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


spunko

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Castlevania
12 hours ago, BearyBear said:

The way they trade via Robinhood is shocking to me, most of them are destined to a financial disaster. Anyways, as soon as I start seeing YT videos in recommended section titled: "How I've lost my house on Robinhood" I am going full in!

They’re just contrarian’s like us ;) 

A share chart of the one that shall not be named would most probably look similar with regards to us on this board.

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Castlevania
1 hour ago, MrXxxx said:

This got me thinking again; the true value of this thread/website, so lets consider a scenario and pose two questions. Person in DC scheme and can take early retirement now (or next 2-3 years) or stay invested in scheme,

In short-term are they better:

1. Moving accumulated funds from shares into a cash part of scheme now, crystallizing/retiring when shares crash, and then buying in?

2. As for 1. above but just move to a diversified share option in scheme when shares crash and don't officially retire?

3. Staying invested in a diversified share only option over next cycle until equities recover?

4. As for 3. but share/bond mix.

 

I can see advantages/disadvantages in all as follows:

1/2. No management costs whilst in scheme (could equate to 0.,-1.5% so important in current/future low returns environment), preserving already accumulated gains, but time risk of being out of market.

3. No costs in scheme, no timing the market worries, no picking the winners worries due to diversity, but could be waiting some time for equities to recover.

4. As for 3. above but bonds/gilts MAY give some capital preservation.

 

Obviously all of the above depends on timings I.e when deflation ends/inflation begins, shares crash/recover...what are people's current thoughts on this regarding timescales?

If retired or approaching retirement and I didn’t want to watch the markets closely I’d go down the Permanent Portfolio Route. 25% cash (in the currency of the country I live in, USD if I lived in an Emerging market); 25% long dated Treasuries; 25% S&P; 25% gold. Rebalance once a year. If I could achieve this in the DC scheme I’d leave it in if not I’d put into a SIPP. Clearly this isn’t advice but hypothetically what I’d do.

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12 hours ago, Yellow_Reduced_Sticker said:
PAGING: @Harley @DurhamBorn @Cattle Prod @sancho panza ...AND anyone I've forgotten!
 
Came across this VERY INTERESTING video about "Living Off Grid" and wanted to share with YOU guys, its by a chap that moved from London to woodland in Wales, built his own house for CHEAP...blimey hes even got his own hydroelectric!
 
Check it OUT...You'll LOVE It! :Jumping:

Yes thanks, I did!  I heard Wales got a lot of persecuted Alt types back in the day but then even there the Welsh authorities eventually clamped down.  Apparently many have aged a bit and have settled down into a more accommodating lifestyle (but still have their beliefs).  I've known a few and really liked some although, as with any community, you get all sorts.  I've worked with some (hard working and competent) and had many an agreeable conversation.  Helped with my emerging beliefs.  They seem more relevant than ever right now.  Of course, I will always be an outsider.  Reminded me of the Rastafarians I befriended in the Caribbean.  The (rare) real ones with a thought through and committed belief system.  Amazing what an open mind away from the System's narrative can deliver. 

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Castlevania
6 minutes ago, Harley said:

Yes thanks, I did!  I heard Wales got a lot of persecuted Alt types back in the day but then even there the Welsh authorities eventually clamped down.  Apparently many have aged a bit and have settled down into a more accommodating lifestyle (but still have their beliefs).  I've known a few and really liked some although, as with any community, you get all sorts.  I've worked with some (hard working and competent) and had many an agreeable conversation.  Helped with my emerging beliefs.  They seem more relevant than ever right now.  Of course, I will always be an outsider.  Reminded me of the Rastafarians I befriended in the Caribbean.  The (rare) real ones with a thought through and committed belief system.  Amazing what an open mind away from the System's narrative can deliver. 

Yeah when I was growing up you still had a fair few hippies living the dream in their converted busses and vans up in the hills. Quite a few settled down, converted/rebuilt old mining cottages and rejoined society.

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Bricormortis
17 hours ago, Castlevania said:

How does working in a mine lead to HIV?This is terrible reporting.

 

 

Prossies on pay day. .it's a thing in SA mining settlements. 

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2 hours ago, Castlevania said:

Yeah when I was growing up you still had a fair few hippies living the dream in their converted busses and vans up in the hills. Quite a few settled down, converted/rebuilt old mining cottages and rejoined society.

