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


spunko

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2 hours ago, M S E Refugee said:

I know nothing about Exxon but I don't like BP borrowing money to pay dividends, that's just silly! I'm glad I haven't bought them.

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Don Coglione
2 hours ago, M S E Refugee said:

"Westman, whose firm is the most successful portfolio investor in Russia and the former Soviet Union..."

 

Completely impartial then...

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M S E Refugee
7 minutes ago, Knickerless Turgid said:

"Westman, whose firm is the most successful portfolio investor in Russia and the former Soviet Union..."

 

Completely impartial then...

Well it's always good read about different perspectives.

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Don Coglione
9 minutes ago, M S E Refugee said:

Well it's always good read about different perspectives.

Of course, though the ramping of his own book was rather obvious.

I have stated before that I am a big fan of Russian energy stocks and see great potential there.

BP has a reasonable presence in Russia anyway, does it not?

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sancho panza
5 hours ago, BearyBear said:

How about RBS..? Anyone holding since 1988? Using BoE inflation calculator, 720p in 1988 is approx 1950p in todays money.

 

 

I do wonder how banks will perform in inflationary environment..?

The banks will enjoy much better margins in an infaltionary environment.Negative rates are disastrous for banks.

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sancho panza
5 hours ago, Bricormortis said:

 ( re Kaplan ) Very interesting Sancho. I am thinking there is a lot more downside risk than upside potential in stocks, and was already considering selling most of my modest portfolio gradually. I have 22k in an isa, about 25% of that is metals and miners, the rest reflation stocks. Also have a 11k Silver holding. Thinking of  keep the silver, keep the metals and miners stock, sell about 70% of the remaining stocks and sit in cash to get back in after a bust. One can take the view that it might not all bust, but I strongly believe every sector is going to get whacked.

  If I knew what Repsol and Gazprom were going to do to their divis going forward It would help my thinking. 

Re the tweet above, it confuses me, not clear what he is alluding to, The scale of the crash might surprise some, a melt up may or may not occur from here, whats he on about "what happens after the crash". ?

There will be a number of shares /possibly secotrs that rise through the crash.There always are.Look aat miners through 2000,telecoms through 2008...depends when you buy.Im happy to hold our oilies at where we're at through a crash if I dont get out in time.

I think the worying stat for me ref that article is that 15% S&P is in 3 stocks.People need to remember there are a lot of cheap stocks already that get hidden behind the Tech driven headline increases.

We're only realy in oil,PMs,potash,utilities.S&P can crash and I won't mind too muchObviously I'd like to trade it wouldn;t we all? but anyone exposed to the broad S&P/tech stocks needs to reassess their risk profile imho.

Ref the tweet,he may be alluding to secotr rotation away from seemingly unassailable tech stcoks but I don't know for sure.

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sancho panza
5 hours ago, BearyBear said:

I wouldn't buy them now, but if I was to apply a contrarian logic they are the ones to watch.

@DurhamBorn do you have an opinion on UK banks..?

I'll offer a view if i may.we held HSBC/SC through the mid 90's to 2007/8 and it was a good trade.We're looking to rebuy those shares but not yet.Lot of losses to come in UK CRE/resi.

I'd like some swiss banks too but post big kahuna

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jamtomorrow
40 minutes ago, sancho panza said:

I'll offer a view if i may.we held HSBC/SC through the mid 90's to 2007/8 and it was a good trade.We're looking to rebuy those shares but not yet.Lot of losses to come in UK CRE/resi.

I'd like some swiss banks too but post big kahuna

See also HSBC's exposure to Hong Kong property and thus the wider situation with China. Some analysts think that one potentially an existential-scale risk (can't recall whether I saw that here or on The Twitter - will edit/post link here when I next trip over it)

EDIT: I thought it might have been Kyle Bass (he's been pushing the Hong Kong banking crisis thesis of late), but pretty sure this is the one I'm thinking of: http://www.strategicmacro.com/2019/08/hsbcs-exposure-to-hong-kong-real-estate_6.html

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ThoughtCriminal

I now know of 5 Businesses who have applied for and received 50k government backed loans, within 24 hours of applying no less. 

 

3 of them have no intention of paying it back and will just go bump. All of them lied about their turnover on the application as it said “if you don’t know your turnover just guess”. I shit you not. 
 

One of the others, the two lads that own it are using the 50k to buy range rovers. 

 

I predict this will be the next scandal down the line. 

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10 minutes ago, ThoughtCriminal said:

One of the others, the two lads that own it are using the 50k to buy range rovers. 

Are they retarded?

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Ellandback
1 hour ago, Hardhat said:

I'll be interested to read that "shopping list" of silver stocks he talks about.

Same here!

I think somebody posted a screenshot of this fellas portfolio before, this is his  latest position and Twitter thread discussion which I found interesting. 

 

20200523_170943.jpg

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ThoughtCriminal
16 minutes ago, Errol said:

Are they retarded?

Yes. Absolute morons of the highest order. 
 

This is what happens when furlough payments and easy government back loans seem like free cash. 

 

Nobody seems to want to go back to work either. Attitude seems to be “I’d rather get 80% for nothing than 100% for working”. 

 

Ironic given what’s about to hit. 

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41 minutes ago, ThoughtCriminal said:

I now know of 5 Businesses who have applied for and received 50k government backed loans, within 24 hours of applying no less. 


One of the others, the two lads that own it are using the 50k to buy range rovers. 

And there was me half joking about chucking the whole £50K into bullionvault....

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DurhamBorn
5 hours ago, spygirl said:

What was shearings will come back under a less leveraged owner who can actually run the company.

Demand and margin are there.

