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

[DurhamBorn]

15 minutes ago, MrXxxx said:

Can you explain why (genuine question).

Insurers park a lot of their income into short term paper so higher rates higher profits.They also gain because they have a lot of annuities based on low rates,though they will be more hedged.

[MrXxxx]

4 minutes ago, DurhamBorn said:

I still own some GOG down 55%

Well that's made me feel better, perhaps I am a financial genius the?! :-)

[DurhamBorn]

19 minutes ago, MrXxxx said:

Thoughts on Anglo American?

I think Anglo have the best management in the industry.I had them back in 16 when they got smashed and sold them all around £14 when they trebled.I was going to buy some in March during the falls,but they never tagged my buy point so missed out on getting any.I bought a lot of BHP below £10,but no Anglo.I wish i had got some,but not buying now as my allocations are pretty settled now and im just topping up other holdings.

What you can take from Anglo though is by buying the Yorkshire potash project they are telling you potash is close to the bottom of the cycle.Just need BHP to push its huge project in Canada forward.

[Democorruptcy]

6 minutes ago, DurhamBorn said:

I was laddering in,in March most sectors fell through 3 ladders at once  ,got lucky on them really,i bought decent whacks,but then thought this could be structural change and decided to sell and in the meantime they had rallied hard.I was going to hold National Express,but when the CEO jumped ship i decided to sell those as well.I still own some GOG down 55% and Stagecoach down 66%.I might top up at some point,but i dont like the fact they are 100% now depending on government.

 

Well given the premise of this long running thread that's more like what some thread watchers (buyers) might expect. It doesn't seem fair on them to only look at purchases since your lucky pension transfer timing!

Disclosure, never owned GOG sold all my SGC 27th Feb after noting a lack of buses on Chinese streets! I have been tempted several times to buy back in but cannot manage to click.

 

[nirvana]

18 minutes ago, DurhamBorn said:

the fact they are 100% now depending on government

isn't that the case for all the economy now?

And this is what has worried me about the north east for a long time now.....3 economies...

1 - fat benny scroungers

2 - fat public sector workers

3 - Nissan and it's associated supply chain.........

how much has Nissan taken from the government since startup? And now Renault has announced losses of €7.3 billion

quote 'Without Nissan’s negative contribution to the alliance, Renault’s losses were at €2 billion'

There is no free market economy anywhere anymore, it's so fucked it beggars belief.......doesn't appear to bother stoopid fatties like my brother mind you 

e2a - he's in economy no 3 so not one of the most annoying fatties 

[Democorruptcy]

On 31/07/2020 at 11:31, Donald McFlurry said:

Good spot on the CPI stuff.

 

I think lot of capex in the last 20 years at telcos has been in dealing with two step changes in technology; the move to optical fibre, and the change in technology from circuit to packet switching.. Telefonica have been shutting down copper exchanges across Spain for the past few years and are ahead of BT that area, at least domestically. 5G networks are completely packet optical, so a lot of old equipment can be thrown away over the medium term as 2G and 3G networks are turned off. Another aspect of this has been the painful legacy of restructuring a business that has undergone huge changes in terms of staff and organisation. However, those big adjustments are all laying the groundwork for far lower expenditure in the future. Upgrades to capacity can be achieved on packet/optic infrastructure by swapping or adding equipment, rather than digging up the ground again. Operational costs are also reduced, with lower power footprint of exchange equipment, fewer active street cabs and increased reliability and quality of optical fibre.

Once those debt piles become manageable, they should generate very solid returns. Even more so in an inflationary environment.

That's purely looking at it from a phone point of view. When we had buyers on here at £2+ I seemed to be the only one that pointed out some potential problems like the huge pension deficit, the price wars due to extra telco competition in Europe compared to say the US. The costs of removing Huawei kit.

BT are now very much into TV and that is a huge expenditure for the future. At the moment just the 12:30pm Saturday Premier League contract that expires 2022 cost £9.2m per game. It's not just about phones any more, it's a gamble on TV being able to tempt new or retain existing customers via a wider product offer.

Also BT are going against the trend and ramping up their ex-EE high street presence. Their 615 shops will be more than any other telco firm O2 2nd with 450. BT is also moving all of its customer call centres to the UK and Ireland and has promised 900 'home technology experts' will be on call to visit homes and fix problems. That's all increasing costs.

I think when we exit the Brexit transition period the sector might get more interesting, especially if it relaxes competition rules.

Disclosure: Despite having some doubts about BT at earlier thread prices, I did buy a few in Feb only because I didn't own any shares in anything. Then some more in the March crash. That was going to be my lot, after they suspended the dividend for the year ended March (profits pre-covid) while executives got 75% of their annual bonus . However the 99p on Friday tempted me in again. Come on governbankment, give us some money!

[nirvana]

42 minutes ago, Democorruptcy said:

However the 99p on Friday tempted me in again. Come on governbankment, give us some money!

Same here, I was last in them at circa £1.90 but sold when they were going down.....trailing stop loss anyone? will sell on a 10% bounce next week 

[jamtomorrow]

1 hour ago, Democorruptcy said:

That's purely looking at it from a phone point of view. When we had buyers on here at £2+ I seemed to be the only one that pointed out some potential problems like the huge pension deficit, the price wars due to extra telco competition in Europe compared to say the US. The costs of removing Huawei kit.

BT are now very much into TV and that is a huge expenditure for the future. At the moment just the 12:30pm Saturday Premier League contract that expires 2022 cost £9.2m per game. It's not just about phones any more, it's a gamble on TV being able to tempt new or retain existing customers via a wider product offer.

