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


spunko

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3 hours ago, Knickerless Turgid said:

Harley (and others),

Can you give an explanation as to why charting works? Be it short, medium, or long-term, I simply can't understand how chart patterns can determine market entry and exit points. Doubly so during a time of uncertainty, such as now.

It's all about price.  Not a science but there are themes in the ongoing battle between bulls and bears which paint pictures.  They provide narratives to what might be going on as in who is likely to have the upper hand.  

The above is an example but where the usual narrative may not be applicable.  Higher lows and lower highs usually means bulls are consistently ready to buy the dip but are being beaten down by progressively weakening bears.  Eventually the bullish sentiment breaks through and the price takes off like a coiled spring.  But not in this case!?  My interpretation FWIW is that the market was fundamentally weakening well before CV (a common view in the later days) and that may impact any recovery (the BOE, etc measures although tbd).  And if the market has further to rise it may hit further resistance at the upper descending line.

Looking at other data points of the price action can help to paint a possible picture.  MACD is a way of showing changes in average prices.  In the above example it (the fourth chart down) has been on a downward trajectory for many months.  Yet the price appears to have been trending up, although choppy and confusing.  This divergence cannot last and in this case resolved to the downside.  The MACD showed the somewhat rising price had questionable foundations.

Likewise the stochastic (second and third charts down).   This measures the momentum of the price change.  It has been up and down but overall trending down suggesting declining enthusiasm of sorts.

Well that's an interpretation, one of several.  So each to their own and what works for them.  There are many measures that can be used but I've specialised in these two, plus price chart patterns.  Some I win, some I lose.  As long as I win enough times! 

The key thing is to be aware of the time periods being looked at.  The monthly chart above is a long term chart for intermediate trading and investing.  Not for day trading.  But sometimes combinations of the day, week and monthly charts align to confirm or expand on the picture.

I used to use weekly charts to help time buy and hold investments but got far better results waiting, forgoing some gain, and looking at the monthly charts.  I was sacrificing some gain (paying) for more reliable data.  Fine for the long term but rubbish for sort term moves.

But then for investments, I've already looked at the financials so just trying to buy a bit cheaper.  Totally different for trading which is a numbers game wrapped up in careful money management (to avoid getting wiped out by the inevitable duds).

PS:  Your comment about usefulness in times of uncertainty is an interesting two edged sword.  Not so much the uncertainty but the possible impact of the extremes of the price action we've seen.  My usually approach is giving a confusing signal saying this might be a fake but very tradeable bounce at the start but now maybe not.  A real test of fortitude!  But then times of animal spirits enthused by what's happened can also bring clarity and sharper results.

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20 minutes ago, Shamone said:

Is it me being stupid or is one unable to buy Israel Chemicals with Hargreaves?

Which exchange?  Is it an ADR or GDR (Desository Receipt, not always clear, and which class?) or a Crest International security (starts with "0") on the LSE International exchange (LSIN) or a US OTC (Over The Counter) exchange security (which HL does not support).

PS:  Is the exchange open?!

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13 minutes ago, Harley said:

Which exchange?  Is it an ADR or GDR (Desository Receipt, not always clear, and which class?) or a Crest International security (starts with "0") on the LSE International exchange (LSIN) or a US OTC (Over The Counter) exchange security (which HL does not support).

PS:  Is the exchange open?!

I thought it was quoted on the NYSE, which was open when I searched?

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King of Fools
10 hours ago, DurhamBorn said:

Iv picked up a few more bits last week,mainly some more Telia as i was light on them,they are my 4th biggest Telco holding,but i want them up to 35% of my Vod and TEF holdings that are both roughly equal,VOD slightly bigger.

On Telefonica iv noticed the dividend scrip rights have appeared on HL under my holding,but doesnt show any amounts yet.Repsol should follow soon.I usually take all dividends and was going to invest all dividends coming in into silver,but im going to keep the extra shares on Telefonica and Repsol while they are priced where they are.They would both have to be 25% higher to take the cash.

The interesting thing is to see how the tax works.Repsol are doing a capital increase,so i would guess there would be no tax on the divi,though not certain on that.I think Telefonica is a straight scrip issue,so probably taxed.I should know all that of course before buying something,but my Spanish on my Club 18-30 holidays  only got as far as "Tienes una hermosa sonrisa" ,

You silver tongued cavalier.

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7 minutes ago, Shamone said:

I thought it was quoted on the NYSE, which was open when I searched?

Restricted?  Some UK, etc sensitive stocks are to certain nationals.

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1 minute ago, Harley said:

Restricted?  Some UK, etc sensitive stocks are to certain nationals.

Maybe I guess. Cheers.

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Well b*gger that!  I looked into buying worldwide Sector ETFs (e.g. Materials) for a SIPP.  Looked at the ones available to buy in Europe and the majority are just too small AUM and liquidity wise.