The genuine stories of persecution by the State (like the accommodating elasticity of the law) they told not only shocked tough old me but had me reciting in my head "First they came....".   That's all I needed to know.

Relevant to this thread for two reasons.  First, they will come for us, our hard work, our savings, our financial (and hence general) independence, and our wealth.  Second, the best political economist I ever spoke to was one of them.  He would, in a peverse way, be right at home here and would be a welcomed major contributor. 

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4 hours ago, MvR said:

W%R,

You lost me at the first hurdle but I googled and found this for anyone interested:

https://www.investopedia.com/terms/w/williamsr.asp

My method is to look at the chart and guess which may account for why I'm not doing very wellO.o but I think the buying at set points in the long-term chart in ladders is probably best for me in the long run.

I can see the advantage if I were trading though so thanks for posting.

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5 hours ago, Castlevania said:

If retired or approaching retirement and I didn’t want to watch the markets closely I’d go down the Permanent Portfolio Route. 25% cash (in the currency of the country I live in, USD if I lived in an Emerging market); 25% long dated Treasuries; 25% S&P; 25% gold. Rebalance once a year. If I could achieve this in the DC scheme I’d leave it in if not I’d put into a SIPP. Clearly this isn’t advice but hypothetically what I’d do.

But this is assuming the market is mid-cycle/normal and you would be getting an income from divis?....with the PP above and the current/next 10 years is the 50 % gold and stocks going to give enough return to allow for the inflationary erosion on the 50% cash and LTTs?

Note, not looking for FA, just interested in kicking around thoughts/ideas to develop my financial understanding.

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sancho panza
18 hours ago, JMD said:

 Although I am very critical of all main party leaderships, I am not a total cynic and was for example impressed by the cross political spectrum support for the Brexit party. That support was unfortunately/tragically not tested. Anyway my thinking is that a 'renamed' Brexit party, (along with new 'populist' policies) would do very well at next election. And how about a new successor to Farage, perhaps someone like the elected Brexit party MEP Clair Fox, a female, working class, northern, ex-trotskyisk(like Hitchens, so not automatically a scary concept!)... I think if things turn as economically crazy as expected such a breath of fresh political thinking would do very well at the polls.

I think we're entering a period of time where this thread needs to be discussing political changes that are inbound.This isn't about my politics.I've had a successful time on Betfair punting on politics and I'm unemotional when it comes to money.

In money terms,I wouldn't waste any of Farage and the Brexit Party.Cummings will stay in the  Tories.

We need to be looking at hard right and hard left or like you suggest a cross party hybrid that successfully crosses the two, for where the changes are going to come.Like I said,GD1 saw in a period that saw Labour get established/Hitler rise/Communsim spread.

I agree on the cross class support for BP,also Ukip in it's time had several strands that pushed it along.

The big weakness each time was it's leader.Farage is quite the authoritarian and struggles to allow strong characters around him,which means anything he leads will always be limited to 10-15% of the vote-probably less now..

The scene is set for a breath of fresh air-much like Labour in the 30's.And at the moment ,it's not so much my job to spot them,but jsut to be aware that the ground is set for them,both historically and secondarily,by the sheer poverty of the talent pool in the political class-the latest Tory/Labour/LD leadership elections have set the scene for change.

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My opinion now is that politicians are the puppets on the arms of finance.  I didn't even vote in the GE.  First time since I was 16.

If the economic paradigm needs a Blair, Trump, Hitler, Stalin, etc, one will be created and put into place. (Leads and lags!) xD

I'd far rather spend time learning about the subject(s) of this thread than politics...on a time/value basis.  

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On 24/05/2020 at 20:17, Chewing Grass said:

The oldest profession, prozzies, but the BBC probably can't report that.

Africans love using prozzies and so do NGO aid workers, but they like children as well which is why they work for NGOs.

:Jumping:

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ThoughtCriminal

Have an interesting anecdotal from today that I think is illustrative of what’s coming our way. 

 

Me and business partner went to a Mercedes van dealership today to have a speculative look at a 19 plate Vito. 
 

Price was 22k so I (half) jokingly said to the sales lad “Car sales are down 97% so you’d best sharpen your pencil”. 
 

He then proceeded to tell me how fucked they are. Fleet sales are strong, Tesco bought 100 sprinters off them last week, but small companies are dead. Said not even getting enquires let alone sales. 
 

