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


spunko

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11 hours ago, Bobthebuilder said:

While we are talking platforms and divis i would like to ask the more experianced members like Harley and SP if they think automatic dividend reinvestment is a good idea. I do it and my platform dont charge me for it. Do i need to be enlightened?

I used to use it but stopped as it did not cover all my stocks and I now have better ways to time my purchases.  Plus I like to control my allocations better and wondered (never checked) if the prices went up a bit at reinvestment time.  Certainly has its place for some people though.

You're a builder and therefore already one of the most enlightened people on the planet!😉

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12 hours ago, Harley said:

Question is why do you hold RDSB?  I hold it for its divs so won't be selling it, especially if people think it will go up, down and then up again.  I'm not trading (trying to time things) and if I was, there's far better than RDSB.  I never mix the two objectives.  Both valid but very different.

I only have one objective. I hold it because I'm hoping to win some money from the bet I've staked on it. This could be via divis or capital appreciation, I hope it's both. If there was a chance I could make more profit via a trade in/out I'd consider it. I suppose that's the gambler in me that's always looking for value and not taking a wrong price. I doubt DB would describe himself as a trader, is he a macro investor? Though he's sold and then repurchased lots of shares during the life of his threads. I don't care whether people call me a trader, an investor or an idiot, as long as I'm making a profit.

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8 hours ago, sancho panza said:

I like how you accuse DB of being disingenuous and then without a hint of irony,write the second bit in bold.

As you say,anyone who bought at peak and held,got burned big time.If they lived long enough,they might have seen it come back,but likely most didn't.

Now that is ironic. Take a deep breath SP lol. Just have a little think why I didn't post the data (when I quite often do). Your second paragraph illustrates nicely. You're just rabbiting on without actually looking at the data objectively. Not the first time I see that with you

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19 hours ago, Durabo said:

It's insane. In the meantime, me and my wife are getting fucked because our savings get fuck all interest and inflation is eating away at it. The current system rewards fecklessness and punishes the sensible.

I feel your angst/annoyance which is why a) I started following this website (and the other that should not be spoken of), and b) decided to excel at every opportunity to starve the government of my taxes  via I.e. increased pension contributions, essential purchases only (and many secondhand)...and yes, even  elbow-to-elbow with the yellow sticker `vultures`.....

...as for APs? predictions above I.e. pensioners getting screwed over to protect the indebted via reduced taxation, what do people feel the answer will be to beat this?...I am assuming reduced taxation=reduced services/provision I.e. health/care services?...as a future OAP this safety net is the only thing keeping me in the UK, remove these and I may as well move to somewhere cheaper/warmer within the EU I.e Maderia/Malta/Canaries.

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8 hours ago, sancho panza said:

Also,if anyone knows of nay that allow multple currency accounts other than Intereactive Investors.I would apreciate it.

Most of the main brokers likely will outside of an ISA account, but then you pay a premium for it.

in a GIA account interactive brokers or Degiro would be your best bet.

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7 hours ago, Tdog said:

Is there anything similar for SIPPS, my costs are about £12 per deal with AJBell  when i buying somewhere between £600 to £1200 quids worth.

Same costs for my kids Junior Isa ive recently opened, think i need to look for a better deal on this as im only buying £500 worth at a time.

AJ Bell have a regular investor feature for £1.50 a trade. Just turn it off after each trade. Aj are one of the most competitively priced for a SIPP. I'm thinking of moving mine from II to them next tax year.

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17 hours ago, Majorpain said:

Both i think!  I still think 50% of UK construction companies are going to go out of business, we are up to about 10-15% at the moment so there is a long way to go.....

In a nutshell, the current market structure, with its focus on passive investing, has never been through a major downturn.  In that situation mechanically plowing money into an index, regardless of company fundamentals, will end badly when zombies start going out of business.   All im saying is there may well be a situation where the Index and its following ETF decouple as bankrupt companies drop out, with the ETF's money in them going to oblivion, whilst new companies join the Index.

