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

[Durabo]

35 minutes ago, DurhamBorn said:

Yes you could.I paid my house of with my BAT shares i bought for £7k,house was £50k.The way to look at the next cycle is everything going backwards from where we are at 4x the speed back to the early 80s.

If i was going to do it again,id look to buy perhaps 1/3rd the value in a mix of PM miners and/or oil and gas companies.Quality mid sized ones.Re-invest the dividends and hold until around 2026/7 then sell and pay off the house.

The risk is you cant meet the mortgage payments in the period of course,but always ways around that like letting rooms etc.

This is pretty much the plan I've discussed with my wife. I've been slowly drip feeding. Do you have any names you would suggest looking into for each sector?

[Harley]

2 hours ago, DurhamBorn said:

Yes on the HEX through Hargreaves.I need to go through a lot of the stocks on other markets,but simply havent had the time,hopefully i will soon.

I never buy on charts Harley,i buy from my cycle and liquidity road maps,though i do have some sentiment numbers i use on first ladder buys.I bought all the reflation stocks i put up a few pages back all on the same day and within a few minutes.I simply went through them buying.Some i didnt even go into their balance sheets too much.I look at sectors,then decide on a few companies.Iv actually sold a couple already (oil companies) and taken profits as my road map says oil can go much lower.I dont usually trade at all,its just at cycle turns we get a lot of large swings.

Thanks for explaining but I'm now totally lost how you can be precise with say an initial ladder for Komatsu at 13% lower than the current price from just liquidity and cycle roadmaps!  One seems very micro and the others macro.  Maybe I don't understand the terms, being more used to them in macro economics.

[sancho panza]

3 hours ago, DurhamBorn said:

Yes on the HEX through Hargreaves.I need to go through a lot of the stocks on other markets,but simply havent had the time,hopefully i will soon.

I never buy on charts Harley,i buy from my cycle and liquidity road maps,though i do have some sentiment numbers i use on first ladder buys.I bought all the reflation stocks i put up a few pages back all on the same day and within a few minutes.I simply went through them buying.Some i didnt even go into their balance sheets too much.I look at sectors,then decide on a few companies.Iv actually sold a couple already (oil companies) and taken profits as my road map says oil can go much lower.I dont usually trade at all,its just at cycle turns we get a lot of large swings.

I msut say,I'd love oil to go lower.We're laddering into oil services,potash,remx,xop/fcg by price and then laddering in by calendar weeks on  big oil(over ten weeks).If we get a big down turn in WTI then we'll be moving from 14% of portfolio value in it to  20% ++.

Shame to see SLB rocket after we'd discussed it but in this market things are moving fast.XES and OIH and XLE/XOP all had good early week runs....

5 hours ago, Castlevania said:

It’s the cash flow statement you should be looking at.

Point taken CV but I think there are problems with Hills top line going forward which preempt moving onto the cash flow.

4 hours ago, stokiescum said:

That’s a given 

Legend Stokie.......................

3 hours ago, DurhamBorn said:

I see oil and gas huge winners in the next cycle,oil will go over $200,probably over $300.However i think in the deflation ahead it will get smacked down.Demand will fall quick and fast,too fast almost.People need to remember that what the ECB was really saying today was we know deflation is upon us.The market thinks rates will be minus in 2025 in the EU.They will be 5%+ and on their way to double figures.

Absolutely,jsut when they're all thinking inflation is finsihed for ever.....................................

[sancho panza]

1 hour ago, Harley said:

Thanks for explaining but I'm now totally lost how you can be precise with say an initial ladder for Komatsu at 13% lower than the current price from just liquidity and cycle roadmaps!  One seems very micro and the others macro.  Maybe I don't understand the terms, being more used to them in macro economics.

He's working best guesses I suspect.Everyone is,including the ECB/FED.I trade off charts a lot.You'd be shocked at how quickly my decisoins are made off maybe four indicators.But when I see a set up I like....I'll take my chances

What genreally goes on in this thread is we pick asset classes for exposure and then pick a few companies that might mimic the asset class.It's not a science.

