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

[MrXxxx]

4 hours ago, Loki said:

Put it all on cyclical stocks and ignore it for 30 years 

The evidence actually just says `put it on stocks and forget it`...investors generally do more damage by using their `superior` knowledge! :-)

[M S E Refugee]

1 minute ago, MrXxxx said:

But do you have to sell everything only to find that it didn't go to play, and finding yourself sat in cash with the market too expensive to re-enter?...remember that profit whilst in cash is not increasing, its actually reducing...top slicing or `half n half` is actually the best of both worlds.

My head is spinning to be honest as I don't want to lose my gains but I really like the shares that I have purchased so I may just let it ride and let the dividends roll in.

I am 55 in 7 and a bit years time and I want to maximise my chances of retiring then,I've seen too many colleagues work until they are good for nothing so I want to get out ASAP.

[BearyBear]

Wolf's interview, audio quality is awful though

 

[MrXxxx]

1 hour ago, ThoughtCriminal said:

I’m still sat on the sidelines gripped with paralysis by analysis. 80% cash, 10% silver, 10% gold.

 

Im overthinking the shares element. I probably just need to buy whatever DB does then come on here and blame him for any losers lol

 

I think ANYTHING is going to be better than sterling, whatever happens.

I empathise, this is where I was six months ago!...

''''just remember `any decisions is better than no decision`and......

.......don't get caught up in the rush of the casino by saying to yourself ` I doesn't matter if I miss today's bargain as another one will be along tomorrow`

[MrXxxx]

7 minutes ago, M S E Refugee said:

My head is spinning to be honest as I don't want to lose my gains but I really like the shares that I have purchased so I may just let it ride and let the dividends roll in.

I am 55 in 7 and a bit years time and I want to maximise my chances of retiring then,I've seen too many colleagues work until they are good for nothing so I want to get out ASAP.

I think it depends on what sort of gambler/person you are...I read a book last year that looked at a whole group of professional stock traders (think I put it in The Library thread) and what defined the most successful...at the bottom was those who were FOMO but `choked` when the market turned, in the middle were the ones who were happy to take profit early, and the few at the top were those who `held out` for maximum gain regardless of what they had paid.

I know what camp I am in, but alongside this study of approaches it also has to be remembered how close you are to retirement/how much you can afford to lose...a @Loki intimated if you have money it's easy to make money as the consequences of taking financial risks are less severe on your lifestyle.

[Barnsey]

6 hours ago, Sasquatch said:

I listened to the David Hunter podcast. He seemed so sure of a melt up until labor day (1st Sep). If the S&P does hit 4000 just before then, can I hold my nerve or do I sell out and buy back later? 

Or do I care if I'm in for the long term?

It's an impossible conundrum. Only after the fact, can you be sure of what would have been the correct approach.

He might be right of course, but remember he completely missed that huge decline in March, and I just fear (as he thinks in extremes) that he might miss the next. I hope I’m wrong, but I’m happily sitting this one out.

[UnconventionalWisdom]

It's been discussed on here whether to get the gold/silver etf rather than gold/silver. Here's a good video from Mile Maloney on the topic

 

Shows how the ETFs dont fully follow the price and how management fees take a cut over time. 

Touches on the miners to say they hace performed much worse than gold. He doesn't state it as he is plugging PMs but on this analysis, the miners looks cheap compared to gold. In any case, i think it shows the shortfall in using ETFs that are meant to represent the PM

[DoINeedOne]

1 hour ago, MrXxxx said:

I think it depends on what sort of gambler/person you are...I read a book last year that looked at a whole group of professional stock traders (think I put it in The Library thread) and what defined the most successful...at the bottom was those who were FOMO but `choked` when the market turned, in the middle were the ones who were happy to take profit early, and the few at the top were those who `held out` for maximum gain regardless of what they had paid.

I know what camp I am in, but alongside this study of approaches it also has to be remembered how close you are to retirement/how much you can afford to lose...a @Loki intimated if you have money it's easy to make money as the consequences of taking financial risks are less severe on your lifestyle.