TBC, the EU wants to protect me from the Americans and their large highly liquid ETFs by making me buy a £26m European ETF which hardly trades.  Of course not really, they are just helping the local boys.  Sure, that's gonna work!

And love the Communication Services ones which (bar a Europe only one) are not telecoms centric (hold Disney, Alphabet, Twitter, etc)!

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The code from Ferguson has been independently verified and has produced the same results. See https://zenodo.org/record/3865491

There is also a simple reason as to why running the code with the same input files could produce different results. Monte Carlo simulations are used in epidemiology to create forecasts for the spread of a virus. Each Monte Carlo simulation run will produce one result and will use randomisation. As it uses randomisation, running a second time will produce a different result. 

The whole point of doing this is to obtain a large set of possible outcomes and critically to obtain confidence intervals related to those outcomes. So it it perfectly possible that in the Imperial College report, a large numbr of deaths was one possible outcome. It would have come with a likelihood based on the number of Monte Carlo simulations that produced that figure or greater. This is standard practice.

 

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Hello Mr 1 post and thanks for stopping by the credit deflation thread

I was going to say something about damage control, but then I saw your username and there's no arguing with that.

 

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19 minutes ago, The_Doc said:

The code from Ferguson has been independently verified and has produced the same results. See https://zenodo.org/record/3865491

There is also a simple reason as to why running the code with the same input files could produce different results. Monte Carlo simulations are used in epidemiology to create forecasts for the spread of a virus. Each Monte Carlo simulation run will produce one result and will use randomisation. As it uses randomisation, running a second time will produce a different result. 

From the report: "Simulations were repeated using the public CovidSim implementation, first released in April 2020 onto GitHub, rather than the private code used to generate the findings in Report 9. Small variations (mostly under 5%) in the numbers were observed between Report 9 and my runs."

This is not the code that was used to produce report 9 and has not produced the same results.

Monte Carlo simulations are repeatable using the same seeds for the RNGs. How do you think they are tested?

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7 minutes ago, AWW said:

Monte Carlo simulations are repeatable using the same seed for the RNG.

In Ferguson's case it matters what is seeded and what is variable. The whole point of the Mote Carlo simulation is to produce results that take into account a large number of unknowns. It necessarily will produce a large number of different results but the outliers will have lower probabilities.

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44 minutes ago, Shamone said:

Maybe I guess. Cheers.

I had a look and it's listed elsewhere.  Not tried to buy it though as I could not find any financial data and DB "told" me to buy Mosaic.

PS:  With an attempted purchase like that you'll probably be getting knock on the door, if your lucky!

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16 minutes ago, Loki said:

Hello Mr 1 post and thanks for stopping by the credit deflation thread

I was going to say something about damage control, but then I saw your username and there's no arguing with that.

 

Hi Loki et al. I have been a long time lurker on this thread and appreciate the level and spread of knowledge displayed. Hopefully, I will be add a tiny bit to that. :-) I firmly believe in keeping an open mind and questioning everything.

My investments are in line with the ones discussed here (even the Macbeth holding). 

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Don Coglione
1 hour ago, Harley said:

It's all about price.  Not a science but there are themes in the ongoing battle between bulls and bears which paint pictures.  They provide narratives to what might be going on as in who is likely to have the upper hand.  

The above is an example but where the usual narrative may not be applicable.  Higher lows and lower highs usually means bulls are consistently ready to buy the dip but are being beaten down by progressively weakening bears.  Eventually the bullish sentiment breaks through and the price takes off like a coiled spring.  But not in this case!?  My interpretation FWIW is that the market was fundamentally weakening well before CV (a common view in the later days) and that may impact any recovery (the BOE, etc measures although tbd).  And if the market has further to rise it may hit further resistance at the upper descending line.

Looking at other data points of the price action can help to paint a possible picture.  MACD is a way of showing changes in average prices.  In the above example it (the fourth chart down) has been on a downward trajectory for many months.  Yet the price appears to have been trending up, although choppy and confusing.  This divergence cannot last and in this case resolved to the downside.  The MACD showed the somewhat rising price had questionable foundations.

Likewise the stochastic (second and third charts down).   This measures the momentum of the price change.  It has been up and down but overall trending down suggesting declining enthusiasm of sorts.

Well that's an interpretation, one of several.  So each to their own and what works for them.  There are many measures that can be used but I've specialised in these two, plus price chart patterns.  Some I win, some I lose.  As long as I win enough times! 

The key thing is to be aware of the time periods being looked at.  The monthly chart above is a long term chart for intermediate trading and investing.  Not for day trading.  But sometimes combinations of the day, week and monthly charts align to confirm or expand on the picture.

I used to use weekly charts to help time buy and hold investments but got far better results waiting, forgoing some gain, and looking at the monthly charts.  I was sacrificing some gain (paying) for more reliable data.  Fine for the long term but rubbish for sort term moves.