[King Penda]

I must admit I love watching you rich guys say how you make cash and your plans for the future but many of you are takeing gambles which I love to see I hope you all win

but ironicly I best most of you by simply

takeing a lodger in if we are simplyfying matters 

[sancho panza]

12 minutes ago, stokiescum said:

I must admit I love watching you rich guys say how you make cash and your plans for the future but many of you are takeing gambles which I love to see I hope you all win

but ironicly I best most of you by simply

takeing a lodger in if we are simplyfying matters 

it's all gambling stokie.I've lsot on plenty of my punts

rich is a relaitve term.I've had two bottles of cider tonight and I feel mega wealthy as a result.westons cider 3 for a fiver from the co op.who needs a pad in tuscany to feel this good.????

[Talking Monkey]

5 hours ago, stokiescum said:

So in theory you could go for a 15 year mortgage at fuck all interest potentially see a 40% house price crash but instead of overpaying you buy gold wait for that to increase sell it and buy oil at its lows then just sit there and wait for your assets to outstrip your loses on the house em

Bloody good plan Stokie

2 hours ago, sancho panza said:

it's all gambling stokie.I've lsot on plenty of my punts

rich is a relaitve term.I've had two bottles of cider tonight and I feel mega wealthy as a result.westons cider 3 for a fiver from the co op.who needs a pad in tuscany to feel this good.????

The simple things in life SP are best

[Bobthebuilder]

3 hours ago, sancho panza said:

it's all gambling stokie.I've lsot on plenty of my punts

rich is a relaitve term.I've had two bottles of cider tonight and I feel mega wealthy as a result.westons cider 3 for a fiver from the co op.who needs a pad in tuscany to feel this good.????

Im a lucky fucker, no debt, no mortgage. Had 8 cans of Lidl Perlenbacher tonight with Pollock fish £2,49 for 4 and frozen peas and crinkle chips, i feel like a rich man here at 3.24am. dont have to go to work tomorrrow, suits me fine.

[Harley]

5 hours ago, sancho panza said:

He's working best guesses I suspect.Everyone is,including the ECB/FED.I trade off charts a lot.You'd be shocked at how quickly my decisoins are made off maybe four indicators.But when I see a set up I like....I'll take my chances

What genreally goes on in this thread is we pick asset classes for exposure and then pick a few companies that might mimic the asset class.It's not a science.

To me liquidity and cycles work would help identify sectors and industries from which one could then pick representative stocks but an entry price for a stock at 13% less than the current price suggests something different is in use. As in your case - you may make quick decisions but you still use maybe four indicators.

[DurhamBorn]

7 hours ago, Harley said:

Thanks for explaining but I'm now totally lost how you can be precise with say an initial ladder for Komatsu at 13% lower than the current price from just liquidity and cycle roadmaps!  One seems very micro and the others macro.  Maybe I don't understand the terms, being more used to them in macro economics.

Affects of the Yen on that one.I expect dollar liquidity to take them down more as people wake up to a stronger Yen.I do lots of cross market work across my road map.The transports for instance as an easy example are due to the costs of car use shooting higher while they are hedged for 4 years worth of fuel,

[DurhamBorn]

5 hours ago, sancho panza said:

He's working best guesses I suspect.Everyone is,including the ECB/FED.I trade off charts a lot.You'd be shocked at how quickly my decisoins are made off maybe four indicators.But when I see a set up I like....I'll take my chances

What genreally goes on in this thread is we pick asset classes for exposure and then pick a few companies that might mimic the asset class.It's not a science.

Exactly that.Im not interested in the best bacon sarnie maker in Mecca.I have the sectors i like,i avoid anything lower than middle sized companies (apart from the odd PM miner) and i buy a spread of them.I go for companies directly affected by the area.Babcock got the frigate order etc,they are direct.The likes of Cargotec though i bought because they build a lot of machines for forestry etc,they will be selling into a none price sensitive market that is quickly upgrading its fleet.