"The Art Of Execution" 

There was also a group who did well hold but trimming a little profit along the way to satisfy the need to take profits

Re-read the highlights i made the other week in the book

Oh and those who had rules if this then that, did great too as it took alot of the thinking out of it

 

[Talking Monkey]

5 hours ago, DurhamBorn said:

One of the key drivers of the cycle we are entering in a dash for assets.Some high tech,some as simple as potash.Whenever the political cycles reach this stage over the millennia inflation isnt far behind.Im more interested in the cycle now than if another shoe drops later in the year.Mainly because i have no idea on the structure of any falls now due to liquidity flowing,but i do have a very good idea of how the cycle is going to unfold.Cross market work is now more important for instance because i dont think big oil will go lower than it did because i dont think oil is going lower than it did,even if it got close in a sell off.Giving up profits short term doesnt bother me,if it happens.As far as im concerned i bought all my oil/energy sector investments in March and apart from some top trimming for portfolio structure 2028ish is the next selling area.Im spending zero energy on if Repsol goes up or down next week,month etc.Im not selling it and am very happy with the entry prices.

The main risk to us now is if companies we own go under,solvency is key to get through the bottleneck.Rather than concentrate on price,removing companies that have ran up that might have solvency issues is probably better,and re-deploy in other areas.Things like below i expect to allow more mergers in telcos and governments to allow higher profits in exchange for investment and toeing the political line.BT has clearly stopped its divi in the shor term to provide political cover for a better deal and to ramp up spending to help government.Government needs reflation areas to invest,and they will,in exchange for better terms.Western governments are going to work together,that is certain now.The cycle is underway,the first stages will see continued shakeouts and jolts.

 

https://www.telegraph.co.uk/business/2020/06/03/chinas-drive-digital-supremacy-likely-fail-huawei-going-nowhere/

Here to read,

https://outline.com/

We should not be distracted by Donald Trump’s idée fixe on trade tariffs, cars, and soybeans. The actual fight is going at a more sophisticated level, managed by the professionals of the Washington establishment. Trump is best understood as a bellwether. As Henry Kissinger so tellingly put it, he is “one of those figures in history who appears from time to time to mark the end of an era and force it to give up its old pretences”.

DB in the Big Oil, Telco and Potash sectors, are there any companies that are worrisome. There is always risk but my view is that the super majors in oil and the big Telcos are most likely to come through the dislocation of the next 12 months. 

[Talking Monkey]

16 minutes ago, DoINeedOne said:

"The Art Of Execution" 

There was also a group who did well hold but trimming a little profit along the way to satisfy the need to take profits

Re-read the highlights i made the other week in the book

Oh and those who had rules if this then that, did great too as it took alot of the thinking out of it

 

Trimming a little profit along the way and having sensible rules is very worthwhile

[DurhamBorn]

1 hour ago, Talking Monkey said:

DB in the Big Oil, Telco and Potash sectors, are there any companies that are worrisome. There is always risk but my view is that the super majors in oil and the big Telcos are most likely to come through the dislocation of the next 12 months. 

Always risk,but bigger companies tend to have access to credit much easier than small.Repsol sold Euro1.5 billion of hybrid bonds last week and there was euro13billion of demand (so Repsol will of got a very low coupon),where i doubt many smaller US frack companies would have much chance.Bigger companies have more options as well.Vodafone have massive debts,but float the towers off,still own 51% and you cut debt by 25%.

Other companies like the transports would all be bust now without government contracts and support.Thats why i sold a lot off when they bounced hard.I like them,but iv only small holdings now as i dont fancy having to return to work if Grant Shapps gets out of bed the wrong side.The nature and structure of the crash made me change on those.If the crash had been a derivative driven credit event id of kept bigger holdings.

[Festival]

Sold just under 10 percent of my shares on Friday and am back to around even on the year to date - feels like it has been a good deal more stressful than that though.
 