Just because its never happened before doesn't mean it cant happen, double whammy of your money is trapped in the ETF whilst holdings within it are going to £0 (see Woodford!).

OK, but if say your companies are in say FTSE100 index tracker surely they would fall out of the index a long time before they implode I.e the index by its very nature is self-cleansing?...for other ETFs it could be a different story as per your meltdown.

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Napoleon Dynamite
13 hours ago, A_P said:

I myself decided to opt for one of the free lunches in investing and am investing in circa 6000 companies.

I've considered similar. There's plenty of evidence out there to suggest investing in index funds is the way to go.

It's where most of my assets are, but I have enough concern about that way of investing to think that supplementing it with a smaller contarian portfolio is a good idea. What was true for index funds in the past may not be true in the present/future given the asset bubble caused by the 10 years of low interest rates and money printing we've had.

Like I said, I've watched this thread from the start and have seen most things come to fruition. So have decided (now I'm able) to act upon things and start building, albeit whilst putting more into a (fund based) DB pension.

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50 minutes ago, Napoleon Dynamite said:

I've considered similar. There's plenty of evidence out there to suggest investing in index funds is the way to go.

It's where most of my assets are, but I have enough concern about that way of investing to think that supplementing it with a smaller contarian portfolio is a good idea. What was true for index funds in the past may not be true in the present/future given the asset bubble caused by the 10 years of low interest rates and money printing we've had.

Like I said, I've watched this thread from the start and have seen most things come to fruition. So have decided (now I'm able) to act upon things and start building, albeit whilst putting more into a (fund based) DB pension.

That's interesting. By my monitoring (from the beginning of the original thread) that isn't the case. There certainly has been some good timing on some particular calls earlier in the year. But then most don't have that good timing. I would welcome people to post their trading performance. After costs and effort I suspect only a few will have beaten the index.

An asset class performance blanket is worth looking at. So is the data around timing the market, when the gains happen etc.

"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." -Peter Lynch

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38 minutes ago, A_P said:

That's interesting. By my monitoring (from the beginning of the original thread) that isn't the case. There certainly has been some good timing on some particular calls earlier in the year. But then most don't have that good timing. I would welcome people to post their trading performance. After costs and effort I suspect only a few will have beaten the index.

An asset class performance blanket is worth looking at. So is the data around timing the market, when the gains happen etc.

"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." -Peter Lynch

Im currently up 36% this year, and went from a £0 portfolio 9 years ago to a 6 figure one today.  I don't consider myself good, with a bad habit of buying spikes that then crash downwards, but things always seem to work out in the long run.  Sitting in the bearish camp for a few years rather than losing 50% of portfolio value is a reasonable tradeoff IMO.

Ultimately the only thing that matters is the next recession, it should have gone under in 2016 but more QE injected into the system kicked the can another three years.  Since cycles are every 8-10 years, we are overdue one, Brown learnt that the hard way with no more boom and bust.

Time will tell if you are right and its a big fat nothing burger, or 2008 on steroids.  The worried noises from the CB's point me towards the latter, in which case I aim to double my money at a minimum.  The only thing that is certain is that the markets will get tested eventually.

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2 hours ago, MrXxxx said:

OK, but if say your companies are in say FTSE100 index tracker surely they would fall out of the index a long time before they implode I.e the index by its very nature is self-cleansing?...for other ETFs it could be a different story as per your meltdown.

Depends on how fast the ETF can sell I suppose, forced selling into a falling market has potential to become self sustaining as more people notice the drop and demand their money back from the ETF.  If the ETF runs out of money for redemptions and cant or wont sell at the current market prices its lock in time.  UK isn't so bad I don't think, and the regulators got a bite of the S**t sandwich with Woodford, so should be going through the rest of them making sure they don't have a load of shares listed in illiquid Guernsey.