Some of the companies i buy take like you say a few minutes of research.However the road map behind the sector choice and cross market work takes years,and actually decades of work.

[Harley]

6 minutes ago, DurhamBorn said:

Affects of the Yen on that one.I expect dollar liquidity to take them down more as people wake up to a stronger Yen.

Good morning!🙂

[DurhamBorn]

1 minute ago, Harley said:

Good morning!🙂

Early worm and all that.

[DurhamBorn]

5 hours ago, stokiescum said:

I must admit I love watching you rich guys say how you make cash and your plans for the future but many of you are takeing gambles which I love to see I hope you all win

but ironicly I best most of you by simply

takeing a lodger in if we are simplyfying matters 

My partner rents two rooms out to lodgers instead of renting her house out to a full tenant.That way she gets full tax relief and we can boot out any idiots without any notice if needed.It works out she makes exactly the same money after the fact she doesnt have to pay tax.She doesnt live there of course,but does.

[Castlevania]

5 hours ago, sancho panza said:

it's all gambling stokie.I've lsot on plenty of my punts

rich is a relaitve term.I've had two bottles of cider tonight and I feel mega wealthy as a result.westons cider 3 for a fiver from the co op.who needs a pad in tuscany to feel this good.????

Pro tip. Get an NUS card (you can lie that you’re studying) and get 10% off everything in the Co-Op. you could have saved 50p!

[Harley]

Crickey, this thread has it's own breakfast club!🙂

[Castlevania]

6 hours ago, stokiescum said:

I must admit I love watching you rich guys say how you make cash and your plans for the future but many of you are takeing gambles which I love to see I hope you all win

but ironicly I best most of you by simply

takeing a lodger in if we are simplyfying matters 

You’re just sweating your asset. But yeah taking in a lodger is easy money as long as you get along. It’s painful if you don’t, but I suppose you can always give them the boot with minimal notice if that’s the case.

3 minutes ago, DurhamBorn said:

My partner rents two rooms out to lodgers instead of renting her house out to a full tenant.That way she gets full tax relief and we can boot out any idiots without any notice if needed.It works out she makes exactly the same money after the fact she doesnt have to pay tax.She doesnt live there of course,but does.

Is there a third bedroom which she designates as her own?

[King Penda]

1 hour ago, DurhamBorn said:

My partner rents two rooms out to lodgers instead of renting her house out to a full tenant.That way she gets full tax relief and we can boot out any idiots without any notice if needed.It works out she makes exactly the same money after the fact she doesnt have to pay tax.She doesnt live there of course,but does.

I’ve thought of that but I can’t make the maths work unless I buy a 3 bed or a 2 bed with a a room  to the side downstares I’ve got a friend that boarded his loft out however and rents his 3 bedrooms out but I suspect he has a gambling problem he is still interest only and never has any cash

[King Penda]

F

[dgul]

1 hour ago, DurhamBorn said:

My partner rents two rooms out to lodgers instead of renting her house out to a full tenant.That way she gets full tax relief and we can boot out any idiots without any notice if needed.It works out she makes exactly the same money after the fact she doesnt have to pay tax.She doesnt live there of course,but does.

I'm surprised more people don't do this.  But people are often stupid when it comes to tax.

[DoINeedOne]

Big Six energy provider SSE has agreed to sell its household supply arm to smaller rival Ovo Group in a £500 million deal.

Ovo’s planned takeover of SSE’s energy services business is expected to complete later this year or early next year.

The deal comes after SSE was forced to scrap its merger with Big Six rival npower last December after the Government’s energy price cap sent shockwaves through the industry.

 

If i remember correctly @DurhamBorn wasn't this what you wanted for them to offload their household supply arm

[Loki]

14 hours ago, Castlevania said:

I bought some Cresud the other week after the Argentine peso collapsed. One for the brave or foolish. They own farmland and farms in South America which I like; plus a big stake in an owner of Argentine shopping malls which I don’t. Again one for the brave or foolish.