Then, without us even haggling, he proceeds to say he’ll knock five grand off the price. 22k-17k, just like that. 
 

Stunned isn’t the word. We told him we were going to VW to look at Transporters before we decided. On way to VW his manager called us and asked us to give him a chance to beat VW price before we decide anything. 

 

Ive been buying cars a long time and I’ve never known anything like it. 

 

Id say they’re going to be giving cars away in a couple of months time. 

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sancho panza
12 hours ago, MvR said:

I know this is mostly an investing rather than trading thread, but here's a useful indicator to help identify better entries.. I know I have mentioned it occasionally before, but W%R, with a 45 day period ( not the default 13 or 14), is great for signalling swing highs and lows by looking for price/oscillator divergencies.

I was marking the last few week's signals on the hourly for Gold ( IG charts, based on one of the smaller futures contracts I think.), and was surprised myself how accurate they were, so I thought I'd share it with you guys.

Strong signals are in white, and weak signals in grey. It's not perfect, and doesn't catch all the tops and bottoms, but those it does identify are good 80% of the time at least.  This could be improved further when used alongside other TA.

The rules are simple  :-

1. A strong topping signal occurs when price puts in a higher high then turns down for 1 period, whilst W%R(45) puts in a lower high.

2. A weak topping single is when price puts in second high the same level as the previous peak, whilst W%R puts in a significantly lower high.

3. A strong bottoming signal occurs when price puts in a lower low then turns up for 1 period, whilst W%R(45) puts in a higher low.

4. A weak bottoming single is when price puts in second low the same level as the previous low, whilst W%R puts in a significantly higher low.

The W%R highs and lows must be in the overbought/oversold zones of the oscillator ( above -20 or below -80 ) for the signal to be valid.

It works great for swing trading on the hourly, giving signals every few days, or on the 15m for day-trading, or on the daily ( or rarely, weekly ) for longer term signals.  I go mostly with the hourly, and maybe zoom in to the 15m to fine tune an entry. close-up of recent signals.

edit : fixed glaring error in the rules :)

I need to study this some and have in the past mainly stuck to RSI/MACD

I use the Ichimuko that ou introduced me to on my charts all the time M.Big thanks for that.

 

 

 

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sancho panza
44 minutes ago, Loki said:

My opinion now is that politicians are the puppets on the arms of finance.  I didn't even vote in the GE.  First time since I was 16.

If the economic paradigm needs a Blair, Trump, Hitler, Stalin, etc, one will be created and put into place. (Leads and lags!) xD

I'd far rather spend time learning about the subject(s) of this thread than politics...on a time/value basis.  

I get where you're coming from Loki.Unfortuantely,Italy leaving the EU will have a massive imapct on the the themes of the thread.German opposition witll have a maissve effect on the ECB QE program.It was ever thus.

The one good thing this year is that if it is Biden vs Trump,the result won't make much difference to us.

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ThoughtCriminal
7 minutes ago, sancho panza said:

I get where you're coming from Loki.Unfortuantely,Italy leaving the EU will have a massive imapct on the the themes of the thread.German opposition witll have a maissve effect on the ECB QE program.It was ever thus.

The one good thing this year is that if it is Biden vs Trump,the result won't make much difference to us.

Agree completely.

 

Whilst I respect DB MASSIVELY and think he’s very likely to be proved right, I think we’re ill served if we don’t regularly look at what’s happening politically.


I don’t mean the flim flam like the Cummings circus etc, I’m referring to anything that could lead to Black Swan type events.

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7 minutes ago, sancho panza said:

I get where you're coming from Loki.Unfortuantely,Italy leaving the EU will have a massive imapct on the the themes of the thread.German opposition witll have a maissve effect on the ECB QE program.It was ever thus.

The one good thing this year is that if it is Biden vs Trump,the result won't make much difference to us.

That is true, the financial side can only work with the pieces it has. I thought you meant team red vs team blue rather than geopolitics. My mistake!

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sancho panza
15 minutes ago, ThoughtCriminal said:

Agree completely.

 

Whilst I respect DB MASSIVELY and think he’s very likely to be proved right, I think we’re ill served if we don’t regularly look at what’s happening politically.


I don’t mean the flim flam like the Cummings circus etc, I’m referring to anything that could lead to Black Swan type events.

