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


spunko

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On 03/01/2020 at 20:32, MrXxxx said:

Anyone have experience of a HSBC Invest Direct share trading account?...I don't plan on a lot of trading (more buy and hold), so a HL account with low trading fees is not necessary, and the yearly cost of the HSBC account is only £42, plus £10.50 per trade.

Moved this line of thought/question over to a new thread in the `Investments` section so that I don't `railroad`this thread with my questions. Would appreciate if some of you took a look to confirm or correct my understanding.

Thanks :-)

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8 hours ago, sancho panza said:

EXK and GPL look like certain buys to me,Both beaten down of late.Maybe time for us to really lever into cheap silver plays??

GPL sure looks cheap compared to their past valuations, but it also looked cheap half a year ago, and half a year before that. At some point one has to wonder whether it's constantly cheap because the market is dumb, or maybe it's simply not the same company it used to be. GPL is an absolutely shite outfit that deserves to go bust and their price reflects that possibility. Obviously, it doesn't mean they won't 5-bag but risks are plentiful. 

This post by Mark highlights their most recent achievements, and the last item on that list is a straight-out criminal behaviour. 

https://incakolanews.blogspot.com/2019/11/great-panther-gprto-gpl-leopards-dont.html?m=1

EXK is a problem for me since they lost El Cubo and I'm not sure how they're going to replace it short term. Their 2020 guidance might be a rude wake up call to some holders (and could provide a more attractive entry point). 

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@Harley. Interesting hearing re Sainsbury's.  I don't really have experience with Argos but it is a good sign that there strategy seems to be well run at the least.  The whole nectar rewards scheme recently had a massive overhaul and personally feel it could be bringing customers back or retaining more (that's totally anecdotal ie me). Weekly they send you personalized offers where you get a large bump in points for buying one of the products that you likely bought before.  Very dynamic and responsive I feel - there obviously using the tech / tracking out there quite aggressively.

Likewise those damn vouchers for money off coupens I try and play a bit with, I'm sure if I shopped regular there I wouldn't be getting any.

And while Tesco seemed to have tried taking on the discounters head on with the short lived jack's label Sainsbury's didn't exactly..... but I've noticed some products creep in recently like the Nespresso compatable pods which are priced similar to Lidl (well cheaper after other discounts taken into account). Seems clever all round to me.

Tesco mobile I'll say is the best mobile operator I've used though... Quick UK based support if needed, good website, lots of options and runs on 02 which is by far best coverage here.  That's one service that had consistently being getting cheaper for me over the years.  End of last year after my 12 month contract expired noticed they had a sale on so was able to once again reduce (with the f&f employee discount I'm now paying £10.80 for 10gb whereas last year was closer to £13)

Just been to the large ish Tesco tonight still some cheapish chocolate not much else but did stock up on next year's gift wrap decorations cards etc for pennies

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25 minutes ago, Tdog said:

Why is the price of Palladium rocketing?... if it looks like a bubble and all that

https://www.bullionbypost.co.uk/palladium-price/alltime/ounces/GBP/

 

image.png.c8280fea72e795c834b285eb9db33252.png

I assumed because it’s used in petrol cars, and after the Volkswagen dieselgate affair people no longer want diesels. However, that’s probably way too simplistic a view.

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sancho panza

Incredible that our CB overlords could have got it so worng for so long.We've been discussing this here and on tos for a looong time.

@Harley for explaining to me what behavioural economics was/is

 

image.png.ccb60910a98998b2cb86159ac80cd6a0.png

 

 

 

 

 

 

8 hours ago, DurhamBorn said:

I havent looked at the sector at all lately as im working on asset allocation mostly now.Il be honest im not really looking for big capital gains in that im happy with my capital position,im more looking for companies that can increase their divis through the next cycle.That will see capital growth as well of course.

A quick look at a few indicators though says the sector is over bought and might correct and be a better buy in a few months.If so i will re-visit then.I wont sell my silver stocks though as i think we might see silver at $26 within 12 months,but there is a big risk is corrects in a big deflation so im in the most leverage plays,but lots of room to increase later again.

 

 

yeah I was looking at XAu and HUI both look a little high.We've still got another few per cent I'd like in there though.keen not to overpay

Hoping for a drop in S&P to take oilies down for a month or two before Powell backs up the truck...

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sancho panza
7 hours ago, Barnsey said:

Unfortunately prices in the decent parts of the Midlands quite a bit more than that DB, but I have seen a couple on for £220k which have been sat on the market for a while and have potential.

 

I'm only a couple months into the 6 month rental contract, but the house buying process can take many months right? Might start low balling offers out there just to gauge the market, but my instinct is still telling me it's too early. Prices aren't bonkers here, I reckon about 15% above inflation since the post crash bottom, so i'm looking for the same off really before jumping in. My worst case fear is that prices just stagnate until the powers that be juice things up again. 