Ultimately if the market is fairly valued and liquid it wouldn't be a problem, the US epic QE bubble markets are the opposite IMO and it will be great until one day it isn't.

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2 minutes ago, Majorpain said:

Im currently up 36% this year, and went from a £0 portfolio 9 years ago to a 6 figure one today.  I don't consider myself good, with a bad habit of buying spikes that then crash downwards, but things always seem to work out in the long run.  Sitting in the bearish camp for a few years rather than losing 50% of portfolio value is a reasonable tradeoff IMO.

Ultimately the only thing that matters is the next recession, it should have gone under in 2016 but more QE injected into the system kicked the can another three years.  Since cycles are every 8-10 years, we are overdue one, Brown learnt that the hard way with no more boom and bust.

Time will tell if you are right and its a big fat nothing burger, or 2008 on steroids.  The worried noises from the CB's point me towards the latter, in which case I aim to double my money at a minimum.  The only thing that is certain is that the markets will get tested eventually.

I'm not trying to be right. I'm trying to be objective. You're taking such a hardline and extreme stance (noted by your previous post to me). I don't disagree a downturn/recession or whatever you want to call is due. Nor that generally it is messed up out there. Why I'm on the forum after all. But then I'm open to the plates being spun and can's kicked down the road for however long. I like to question and probe to keep myself grounded and open to other eventualities. I actually get stuck into the data rather than just read a headline or skim an article.

Kudos on the returns for this year (it's been a good year for every asset class thus far). But how about the year before and the year before that etc. Data suggests sitting on the sidelines/bearish camp waiting for the downturn isn't a reasonable tradeoff. In fact it is quite the penalty. Yet you believe otherwise? Your aim is double the money? You could have doubled it already in the meantime. By the time the 50% downturn could happen, how much time and money has gone by? Why be so heavily invested in a single asset class/region that a downturn will even register as more than a time to get more assets cheaply?

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24 minutes ago, A_P said:

I'm not trying to be right. I'm trying to be objective. You're taking such a hardline and extreme stance (noted by your previous post to me). I don't disagree a downturn/recession or whatever you want to call is due. Nor that generally it is messed up out there. Why I'm on the forum after all. But then I'm open to the plates being spun and can's kicked down the road for however long. I like to question and probe to keep myself grounded and open to other eventualities. I actually get stuck into the data rather than just read a headline or skim an article.

Kudos on the returns for this year (it's been a good year for every asset class thus far). But how about the year before and the year before that etc. Data suggests sitting on the sidelines/bearish camp waiting for the downturn isn't a reasonable tradeoff. In fact it is quite the penalty. Yet you believe otherwise? Your aim is double the money? You could have doubled it already in the meantime. By the time the 50% downturn could happen, how much time and money has gone by? Why be so heavily invested in a single asset class/region that a downturn will even register as more than a time to get more assets cheaply?

Nil points for being objective, only thing that matters in markets is being right.  That's where the profit is. I don't get it 100% right but neither does anyone else!

I base my portfolio off my own research, even with the strong possibility of a crack up boom in the US markets i'm not taking the risk in buying.  I have no problem leaving that market to other people to take the risk of being bagholders/greater fools and will quite happily wait many years till it gets to a level im happy to buy if necessary.  Its better IMO to rotate to sectors which I feel comfortable with, and not the more risky ones (IMO) which could theoretically make more guaranteed profits.  Buying with the benefit of hindsight is very easy, but do you have any idea where the main stock markets will be in one years time?  Two years?  No-one does, thats what makes a market.

Whether that's a good idea in comparison to other people im not worried about, it beats the bank savings rate, and more importantly I can sleep at night.

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44 minutes ago, Majorpain said:

Nil points for being objective, only thing that matters in markets is being right.  That's where the profit is. I don't get it 100% right but neither does anyone else!