Will continue to lighten up if equities push on further this summer. Cash is currently at around 30 percent, stocks 40 percent, gold and silver 17 bonds 13. Watching the vix closely which is down to 24 ish on Friday. Am quite taken with true contrarians idea that you should reduce equities by time vix hits mid teens and am also taken with his idea that US insiders have to hold for 6 months for tax reasons and there were record insider purchases in March. Assuming all goes to plan I will increase gold and UST and USD holdings at the expense of equities as the summer progresses with a view to having achieved preferred portfolio by 1 Sept latest in case the big down happens in the autumn. US election is the big wild card for me - too uncertain an outcome atm and think fed could become compromised or less active as we near election date. Will keep my oil holdings come what may as they were bought quite low and I’d be surprised to see them below march 2020 levels in the autumn.

[Castlevania]

23 minutes ago, DurhamBorn said:

Always risk,but bigger companies tend to have access to credit much easier than small.Repsol sold Euro1.5 billion of hybrid bonds last week and there was euro13billion of demand (so Repsol will of got a very low coupon),where i doubt many smaller US frack companies would have much chance.Bigger companies have more options as well.Vodafone have massive debts,but float the towers off,still own 51% and you cut debt by 25%.

Other companies like the transports would all be bust now without government contracts and support.Thats why i sold a lot off when they bounced hard.I like them,but iv only small holdings now as i dont fancy having to return to work if Grant Shapps gets out of bed the wrong side.The nature and structure of the crash made me change on those.If the crash had been a derivative driven credit event id of kept bigger holdings.

Repsol did use 10 banks to sell it for them

[TheCountOfNowhere]

9 hours ago, Sasquatch said:

I listened to the David Hunter podcast. He seemed so sure of a melt up until labor day (1st Sep). If the S&P does hit 4000 just before then, can I hold my nerve or do I sell out and buy back later? 

Or do I care if I'm in for the long term?

It's an impossible conundrum. Only after the fact, can you be sure of what would have been the correct approach.

Sell out for 6 months.  Wont make much difference if things stay high....

[BearyBear]

2 hours ago, UnconventionalWisdom said:

It's been discussed on here whether to get the gold/silver etf rather than gold/silver. Here's a good video from Mile Maloney on the topic

 

Shows how the ETFs dont fully follow the price and how management fees take a cut over time. 

Touches on the miners to say they hace performed much worse than gold. He doesn't state it as he is plugging PMs but on this analysis, the miners looks cheap compared to gold. In any case, i think it shows the shortfall in using ETFs that are meant to represent the PM

I did a similar comparison years ago and he misses quite important thing called spread. Take goldcore for example - 7% over the spot for 1oz cold coins, 22% for silver 1oz coins, 15% on 100oz bars. This means you need a substantial price rise to break even. For comparison, Gold and Silver ETFs spreads are very tight.

Remember, Mike is selling physical gold for a living, I've stopped watching his videos as he keeps bending reality to make you panic and buy physical. The funniest thing he ever said was "Gold has become unobtainable... try to buy physical! There isn't any!" and 10 sec later "Well, we still have some in stock so be quick!"

[MrXxxx]

3 hours ago, DoINeedOne said:

"The Art Of Execution" 

There was also a group who did well hold but trimming a little profit along the way to satisfy the need to take profits

Re-read the highlights i made the other week in the book

Oh and those who had rules if this then that, did great too as it took alot of the thinking out of it

 

Thanks DINO, that's the book.

[Majorpain]

1 hour ago, BearyBear said:

I did a similar comparison years ago and he misses quite important thing called spread. Take goldcore for example - 7% over the spot for 1oz cold coins, 22% for silver 1oz coins, 15% on 100oz bars. This means you need a substantial price rise to break even. For comparison, Gold and Silver ETFs spreads are very tight.

Remember, Mike is selling physical gold for a living, I've stopped watching his videos as he keeps bending reality to make you panic and buy physical. The funniest thing he ever said was "Gold has become unobtainable... try to buy physical! There isn't any!" and 10 sec later "Well, we still have some in stock so be quick!"

This x 100, the margin on some of the coins at the minute is ridiculous, Silver to Go (no VAT) were only slightly under Bullion by posts (20% VAT) when i looked a few weeks ago, someone is making some serious cash off the panic and its not the treasury!