 Me and Mrs P rent to the bemusement of our circle of friends.But I'd rather build a portfolio of shares to pay the rent and have some left aside than hoe a shedload of capital into an overpriced hovel in Leicester.

We rent on a gross yield of 3.5%,possibly less given the cost of housing here.Next rung up the ladder we can rent on gross yields of 2-2.5%Why buy it at that price?

There are issues with security of tenure and choice but there benefits to being able to leave quickly if the neighbours are nosiy or the area goes to the dogs.

If our gross yield was 7% + I'd have a relook but Mrs P gets it.If we build a  portfoilio with decent income,we use the divi's to pay the rent whereever we are.

Having said all that,if 25 year fix mortgages came in,I might reconsider.

 

Whereabouts are you Barnsey?

 

 

On a separate note,mrs P was worried about having to stay at her current place due to the final salary scheme but I pointed out that while they're nice,there's counterparty risk and if you go welsewhere earn more and stick it in some decent divi stocks,you can leave those stocks to your kids.Whereas pension money is gone when you both snuff it.

It's how you look at things I guess.

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sancho panza
1 hour ago, kibuc said:

GPL sure looks cheap compared to their past valuations, but it also looked cheap half a year ago, and half a year before that. At some point one has to wonder whether it's constantly cheap because the market is dumb, or maybe it's simply not the same company it used to be. GPL is an absolutely shite outfit that deserves to go bust and their price reflects that possibility. Obviously, it doesn't mean they won't 5-bag but risks are plentiful. 

This post by Mark highlights their most recent achievements, and the last item on that list is a straight-out criminal behaviour. 

https://incakolanews.blogspot.com/2019/11/great-panther-gprto-gpl-leopards-dont.html?m=1

EXK is a problem for me since they lost El Cubo and I'm not sure how they're going to replace it short term. Their 2020 guidance might be a rude wake up call to some holders (and could provide a more attractive entry point). 

Points taken K but I can't get over Hecla and Couer.

My plan is to take some of the profits thus far and spread them thinly around all the down and outs with a little bit of research to weed out the absolute dogs.

Only need one ten bagger to pay for the rest.With a rising tide lifting all boats,some of the dogshit shares could realy deliver.

Youre right on GPL but I'm going to watch it for a sub 30c price tag.

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9 hours ago, Barnsey said:

Had some post apocalyptic nightmares last night about home ownership through the great depression of 2028. Led me to seriously start thinking whether it's best to buy something small I can pay off in 7 years, or buy what I'd like to consider as THE house (20-25 year mortgage), on the longest fix possible. Currently 10 years but there are already narrative signs that longer fixes will be made available when the housing market is on it's arse, especially with global central banks pumping insane QE into the system to try to climb out of the deflationary bust (this year?).

Well that's `one side of the coin` regarding house purchase, but what about the other side I.e cash buyer, what do they do with/park their capital whist they are waiting for the market to deliver?...place it in equities and they may be a forced seller when they need the cash, bonds/guilts poor value, saving accounts (erosion)...physical PM?...thoughts/opinions?

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18 minutes ago, sancho panza said:

Points taken K but I can't get over Hecla and Couer.

My plan is to take some of the profits thus far and spread them thinly around all the down and outs with a little bit of research to weed out the absolute dogs.

Only need one ten bagger to pay for the rest.With a rising tide lifting all boats,some of the dogshit shares could realy deliver.

Youre right on GPL but I'm going to watch it for a sub 30c price tag.

I understand the approach. If we get $25 silver then whoever is still getting ounces from the ground will be flying high, so it's tempting to pick 'em up while they are still at their lowest. Still worth doing some DD, as you say, to eliminate those that are already on a death spiral.

However, don't beat yourself up too much on the opportunities missed, unless you had a plan to buy and sell at certain levels and didn't follow through. If you were to buy Coeur @2.85 without a specific price target, what are the chances you'd still be holding any of it, instead of banking your profit somewhere along the way? 20/20 hindsight and all that.

My only regret is WDO, as I had a very well laid out plan to stay with my 100% allocation and sell once it 5-bags (which it probably will in H1). All I had to do was to stick to the script it and I'd be buying a house this year. Instead, I gave in to my gambling demons and started chasing quick buck on some under-researched risky plays. That one is the only one that hurts every day. All the other missed chances look dramatic on the chart, but I know there's no way I'd be able to pick the bottom and the top with any sort of accuracy.

 

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Transistor Man
On 03/01/2020 at 22:41, Sideysid said:

Further to my earlier post I wanted to ask opinions on BOSCHLTD after reading another thread on here.

https://www.bbc.co.uk/news/science-environment-50873047

Obviously a massive company,  but the charts are looking interesting after bottoming in October and no debt apparently??

 

Bosch is an awesome engineering company. But It’s fairly odd one, being 92% owned by the Robert Bosch Foundation/ charity. 