I base my portfolio off my own research, even with the strong possibility of a crack up boom in the US markets i'm not taking the risk in buying.  I have no problem leaving that market to other people to take the risk of being bagholders/greater fools and will quite happily wait many years till it gets to a level im happy to buy if necessary.  Its better IMO to rotate to sectors which I feel comfortable with, and not the more risky ones (IMO) which could theoretically make more guaranteed profits.  Buying with the benefit of hindsight is very easy, but do you have any idea where the main stock markets will be in one years time?  Two years?  No-one does, thats what makes a market.

Whether that's a good idea in comparison to other people im not worried about, it beats the bank savings rate, and more importantly I can sleep at night.

Where did I say I know where the markets will be? I'm not that arrogant. In fact I know more times than not I will be wrong and would have more luck throwing a dart at a cough (asset class blanket) cough. Therefore I'm doing what the data suggests I do, which is invest for the long term in a variety of asset classes at allocations that suit my risk tolerances. If you can show me data that illustrates how good your method is I'll happily take a gander

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https://www.zerohedge.com/markets/demystifying-global-us-dollar-shortage

"The dollar goes up, and collateral draws tight, global trade suffers not because of trade wars or the cost of US goods relative to alternatives but because the lack of sufficient dollar availability slowly squeezes the life out of global demand."

 

"A reserve currency is an intermediator, more than a buffer between national systems often with very little in common. Starting with currency denomination and monetary terms. The example I often use is an export firm in Sweden obtaining goods in that country to be shipped to Japan for final use. The trade can certainly happen without a global reserve, but not efficiently…

If, however, both sides can use a currency that is common in both areas it then obviates the need for either of their national denominations. Should Japanese as well as Swedish banks both hold balances of this middle currency as a regular part of their business, no special concessions required, then trade becomes easy and (very nearly) free.

The downside is that this requires a whole lot of that middle currency to be made available practically everywhere."

 

 

 

I found this interesting (maybe others will too) and pertinent to DB's thesis that the lack of dollar liquidity is what will cause the debt deflation and the cycle to turn.  I hadn't realised the significance  of the dollar being the global reserve currency.

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Whilst thinking about liquidity I have a question for DB or anyone else.  In the last cycle QE all went to the banks and found it's way into assets primarily housing in the UK and stocks in the US but in the next round of massive QE if DB is right why and how will it go into the real economy?  In the last one banks were supposed to lend to small businesses but somehow that never really happened.  Why will it be different this time?  Is it because the money will go to the government for infrastructure projects and the banks won't get any so none of it will end up as mortgage lending this time.

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On 14/09/2019 at 20:02, Napoleon Dynamite said:

Just wanted to say thanks for the thread.  I've not commented much, or even invested off the back of it until recently, but I've followed from the start and tried to learn.

My cashflow's got a bit better lately and I've got some fundamentals in place (10 year low rate fix on mortgage, cars paid off, emergency fund etc.) So I'm now in a place to start trickling money in and building.

Plan is to save hundreds a month, then once I've got £1200 buy a share.  Spray and pray into FTSE 350 shares with information taken from this thread.  Two shares per sector.  Holding them long term.  Sound about right?

iweb looks like the best bet for me for a dealing account.  Will use an ISA to start with, then once I've built up a start using a LISA/SIPP for the Tax Relief.

Actually had a few thousand in a SIPP in Vanguard Life Strategy that I wasn't paying much attention to.  So sold that and I started with VOD and CNA last month, so far so good.  SIPP is HL and I think the fees are terrible for a small amount, will sort that out in future.

Will keep up to date with progress, assuming all goes to plan.

I started buying shares in about March and have bought reflation shares for the long term and have bought £700 at a time with AJ Bell at £9.95 each in a stocks and shares ISA.  I probably wouldn't have even started without this forum! I also bought one or two smaller amounts in a couple of miners.  The dividends I've received have gone into the cash held with the broker account and as it builds up and/or I add to it I can buy more shares.  This probably seems pathetic to those on here who've been at it for longer and have much more to play with but I figure you have to start somewhere:D

In hindsight I could have waited for the likes of CNA/VOD etc to start to show signs of life but even they are starting to come good!

