three coin jubilee set which arguably was an even better buy as they normally sell at a bit of a premium. Nothing like mixing business with pleasure :D

Had to pay with cash as auctioneer got a bit twitchy about debit card charge backs. Thought I had an honest face........

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36 minutes ago, DurhamBorn said:

.Must be them all playing Call of Duty.You would think the elite were getting the young to think war is cool and you get to go off with all your mates for a laugh,hmmm.

The Somme July 1st 1916.

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3 hours ago, JMD said:

Sorry for long question, but what would others do? Perhaps some contributors here are already doing something similar or perhaps they are aiming to persue different line of business/work they consider will do well in the years ahead?    

     

I'm exploring the idea of building a 70 ft trip boat/cafe boat/hotel boat. Something that can work as either, or as my home if I can make money elsewhere. I've spent the last couple of years renting out day boats and doing occasional skippered hires, so I know the market.  It would be hard work and wouldn't make a lot of money, but well maintained and operated, it would be solid asset I can live in, or generate an income from. I could raise my prices with inflation whilst the capital is being paid off so free cashflow would only improve.

 

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6 minutes ago, Ponty Mython said:

I think this is relevant here:

https://www.ft.com/content/d28b9f98-d2fb-11e9-8367-807ebd53ab77

Citi tip gold to hit $2000, hmmm - reverse shoe-shine moment?

This leads to a question I have always pondered - analysts from the large financial institutions appear daily across the main-stream media, spouting their views on which way companies, indeed economies, might move. Never are they held to account but, based purely on the amount of time I used to spend in hotel rooms with CNN or Bloomberg as the only English language channel, these analysts usually turned out to be wrong. Why are they never called to account? Is it deliberate complicity by the media to allow the big-boys to pump their own book, then dump it when enough shoe-shiners have moved in?

They have no understanding of leads and lags.Thats their main problem.They think Fed policy is loose,when its very very tight as well.Zero macro understanding.My friend called them macro tourists.

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51 minutes ago, Ponty Mython said:

I think this is relevant here:

https://www.ft.com/content/d28b9f98-d2fb-11e9-8367-807ebd53ab77

Citi tip gold to hit $2000, hmmm - reverse shoe-shine moment?

This leads to a question I have always pondered - analysts from the large financial institutions appear daily across the main-stream media, spouting their views on which way companies, indeed economies, might move. Never are they held to account but, based purely on the amount of time I used to spend in hotel rooms with CNN or Bloomberg as the only English language channel, these analysts usually turned out to be wrong. Why are they never called to account? Is it deliberate complicity by the media to allow the big-boys to pump their own book, then dump it when enough shoe-shiners have moved in?

I don't know about Citigroup, but I'm always suspicious of Goldman Sachs.

[They made a call for $1600 gold this time last month...]

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1 hour ago, MvR said:

Sorry for long question, but what would others do? Perhaps some contributors here are already doing something similar or perhaps they are aiming to persue different line of business/work they consider will do well in the years ahead?  

I have shifted my business plan from what people want to what people need.

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13 hours ago, Cattle Prod said:

Or the CEO of the biggest bank in the world. It does make you wonder if they're just front running retail the entire time, as @Ponty Mython alludes to

August 2018, and today. Well done Jamie Dimon, you tool

 

 

 

 

Screenshot_20190910-205725_Twitter.jpg

Screenshot_20190910-205717_Twitter.jpg

Speaking from the experience of others who have been 'looked after' by not just GS but other big names,I can well see that when the gold bull runs,they'll be making money and then when it ends,they'll be counting it.I've seen some shocking examples of fee churning over the years.As long as someone in the research dept says buy,they'll put their punters into it.

The irony is that the very thing that saved them in 08/09 ie QE and ZIRP, is the very thing that's destroying them now in their wholesale business

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13 hours ago, Ponty Mython said:

I think this is relevant here:

https://www.ft.com/content/d28b9f98-d2fb-11e9-8367-807ebd53ab77

Citi tip gold to hit $2000, hmmm - reverse shoe-shine moment?

This leads to a question I have always pondered - analysts from the large financial institutions appear daily across the main-stream media, spouting their views on which way companies, indeed economies, might move. Never are they held to account but, based purely on the amount of time I used to spend in hotel rooms with CNN or Bloomberg as the only English language channel, these analysts usually turned out to be wrong. Why are they never called to account? Is it deliberate complicity by the media to allow the big-boys to pump their own book, then dump it when enough shoe-shiners have moved in?

They are generally gone somewhere else on the conveyor belt by the time the sh1t hits.