Sounds like a good call really.  Let us know how you get on!

[feed]

Stolen from off topic.  https://www.telegraph.co.uk/news/2019/09/13/army-could-phase-fossil-fuels-attract-ecofriendly-recruits-senior/ 

I’ve an interest in EV’s in general as I work automotive.  But interesting from a infrastructure perspective.  Electrification of the Military / Government assets. 

And quote form the Frankfurt motorshow 

With electrification fast becoming the mainstream, we are substantially increasing the number of electrified models and powertrain options for our customers to choose from to suit their needs,” said Stuart Rowley, president, Ford of Europe. “By making it easier than ever to seamlessly shift into an electrified vehicle, we expect the majority of our passenger vehicle sales to be electrified by the end of 2022.”

Someone is going to make a big pile of money building the EV infrastructure.   
 

[Democorruptcy]

10 hours ago, sancho panza said:

I msut say,I'd love oil to go lower.We're laddering into oil services,potash,remx,xop/fcg by price and then laddering in by calendar weeks on  big oil(over ten weeks).If we get a big down turn in WTI then we'll be moving from 14% of portfolio value in it to  20% ++.

What do our resident oil experts think about this one? Suggests an oil and gas glut.

Whenever I read things like that it makes me want to do the opposite, I don't trust them. Though it could help prices to fall at least initially as per DB's expectations anyway. 
 

Quote

 

The most alarming comments for members of Opec, especially the cartel leader, Saudi Arabia, came yesterday from the International Energy Agency in its monthly Market Report which warned of a growing oil surplus which will get worse next year.

...

One paragraph in the McKinsey report demonstrates the emerging power of LNG in the global energy market. It reads:

“Over 100 LNG projects totally 1100 million tons a year of capacity are competing to fill the 125 million tons a year supply gap by 2035; many of the marginal projects are from the U.S.”

With potential supply close to 9-times bigger than the forecast in demand growth it is likely that many of the proposed LNG projects will not proceed, but its also possible that too many will be developed, crowding the market and killing the LNG price.

In other words, not only is there an oil glut today but there’s the possibility of a gas glut tomorrow, which is very much not something Opec members want to hear about.

Opec slides closer to collapse as an oil glut overpowers the oil price

 

 

[VeryMeanReversion]

3 hours ago, dgul said:

I'm surprised more people don't do this.  But people are often stupid when it comes to tax.

If you don't live there as your main residence, you are not entitled to claim the rent-a-room allowance. The tenants have much greater rights than a lodger if they can show you don't actually live there.  If either of the lodgers knew the laws then they can make life very difficult for the non-resident landlord and shop them to HMRC since tax-is actually payable on the rental income.

Having two lodgers means HMRC can consider that you are "running a lodging house" so you lose your PRR exemption i.e. liable for CGT on a house sale.

Some neighbours are converting their outbuildings to a new dwelling for their kids or elderly relatives. They are unaware that this triggers an immediate CGT liability (even if it's a gift!).  They told me its CGT exempt if they give it away but I've checked the rules very carefully.

I'll be doing a bit differently by building first, moving in, nominated as primary residence then moving back to old house, then give it away say 12 months later, there is no CGT due.  This will save me a ~£100K tax bill. 

 I spend a lot of time reading up on this sort of stuff since the tax savings are enormous. e.g. some rough numbers....

IHT simple planning that will save £250K+
SIPP that will save me £400K+ (income tax and NI)
Council-tax, planning-permission loopholes and CGT avoidance will save me ~£150K.
EMI options that could save me £160K (or be worth nothing)
Rent-a-room - say £78K income over 10 years, save £30K tax (@40%)
 

That's ~ £1M in tax saved long-term, completely legal and using HMRC approved schemes, no need for trusts or dodgy accountants.  That's more than 25 years of my net income saved by learning the rules of the game.  

(Biggest risk to the above is Corbyn getting in)