My limit is about 2-3% of total wealth for physical, enough if it all goes pete tong i wont starve, but not enough to lose sleep over if it gets robbed.  I don't think i will be buying any more in the future, there is very little point.

[Harley]

Gotta say a nice active thread these last few days with lots chipping in with good questions and data.  That cash holding question for example was a cracker as the answers say a lot in one number and the discussion flowing from it touched on a number of issues most of us must be struggling with right now.  It all helped me a lot thanks and I'm now clearer headed and pumped for Monday!

[MrXxxx]

4 hours ago, UnconventionalWisdom said:

It's been discussed on here whether to get the gold/silver etf rather than gold/silver. Here's a good video from Mile Maloney on the topic

 

Shows how the ETFs dont fully follow the price and how management fees take a cut over time. 

Touches on the miners to say they hace performed much worse than gold. He doesn't state it as he is plugging PMs but on this analysis, the miners looks cheap compared to gold. In any case, i think it shows the shortfall in using ETFs that are meant to represent the PM

Initially he is not comparing gold bullion with allocated gold etfs...he's comparing it with synthetic etfs and miners, and so naturally they behave like shares. When he does compare an allocated etf (GLD) he shows a graph with the investment value declining...if you look carefully though you will see that it is declining at the rate of the OCF charge....to compare like with like he should show the price of gold minus the vaulting fee. In addition, he makes a point about the line fluctuating due to futures/shorting, I actually believe what you are seeing is the natural variation in gold price over the sampling period...the devil is in the detail!

[Majorpain]

Saudi's are starting to ratchet the oil price up, that failed attempt at crushing shale must have cost them a fortune.

Anyone picking up that cheap oil had a very good bit of business!

[Loki]

1 hour ago, Majorpain said:

This x 100, the margin on some of the coins at the minute is ridiculous, Silver to Go (no VAT) were only slightly under Bullion by posts (20% VAT) when i looked a few weeks ago, someone is making some serious cash off the panic and its not the treasury!

My limit is about 2-3% of total wealth for physical, enough if it all goes pete tong i wont starve, but not enough to lose sleep over if it gets robbed.  I don't think i will be buying any more in the future, there is very little point.

Sell them privately (Everyone else would have to pay premium too) or wait a few years

[Majorpain]

8 minutes ago, Loki said:

Sell them privately (Everyone else would have to pay premium too) or wait a few years

Plan is to never sell the physical unless i have to, its my reserve for if things ever get really difficult. 

If i wanted "mad gainz" then i have plenty of PM miners for that, they are doing rather well at the minute and they are infinitely easier to sell.

[Loki]

Just now, Majorpain said:

Plan is to never sell the physical unless i have to, its my reserve for if things ever get really difficult. 

If i wanted "mad gainz" then i have plenty of PM miners for that, they are doing rather well at the minute and they are infinitely easier to sell.

Yeah I hold mine for insurance but assuming we're still here in 2030 and silver is $300 I'll probably cash some in

[DurhamBorn]

1 minute ago, Majorpain said:

Plan is to never sell the physical unless i have to, its my reserve for if things ever get really difficult. 

If i wanted "mad gainz" then i have plenty of PM miners for that, they are doing rather well at the minute and they are infinitely easier to sell.

My dad always says the physical is to bribe the guards 

[DurhamBorn]

https://www.telegraph.co.uk/business/2020/06/07/germans-fear-ecb-following-weimar-reichsbank-inflation-trap2/?li_source=LI&li_medium=liftigniter-rhr

“We could be heading for 1970s inflation. The ECB is creating all this money but at the same time the supply side of the economy is being constrained (by deglobalisation). If the German people wake up to 5pc inflation when this is over, they’ll conclude that the euro is out of control."

"Pandemic QE is different from post-Lehman QE. Banks were crippled after 2008 and drastic central bank stimulus was needed to offset monetary contraction. This time M3 is turbocharged. Monetarists say it will catch fire as Covid-19 recedes and “velocity” returns to normal."