But then for investments, I've already looked at the financials so just trying to buy a bit cheaper.  Totally different for trading which is a numbers game wrapped up in careful money management (to avoid getting wiped out by the inevitable duds).

PS:  Your comment about usefulness in times of uncertainty is an interesting two edged sword.  Not so much the uncertainty but the possible impact of the extremes of the price action we've seen.  My usually approach is giving a confusing signal saying this might be a fake but very tradeable bounce at the start but now maybe not.  A real test of fortitude!  But then times of animal spirits enthused by what's happened can also bring clarity and sharper results.

Thanks, Harley, I think I am even more confused than ever...!

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13 hours ago, Cattle Prod said:

 

Science is never settled  If you ever hear that, get suspicious. It's probably not a scientist who said it.

And it wasn't all virology either. I deal with probabilistic distributions every day to model uncertainty (how big is an oilfield) and I could see straight away major flaws in his model assumptions. Think I discussed it on here. Not even the code. For example he assumed perfect mixing of populations. ie I will interact with a random selection of people every day. This is clearly stupid - I more or less see the same people every day (family, colleagues, shopkeeper, regular commuters) with some randoms. Tweaking this assumption alone would massively bring down contagion.

Then it transpires the guy is a hard core lefty, who probably dreams of Orwellian control. It was idealogical, imo. He should be fired, for a professor at imperial his science is truly shite.

Incidentally, this is the exact same reason that I advise you guys to stay away from small oil companies. Probabilities are multiplicative, so if you over egg one parameter you massively skew the result "we have loads of oil whooo hoo!!". I don't know how many people I told to stay away from Hurricane Energy, but their CEO just kept talking a good game. He wasn't lying, he just got one volumetric parameter badly wrong. He got sacked though, as Ferguson should.

All excellent points you make Cattleprod. Btw, the 'settled' bit was me being critical of the current zeitgeist, but accept nothing is new under the sun, eg Newtonian science was also settled until Einstein came along. But I did rather stupidly neglect to mention my main point, which was really to state again how blatantly political the scientists were at those Corona briefings. Yes, the government scientists were constrained in what and how they could say things, but I don't mind admiting that i found it a freak show and it horrified me because it all smacked of Orwell's 1984, ie so much propaganda, technocrats and newspeak on parade.

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11 minutes ago, The_Doc said:

In Ferguson's case it matters what is seeded and what is variable. The whole point of the Mote Carlo simulation is to produce results that take into account a large number of unknowns. It necessarily will produce a large number of different results but the outliers will have lower probabilities.

Just want to gauge your level of understanding here:

1. Do you think it is impossible to repeat (i.e. exactly replicate) the results of a Monte Carlo simulation?

2. Do you think there are any issues with Ferguson's publication of isolated forecasts for each set of inputs?

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6 minutes ago, The_Doc said:

I firmly believe in keeping an open mind and questioning everything.

Well, we have that in common.  Welcome! xD

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14 minutes ago, Harley said:

I had a look and it's listed elsewhere.  Not tried to buy it though as I could not find any financial data and DB "told" me to buy Mosaic!

I missed the bottom so didn’t get any mosaic yet but did get a small amount of K + S so I’m hopefully still in his good books.

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sancho panza
8 hours ago, DurhamBorn said:

Its the only one iv been buying as well SP.Apart from being a macro strategist im a contrarian at heart and the sector is hated,really hated.However their rents are at about 7% turnover for the retailers and thats very cheap.If the shake out in retail had been slower they would of managed it easily,but the massive hit of Covid will be making it very difficult for them even.Im happy to have a punt on them though,but only a smaller holding.

The shakeout in retail ahs been something else to behold.Although I'm long this market ,I'm what's classed as a perma bear I guess.I state that only so I can say that I didn't see the end of retail coming as quickly as this....at all.It's going to screw some of the banks over too.

I took little Miss Panza to Leicester market this morning and we stopped by the pound shop(High St) to get some stuff.Only two tills running for social distancing(ironic really,as it meant there was huge back up of customers in the shop), and the flow through isn't enough to sustain those businesses given how wafer thin their margins are where they're currently sited.

More power to the smaller local shopping malls I guess.

I think some of the poundland style/card factory shops will make it through but I think the days of them paying £40k p.a. rent are gone.

8 hours ago, Cattle Prod said:

That was a great thing for a government, ( i.e. the people, a real government) to have done. Ballsy and can you imagine the lobby Rockefeller would have mounted against it? They did it anyway, and the people benefitted, and to this day the daughter companies of Standard Oil compete bloody hard against each other, innovate, try and retain the best people, promote the best ideas, etc. good for everyone. Whenever I hear of another merger, I groan. Can you imagine what would come out of a Google breakup, where units of that company had to compete with each other?! It'll happen at some point I'm sure, as Nassim Taleb points out, large organisations are inherently unstable.