I guess that was the point I was trying to make.The set up here is for political black swans.Unlike coronavirus,there will be opportunitites galore as we go through the deflation and see people lose their jobs/homes and then watch as food/fuel prices rise.

Across the western world mainly i suspect.

DB was talking about the coming cold war with china last week.Couln't agree more

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DurhamBorn
1 hour ago, ThoughtCriminal said:

Have an interesting anecdotal from today that I think is illustrative of what’s coming our way. 

 

Me and business partner went to a Mercedes van dealership today to have a speculative look at a 19 plate Vito. 
 

Price was 22k so I (half) jokingly said to the sales lad “Car sales are down 97% so you’d best sharpen your pencil”. 
 

He then proceeded to tell me how fucked they are. Fleet sales are strong, Tesco bought 100 sprinters off them last week, but small companies are dead. Said not even getting enquires let alone sales. 
 

Then, without us even haggling, he proceeds to say he’ll knock five grand off the price. 22k-17k, just like that. 
 

Stunned isn’t the word. We told him we were going to VW to look at Transporters before we decided. On way to VW his manager called us and asked us to give him a chance to beat VW price before we decide anything. 

 

Ive been buying cars a long time and I’ve never known anything like it. 

 

Id say they’re going to be giving cars away in a couple of months time. 

And at the same time the items i used to import and sell have gone from £70ish to £130ish on Amazon.The will feel the price increases on currency and inflation very quickly.Lots of small things going up in price means the one or two big things get slaughtered through lack of demand.

As soon as lockdown is over im going to be buying a lot of stuff 2nd hand on Facebook marketplace,tools etc,spare lawnmovers,you name it.The price of everything small £50 to £200 range is going to go up a lot in price and i think the days of getting quality 2nd hand things for peanuts will end.The squeeze is coming from all sides for people.

Im very tempted to buy a car later in the year,mine are 15 and 12 years old so i think i might as well if prices do take a whack.

 

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ThoughtCriminal
31 minutes ago, DurhamBorn said:

And at the same time the items i used to import and sell have gone from £70ish to £130ish on Amazon.The will feel the price increases on currency and inflation very quickly.Lots of small things going up in price means the one or two big things get slaughtered through lack of demand.

As soon as lockdown is over im going to be buying a lot of stuff 2nd hand on Facebook marketplace,tools etc,spare lawnmovers,you name it.The price of everything small £50 to £200 range is going to go up a lot in price and i think the days of getting quality 2nd hand things for peanuts will end.The squeeze is coming from all sides for people.

Im very tempted to buy a car later in the year,mine are 15 and 12 years old so i think i might as well if prices do take a whack.

 

Agree completely DB. 

 

Ive started already with a few power tool bargains on Ebay and I’ll be checking marketplace too. 

 

I’m 100% convinced that 0% finance and scrappage schemes etc will be coming in soon and used cars will also be hit. Nobody’s buying, and that’s before the shit hits the fan. 
 

If this is the calm before the storm then the storm is going to be a killer. 

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3 hours ago, DurhamBorn said:

 

Im very tempted to buy a car later in the year,mine are 15 and 12 years old so i think i might as well if prices do take a whack.

 

I imagine you’ll go for something stealthy, we don’t want to be to showy in tough times, curious if you’ll get something ultra frugal on fuel given your predictions for oil, will you get a hybrid?

Im sticking with bangernomics for now. My $1000 (£500) ‘98 Volvo estate is going strong after 3 months of ownership, no leaks, knocks, faults of any kind touch wood, smooth and comfy, all it has cost me a pair of brake pads and new windscreen wipers which I knew when buying it - should be good for another 100,000 Kms.

Great thread on PH for those that enjoy finding and running a bargain, ideal for those who are willing to spanner themselves:

https://www.pistonheads.com/gassing/topic.asp?h=0&f=23&t=1794175&i=3080

IMG20200222121645.jpg

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6 hours ago, sancho panza said:

I think we're entering a period of time where this thread needs to be discussing political changes that are inbound.This isn't about my politics.I've had a successful time on Betfair punting on politics and I'm unemotional when it comes to money.

In money terms,I wouldn't waste any of Farage and the Brexit Party.Cummings will stay in the  Tories.