As I said to CP,I've seen some shocking examples over the years that my mum has sent to me ie friends of hers that have seen their life savings go down by 30% in 3 years in a bull market and be charged 5% of portfolio value in fees for the privilege.Hence why so many old biddies yabber on about bricks n mortar.

Ref Citi-it's not a shoeshien moment of any sort,it's them lubing  up the seats of their retail clients.The shoeshine moment comes when said retail clients are whispering to you to buy gold.

 

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21 hours ago, Agent ZigZag said:

A rule of thumb was that if the cost to buy the house was less than the build cost  then the house was undervalued. However due to low interest rates and job growth in the south this has distorted this rule especially against houses in the North of England. I wonder if housing is a long term inflation hedge within a government led economic cycle. Looking into the future I am seeing it as a potential burden unless your home provides a yield to cover the cost of taxation against it. With this in mind my current house that I bought a while back was a very large probate sale. I rewired it so that it was zoned  at ground, first and second floors in order that it can be easily converted it into three flats for rental and build a bungalow in the rear garden for my family thereby still enjoying where I live and covering the cost of council tax. If I was starting again I would buy the best house in the best area in the lowest council tax band. I still may do this instead

Excellent question

I was thinking about this the other day and I wish to caveat my previous comments that it is -if you can stay the mortgage term or won freehold-with a piccie from japan.For it to be an inflation hedge,you need inflation.

Not sure on the methodology

https://www.ceicdata.com/en/indicator/japan/real-residential-property-price-index

image.thumb.png.9c75842d22d1367ffcf3ca531e29b121.png

 

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Talking Monkey
5 minutes ago, sancho panza said:

They are generally gone somewhere else on the conveyor belt by the time the sh1t hits.

As I said to CP,I've seen some shocking examples over the years that my mum has sent to me ie friends of hers that have seen their life savings go down by 30% in 3 years in a bull market and be charged 5% of portfolio value in fees for the privilege.Hence why so many old biddies yabber on about bricks n mortar.

Ref Citi-it's not a shoeshien moment of any sort,it's them lubing  up the seats of their retail clients.The shoeshine moment comes when said retail clients are whispering to you to buy gold.

 

SP you reckon they are preparing to short at 1600-1700 ahead of gold going down when the big sell off hits, so are pumping gold

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10 minutes ago, sancho panza said:

They are generally gone somewhere else on the conveyor belt by the time the sh1t hits.

As I said to CP,I've seen some shocking examples over the years that my mum has sent to me ie friends of hers that have seen their life savings go down by 30% in 3 years in a bull market and be charged 5% of portfolio value in fees for the privilege.Hence why so many old biddies yabber on about bricks n mortar.

Ref Citi-it's not a shoeshien moment of any sort,it's them lubing  up the seats of their retail clients.The shoeshine moment comes when said retail clients are whispering to you to buy gold.

 

That's why I referred to it as a reverse shoe-shine moment!

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10 minutes ago, Talking Monkey said:

SP you reckon they are preparing to short at 1600-1700 ahead of gold going down when the big sell off hits, so are pumping gold

You've got to put yourself in their shoes.I'm a big fan of  the popular misquote of Occams razor ie simplest solution is the best.

Big banks have cut back their prop desks since Dodd frank/Volcker rule.Although there are exemptions.Key thing is that they make far safer/more via commissions than they do prop trading as generally,they did ok in the good times but got wiped out in the bad.See 2008.Traders who are geared to work toward an annual bonus won't take the decisions that people on this thread might to exit the market and take a rest.Generally that means at some point you hit a wall and need taxpayers money to sort it.

Hence a lot of these complex theories about gold/silver manipulation are jsut that.To carry out a complex programme like that,you'd need a lot of entities with varying interests to align for a common cause and history shows that only happens for short periods of time.

Key thing here is who they are pumping gold to...................and it's not readers of this thread,which if you're here,means you won't be using their judgement or advice

21 minutes ago, Ponty Mython said:

That's why I referred to it as a reverse shoe-shine moment!

The reference was to complex for me at this time of the day lol.

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Nicolas Turgeon
15 hours ago, DurhamBorn said:

They have no understanding of leads and lags.Thats their main problem.They think Fed policy is loose,when its very very tight as well.Zero macro understanding.My friend called them macro tourists.

The Citi tip is for $2000 gold over the next two years. Pumping it up!

I saw the other day that David Hunter has upped his target for gold to $1800 this year, alongside targets of GDX to 45, GDXJ to 70, silver to 26. Does this still fit in with your roadmap @DurhamBorn ? A riskier bet from current levels.

I was thinking also that any further increase in dollar assets might be wiped out for us Brits by a slide down in DXY and the USD-GBP exchange rate.

Great work and discussions on hear guys. Always a great read.

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