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The global head of precious metals trading at JPMorgan, one of the biggest bullion banks, has been charged by US prosecutors with running an eight-year conspiracy to manipulate the global precious metals markets and defraud its customers

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Just now, DoINeedOne said:


The global head of precious metals trading at JPMorgan, one of the biggest bullion banks, has been charged by US prosecutors with running an eight-year conspiracy to manipulate the global precious metals markets and defraud its customers

Gotta have a link with this kind of quote, surely!

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11 minutes ago, Noallegiance said:

Gotta have a link with this kind of quote, surely!

DoJ charges three JPMorgan metals traders with market manipulation

https://www.ft.com/content/2d7be5a6-d87a-11e9-8f9b-77216ebe1f17

For those who can't see behind the paywall

US prosecutors uncover ‘massive, multiyear scheme’ to defraud customers

Henry Sanderson in London 48 minutes ago

The global head of precious metals trading at JPMorgan, one of the biggest bullion banks, has been charged by US prosecutors with running an eight-year conspiracy to manipulate the global precious metals markets and defraud its customers.

Michael Nowak, 45, a JPMorgan veteran who ran the bank’s global precious metals trading desk, was charged along with two traders of a “massive, multiyear scheme to manipulate the market for precious metals futures contracts and defraud market participants”, assistant attorney-general Brian Benczkowski said. The indictment alleges the three traders engaged in “widespread spoofing, market manipulation and fraud”, while working at JPMorgan. They placed orders they intended to cancel before execution in an effort to “create liquidity and drive prices toward orders they wanted to execute on the opposite side of the market”, it said. They placed deceptive orders for gold, silver, platinum and palladium futures contracts on the New York Mercantile Exchange, it alleges. Along with HSBC, JPMorgan is one of the banks that dominates global flows of gold and silver trading. JPMorgan declined to comment.

 

also on twitter

 

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26 minutes ago, DoINeedOne said:


The global head of precious metals trading at JPMorgan, one of the biggest bullion banks, has been charged by US prosecutors with running an eight-year conspiracy to manipulate the global precious metals markets and defraud its customers

Hope he kept that comfort letter from you know who?

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25 minutes ago, janch said:

Whilst thinking about liquidity I have a question for DB or anyone else.  In the last cycle QE all went to the banks and found it's way into assets primarily housing in the UK and stocks in the US but in the next round of massive QE if DB is right why and how will it go into the real economy?  In the last one banks were supposed to lend to small businesses but somehow that never really happened.  Why will it be different this time?  Is it because the money will go to the government for infrastructure projects and the banks won't get any so none of it will end up as mortgage lending this time.

Governments mostly.They will invest or they will give better terms to companies to build.Take BT,they would allow them to make say 3% above inflation on fiber roll out instead of 1%.Remember this will be global,so all currency will be being inflated at the same time.That will feed into commod price increases and that will trigger a run in inflation.

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28 minutes ago, janch said:

I started buying shares in about March and have bought reflation shares for the long term and have bought £700 at a time with AJ Bell at £9.95 each in a stocks and shares ISA.  I probably wouldn't have even started without this forum! I also bought one or two smaller amounts in a couple of miners.  The dividends I've received have gone into the cash held with the broker account and as it builds up and/or I add to it I can buy more shares.  This probably seems pathetic to those on here who've been at it for longer and have much more to play with but I figure you have to start somewhere:D

In hindsight I could have waited for the likes of CNA/VOD etc to start to show signs of life but even they are starting to come good!

Everyone started like that.My first shares were bought with money i saved from a paper round.Whatever happens it likely you will pick up a life long dividend income stream.Doesnt matter if its £100 a year or £20k a year,its income no boss has control over.

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