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3 hours ago, MrXxxx said:

Well that's `one side of the coin` regarding house purchase, but what about the other side I.e cash buyer, what do they do with/park their capital whist they are waiting for the market to deliver?...place it in equities and they may be a forced seller when they need the cash, bonds/guilts poor value, saving accounts (erosion)...physical PM?...thoughts/opinions?

Good point, I guess I should research how high mortgage rates affected default rates in 70s and late 80s? Surely pay rises would have to at least attempt to keep up with the possible double digit inflation later this decade? Part of my rationale for going for a more modest home is to minimise losses over the next few years.

We’re in Stafford at the moment @sancho panza

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8 hours ago, Noallegiance said:

I only have roughly a decade for reference from my own watching of gold, but I don't recall a $50 gap up before in said timeframe.

Just a bit of geo-political turmoil, strong possibility it drops back down for a while if tensions ease.

If Tomahawks start flying or the Iranians put mines on tankers again all bets are off however.

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21 hours ago, Harley said:

he Argos model is a jewel.  Excellent back end logistics.  Cruise their website with loads of reviews, etc and then go to store right then, later or the next day to collect.  Along with them being a RM, etc collection point.  Ok not pure on-line but maybe there's a place for that, especially over a normal store with iffy stock availability.  Soften the Soviet style collection process, think laterally, add a cafe, staff with nice looked after people, etc and they could could survive long after the rest as a "hub" retailer.

Interesting concept...perhaps a role for the failing Debenhams or HoF stores that all seem to have restaurants, a store within a store hybrid or an alternative angle for (doon to be struggling?) coffee chains?

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11 hours ago, Noallegiance said:

I only have roughly a decade for reference from my own watching of gold, but I don't recall a $50 gap up before in said timeframe.

See my previous post, looks like the price shoot up to $1569.25 during the last few minutes of Friday's trading and most brokers didn't catch that move.

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Bricks & Mortar
58 minutes ago, BearyBear said:

See my previous post, looks like the price shoot up to $1569.25 during the last few minutes of Friday's trading and most brokers didn't catch that move.

Wow.  All weekend Kitco were displaying 1552. something.

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18 hours ago, Tdog said:

Why is the price of Palladium rocketing?... if it looks like a bubble and all that

https://www.bullionbypost.co.uk/palladium-price/alltime/ounces/GBP/

 

image.png.c8280fea72e795c834b285eb9db33252.png

Amazing rise and I wish I had some!  Accordingto google it's rare and is mainly used in catalytic converters but does this really explain the rise?  No wonder theft of catalytic converters has risen recently.  I hadn't realised the connection.

One I am kicking myself over is Sibanye as I sold when the price started rising and since then it's gone up a lot more.O.oAll my other miners eg FRES are doing nothing.

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1 hour ago, janch said:

Amazing rise and I wish I had some!  Accordingto google it's rare and is mainly used in catalytic converters but does this really explain the rise?  No wonder theft of catalytic converters has risen recently.  I hadn't realised the connection.

One I am kicking myself over is Sibanye as I sold when the price started rising and since then it's gone up a lot more.O.oAll my other miners eg FRES are doing nothing.

I have physical palladium coins (from when the price was closer to £600). But not enough and wish I had purchased more.

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leonardratso
23 minutes ago, Errol said:

I have physical palladium coins (from when the price was closer to £600). But not enough and wish I had purchased more.

unless of course had the price tanked, the other way then youd have wished youd bought less.

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Bricks & Mortar
21 minutes ago, Tdog said:

I made a handsome profit on it but sold too early. Live and dont learn is my motto.

Surely it cant all be down to catalytic converters as car sales are going through the floor.

I think it is. 
Although car sales are down, catalytic converters are up.   China introduced new laws on emissions this year, started last week.
Then there's the lag before a vehicle needs a replacement catalytic converter.  If car sales are down, its because we're keeping our old ones, and statistically, doing more maintenance before they're scrapped, i.e more chance of needing a replacement cat.
The price of palladium even becomes self-reinforcing, as cats are stolen from commercial vehicles for scrap, leading to even more demand.

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UnconventionalWisdom
On 05/01/2020 at 11:36, Harley said:

I think this comment has long legs.  God help things if people ever understood the concept of "opportunity cost"!  That is, the true cost of earning some of these (in reality so-so) salaries.  Some folk I know are back on the job market and I'm hearing of some more mid to senior predominantly home based jobs with some very attractive companies oozing the smarts.  Jobs where you have to get out and about (good for you) but can easily do that from a home base of your choosing.  Good money too, fantastic if you take these opportunity costs into account.  It's a mark of a company that can do this because they know they have a genuinely motivated workforce versus those who do the talk but honestly know they can't let go 'cause it ain't real.  A very attractive proposition, although in the long run I would be concerned as it may increase the power of the corporates to "hire at the gate".      

A mate of mine does this and said he would never go back to an office job. He is strict with timing, but says he gets so much more done. 

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