Absolutely,It harks back to the day when the politicians owned the business lobbies rather than the other way around.

The last bit in bold reminds me of Hyman Minsky's 'stability is inherenetly destabilising' theory.

The FAANG stocks have had an easy time legislatively.

QUite how Facebook/Twitter/Google have maintained utility status at the same time as blatantly censoring users of said utilities is something to behold.

4 hours ago, Knickerless Turgid said:

Harley (and others),

Can you give an explanation as to why charting works? Be it short, medium, or long-term, I simply can't understand how chart patterns can determine market entry and exit points. Doubly so during a time of uncertainty, such as now.

Genuine question, not trying to piss off anyone!

As per Harley's reply above,charts are often used in conjunction with Dow theory.

Personally,I've traded multiple timeframes technically,but I use a very basic set up.

If you plot a 10month exponential MA with a 13 month on the S&P,,you'll see that over the years,wipsaws included,buying and selling the crosses(moving to cash) would have got you ahead.Takes a strong soul to overide the urge to push the sell button

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sancho panza
1 hour ago, The_Doc said:

In Ferguson's case it matters what is seeded and what is variable. The whole point of the Mote Carlo simulation is to produce results that take into account a large number of unknowns. It necessarily will produce a large number of different results but the outliers will have lower probabilities.

What matters is that he got his predictions badly,badly wrong.

The Swedish epidemiologist said a couple of months back,words to the tune of,

'never has one non peer reviewed paper had such an effect'.

I think Ferguson should release the full code and the methodology of how he arrived at his conclusions,so that he may be peer reviewed in good order buy the representatives of the taxpayer's who's funding he has benefited from.

Whilst not solely due to Freguson ,people have had cancer treatments suspended,elective operations cancelled and more generally,the nation's health has really suffered due to the excessive focus on Covid.I think we're owed some genuine reflections on what went right and what could have gone better.

 

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1 hour ago, Harley said:

Well b*gger that!  I looked into buying worldwide Sector ETFs (e.g. Materials) for a SIPP.  Looked at the ones available to buy in Europe and the majority are just too small AUM and liquidity wise.

TBC, the EU wants to protect me from the Americans and their large highly liquid ETFs by making me buy a £26m European ETF which hardly trades.  Of course not really, they are just helping the local boys.  Sure, that's gonna work!

And love the Communication Services ones which (bar a Europe only one) are not telecoms centric (hold Disney, Alphabet, Twitter, etc)!

Interesting Harley, as I am about to do a personal review of etfs/funds/trusts to hold, for my own self identified next-cycle themes/sectors/regions. I'm doing this because I haven't the skills to select a suitable number of individual stocks, so want to use funds to add more diversification. As you have amply shown in previous postings, there are so few 'good' funds out there, and the ones worth owning are in a small minority.

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1 hour ago, sancho panza said:

The FAANG stocks have had an easy time legislatively.

QUite how Facebook/Twitter/Google have maintained utility status at the same time as blatantly censoring users of said utilities is something to behold.

Indeed SP, and if I may 'expand' the criticism... - now it suits them, these faang companies have aquiesed to having 'regulatory controls' (poor things!). 'Publish and be damned' is a well known phrase, well I say why not make YouTube et al, all publishers and then damn them all! What I mean is that their cosy disingenuous 'platform' model would collapse overnight.                                                                                                                                                                                            I particularly dislike these companies because I view them as inhabiting a kind of US Wild West metaphor (bear with me!), where violent bullying lawless types once called the shots(?!) until that is, towns hired their own sheriff's to control things... Btw, the 'violent bullying lawlessness' I see is in the 'violent'-social-group-fragmentation of society, the 'bullying'-content-censorship, the 'lawless' non-tax paying (corporate-personhood-on-steroids) status of these companies... Am I being OTT? I don't think so, after all, as per this thread, and in the last days of our consumer society, are not these companies just merely devouring their own host society? Surely at the very least their business practices are soon to become relics of the West-ern world(!?), and I wait impatiently for our own Clint Eastwood type 'sherif' character to round them up!!

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RickyBacker

Just a quick one relating to the 'big idea' of DB's incredible thread. This guy doesn't have that many followers on You Tube, but his content is astounding. His latest 2 minute video shows that the FED are locked and loaded and ready to fire the infrastructure spending bullet. @ErrolIf you're not aware of this guy, you will love his stuff.

 

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9 hours ago, Harley said:

then for investments, I've already looked at the financials so just trying to buy a bit cheaper.  Totally different for trading which is a numbers game wrapped up in careful money management (to avoid getting wiped out by the inevitable duds).

So are you saying that TA as a tool is very much for short/mid term trading whereas FA is for long term investing...or should you be using a combination of both?

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