We need to be looking at hard right and hard left or like you suggest a cross party hybrid that successfully crosses the two, for where the changes are going to come.Like I said,GD1 saw in a period that saw Labour get established/Hitler rise/Communsim spread.

I agree on the cross class support for BP,also Ukip in it's time had several strands that pushed it along.

The big weakness each time was it's leader.Farage is quite the authoritarian and struggles to allow strong characters around him,which means anything he leads will always be limited to 10-15% of the vote-probably less now..

The scene is set for a breath of fresh air-much like Labour in the 30's.And at the moment ,it's not so much my job to spot them,but jsut to be aware that the ground is set for them,both historically and secondarily,by the sheer poverty of the talent pool in the political class-the latest Tory/Labour/LD leadership elections have set the scene for change.

I agree SP, i didn't know how to initiate this subject, it's very complex. And I think my somewhat muddled post didn't really explain what I was getting at. I like and enjoy learning about macro global/domestic view as personally I find subject nearly as useful, in terms of helping frame my investment decisions, as say the other 'great trends' discussed here in this forum such as finding inflation-loving-assets, decomplexity, etc. It's often said that we are only a few years behind America so perhaps just look to who and what follows Trump. Anyway in terms of ananysis I'll set out below my initial thoughts.                                                                                                                                                                                                                    To be clear, as others have said, this is not about left/right politics, which is now a busted flush, whether it be measured in party unity, ambition, ideology, intelligence, leadership. Instead this forum is pretty clear on the negative impact that will be inflicted upon most people (voters) come next cycle. I posit that to keep these voters 'on side' politicians will have to at least pretend to try to mitigate the harshness of their policies. ...Or they may try to 'appeal' to the voter in other nefarious ways!? I am being vague on purpose, because I think it is premature to think in these terms... we may end up having full on authoritarianism along with an ugly balkanisation of our politics, but if so there is little value in over thinking this in terms of what it may ultimately mean, because probably it would just mostly result in private wealth being confiscated etc. And also this might/will only happen in the future, say 2028.                                                                                                                                                                                                                                                               So I focus attention on the near term, and the type of 'mitigation/bribe' policies which are likely to materialise. Mass housing projects have been discussed here and I agree. I think the NHS/social care will also be expanded, but more and more private services will be added over time, and more crucially an insurance backed element will be introduced. We can probably invest and benefit from this if we wish. On the other hand we have been warned to expect financial repression in the form of inflation. What other policy ideas/fears do people have?                                                                                                                                                                                                                                                       In terms of leads and lags - and how our politicians react or are required to react, in the short term depends a great deal on changing voter sentiment and changing party loyalty. I'd suggest that the major factors at play here are that a very large proportion of working class voters are now politically homeless, and that large factions of conservative and Libdem voters are frustrated with their own parties. While British people have historically shown themselves to not be attracted to radical politics, they have unfortunately recently shown how easily they can be manipulated (subjugated even) so just 'good in parts'. Of course there has been much social conditioning over many years where many people have been taught 'what' to think and not 'how' to think. 

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jamtomorrow
14 hours ago, MrXxxx said:

But this is assuming the market is mid-cycle/normal and you would be getting an income from divis?....with the PP above and the current/next 10 years is the 50 % gold and stocks going to give enough return to allow for the inflationary erosion on the 50% cash and LTTs?

Note, not looking for FA, just interested in kicking around thoughts/ideas to develop my financial understanding.

That's where I ended up. I like the idea of having PP as strategic bedrock, but also think you'd be daft to ignore the macro picture as oft discussed here.

Basically: "Like cheese? Like peas? You'll love cheesy peas"

So I'm now running what I'd describe as PP+: basically PP but with the percentages fiddled intuitively to correspond to where I think we are in the macro cycle, and with an allocation for "leftfield" low-probability/high-return asset classes that don't feature in canonical PP (effectively: this is me giving myself permission for a bit of crypto).

Roughly, it currently looks like:

3% treasuries

10% crypto

29% stonks

29% cash

29% PMs

Might be a bit overweight on cash once we get some hindsight, but that represents my perceived residual short-term risk of a deflationary episode. 

Not clear to me if/when bonds should come back up.
 

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ThoughtCriminal

I may show my naïveté here as currency isn’t my strong point, but given what we’re expecting to happen to sterling, aren’t we going to be better parking our cash element in something like Swiss Francs rather than sterling?

 

 

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