Hope so Spy ,they should have a decent decade ahead if they can.My mam was disabled and could hardly walk at all and they were always great with her and my dad.My dad never tips anyone,but he nearly always tipped their drivers.I remember the days of going to Spain on the coach with Siesta etc and the axles being weighed down on the way back as everyone stuffed the bus with fags and booze,including the owners xD

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King Penda
32 minutes ago, ThoughtCriminal said:

Yes. Absolute morons of the highest order. 
 

This is what happens when furlough payments and easy government back loans seem like free cash. 

 

Nobody seems to want to go back to work either. Attitude seems to be “I’d rather get 80% for nothing than 100% for working”. 

 

Ironic given what’s about to hit. 

I’m jelouse 

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1 hour ago, ThoughtCriminal said:

I now know of 5 Businesses who have applied for and received 50k government backed loans, within 24 hours of applying no less. 

 

3 of them have no intention of paying it back and will just go bump. All of them lied about their turnover on the application as it said “if you don’t know your turnover just guess”. I shit you not. 
 

One of the others, the two lads that own it are using the 50k to buy range rovers. 

I don't feel so bad about spending some of my £5500 self employed income support scheme on silver and stocks now.

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Eventually Right
54 minutes ago, ThoughtCriminal said:

Yes. Absolute morons of the highest order. 
 

This is what happens when furlough payments and easy government back loans seem like free cash. 

 

Nobody seems to want to go back to work either. Attitude seems to be “I’d rather get 80% for nothing than 100% for working”. 

 

Ironic given what’s about to hit. 

I wouldn’t be that bothered, except for the fact that taxes are going to be ramped up across the board in the autumn under the guise of “paying for the crisis”.

paying more tax, so the govt can try and demonstrate to the markets that we’re not going all Weimar, whilst others are gaming the system, is going to really stick in the throat!

...Just to edit in case it’s not clear-that was a dig at people taking £50k loans to buy cars with no intention of paying it back, rather than anyone just on furlough!

 

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DurhamBorn
6 minutes ago, Eventually Right said:

I wouldn’t be that bothered, except for the fact that taxes are going to be ramped up across the board in the autumn under the guise of “paying for the crisis”.

paying more tax, so the govt can try and demonstrate to the markets that we’re not going all Weimar, whilst others are gaming the system, is going to really stick in the throat!

...Just to edit in case it’s not clear-that was a dig at people taking £50k loans to buy cars with no intention of paying it back, rather than anyone just on furlough!

 

The UK has reached Clown World economics now where if you dont take from the state you get left behind.Furlough you could argue was a decent idea for couple of months seeing as the government decided to bankrupt a lot of the self employed,but the business loans idea and forcing the banks to push them through is nuts.Massive changes coming soon,there is hardly any private sector left compared to the size of the scrounging and feasting from the public and welfare sector.

The question about bank shares above is valid.Id nearly consider some good cycle buys if we knew they could get through whats ahead first,but it seems the government by pushing all this lending is making sure the next 5 years of bank profits,goes on covering bad debts so shareholders get zip.

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Lightscribe
21 minutes ago, DurhamBorn said:

The UK has reached Clown World economics now where if you dont take from the state you get left behind.Furlough you could argue was a decent idea for couple of months seeing as the government decided to bankrupt a lot of the self employed,but the business loans idea and forcing the banks to push them through is nuts.Massive changes coming soon,there is hardly any private sector left compared to the size of the scrounging and feasting from the public and welfare sector.

The question about bank shares above is valid.Id nearly consider some good cycle buys if we knew they could get through whats ahead first,but it seems the government by pushing all this lending is making sure the next 5 years of bank profits,goes on covering bad debts so shareholders get zip.

Certainly is clown world. So let’s look at the back of a fag packet numbers here. 

So we have ‘officially’ 66 million people in the UK (the census next year will prove that’s underestimated by 5 million but still) Under half of the population pays income tax (30 million). 6 million are furloughed (which most will lose their jobs) another 3 million on universal credit and another 2 million or so are still on working tax credits.

So essentially we will have a 20 million tax base with 5 million self employed (Make your own mind up on tax levels there). I can’t see how helicopter money (UBI) won’t be implemented from this, as essentially most of the country will be living off the state anyway. 

I’ll stick to trading my BTC to increase my holding there (heading to 2 BTC now) as well as my gold and silver. The current monetary policy being thrown around (negative rates/grants etc) makes crypto look sane. 

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Castlevania
4 hours ago, sancho panza said:

There will be a number of shares /possibly secotrs that rise through the crash.There always are.Look aat miners through 2000,telecoms through 2008...depends when you buy.Im happy to hold our oilies at where we're at through a crash if I dont get out in time.

I think the worying stat for me ref that article is that 15% S&P is in 3 stocks.People need to remember there are a lot of cheap stocks already that get hidden behind the Tech driven headline increases.

We're only realy in oil,PMs,potash,utilities.S&P can crash and I won't mind too muchObviously I'd like to trade it wouldn;t we all? but anyone exposed to the broad S&P/tech stocks needs to reassess their risk profile imho.

Ref the tweet,he may be alluding to secotr rotation away from seemingly unassailable tech stcoks but I don't know for sure.

It’s a difficult one. I’m up YTD. I’m not invested in a balanced portfolio and yet when I break it down to the core sectors most are down. So for me in terms of performance:

Gambling: Rubbish

Agriculture/Potash: Rubbish

Telecoms: Rubbish

Energy: Rubbish

Oil & Gas: Rubbish

Emerging Markets: Rubbish

Financial services: Excellent

Precious Metal miners: Excellent

 

 

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