Also BT are going against the trend and ramping up their ex-EE high street presence. Their 615 shops will be more than any other telco firm O2 2nd with 450. BT is also moving all of its customer call centres to the UK and Ireland and has promised 900 'home technology experts' will be on call to visit homes and fix problems. That's all increasing costs.

I think when we exit the Brexit transition period the sector might get more interesting, especially if it relaxes competition rules.

Disclosure: Despite having some doubts about BT at earlier thread prices, I did buy a few in Feb only because I didn't own any shares in anything. Then some more in the March crash. That was going to be my lot, after they suspended the dividend for the year ended March (profits pre-covid) while executives got 75% of their annual bonus . However the 99p on Friday tempted me in again. Come on governbankment, give us some money!

I find BT in its current form hard to buy. It's such a mixed bag, and hard to tell from here whether the unfocused retail and B2B offerings and general residual monopoly sclerosis will drag the cyclical infrastructural upside under the waves.

Openreach Plc would be *quite* a different proposition however.

[Lightscribe]

Big move at the BTC $12100 support level this morning. Someone wanted to liquify the long contracts without any stop losses. You have to be an idiot to leverage bet on crypto at the best of times, not putting in stop losses and you deserve everything you get.

Im not complaining, a massive buy wall was put up at 65000 in LINK so I managed to get in at 65001, then sold immediately on the rebound to 70000. Not bad for a Sunday morning.

[Clueless Imbecile]

10 hours ago, CVG said:

I expect mean UK property to revert to aound 5x mean annual salary (Is that a 50% average drop?). I've given up guessing when, and you may also find prices go down much more than that before reverting to the new mean. Prices will differ in different regions. Where are you?

You don't mention a pension. In my book that comes first - sorting out your long term post work finances.

Given your happy state I'm tempted to say don't change it while you don't have to. You realise that can't continue indefinitely and are making plans. Good job.

Thanks for your comment.

I have a defined-contribution money-purchase pension, which is invested in a default fund (mostly a collection of equity & bond index funds as far as I know). I know that goes against the theory of this thread, but my current thinking is to keep it as it is and keep putting modest contributions in. I see it as a hedge against two possibilites:

1) If things do not turn out the way this thread has imagined (e.g. if indexes were to continue to peform reasonably well).

2) If things do turn out the way this thread has imagined but if I screw up by not executing the strategy well enough. (e.g. in my ISA I didn't invest enough in PM miners and didn't ladder in enough, so I've only made modest gains. Also, some of my reflation stocks are down 40 to 60 percent.... OUCH! LOL!).

I'm in Cheshire. The kind of property I'd consider would be any of the following:

1) Bungalow
2) 2 or 3 bed terrace
3) 2 or 3 bed semi-detached

Typical asking price for any of those recently in the areas I'm interested in is £250K to £300K. I like the idea of a bungalow the most. Also, a bungalow might be suitable for one or both of my parents to move into at some point, if they find they can no longer cope with the stairs in their house.

Cheers,
Clueless Imbecile

Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.

 

[Clueless Imbecile]

6 hours ago, MrXxxx said:

Putting the financial aspects to one side, I think you provide all the reasons for not owning a property.

As for the fear of losing your assets, I don't know if others would agree, but I think this is overplayed by many (famous last words?), and as long as your assets are  well diversified you are unlikely to lose a large part of them in a SHTF scenario...and if this was the case, this would be the `least of your worries`. The greatest threat is probably inflation eroding your capital.

That said, I am not an financial advisor, this is not financial advice, and so what do I know?

Thanks for your comment.

As you say, I've stated what I see as some of the negatives of owning a property. Here are some of the positives I see....

1) I can finally stop worring about being left behind by rising house prices.

2) If I end up out-of-work (I work in software development, which is a very volatile industry), I might be able to claim benefits. From what I've seen over the past 20 years, the welfare state is far more generous to home owners than it is to savers. Last few times I've been out of work I have been unable to get any benefits because I had savings.

3) My pension is invested in equities, bonds & cash. Currently almost all of my non-pension savings are also in equities, bonds and cash. Owning a property would be a good diversifier.

4) I'm getting tired of agonising about investment decisions. I feel like I should be spending my leisure time doing something that is either healthier or more enjoyable. This is possibly a spiritual thing. I've been "living in scarcity" and "resisting the present moment". I'm starting to wonder if I should try to live more in the present moment and let the future take care of itself. Trying to anticipate and control everything is very stressful.

 

Cheers,
Clueless Imbecile

Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.

 

[Bricks & Mortar]

Russel Napier podcast.  Follows on from his recent written article, featuring his view that we're going straight to inflation from here.
https://ttmygh.podbean.com/e/teg_0005/

[Loki]

5 minutes ago, Bricks & Mortar said:

Russel Napier podcast.  Follows on from his recent written article, featuring his view that we're going straight to inflation from here.
https://ttmygh.podbean.com/e/teg_0005/

Thanks for that, I liked Grant Williams 'Hmmmminar' series so will download this to listen to in the car

[nirvana]

2 hours ago, Bricks & Mortar said:

Russel Napier podcast.  Follows on from his recent written article, featuring his view that we're going straight to inflation from here.
https://ttmygh.podbean.com/e/teg_0005/

I'm listening to this.......

Scottish fucker says 'ock aye the noo, we have financial engineering not to be confused with capitalism, they are 2 different things'

me - fuck off! why don't you just call it what it is, crony capitalism!

American geezer - calls it crony capitalism

me - hahahhahahahahhaaha 

Edit: I've had enough.......he's comparing debt to gdp ratios after the war with now, complete bollocks if you ask me cos it completely ignores absolute values....

[christh]

On 01/08/2020 at 20:23, DurhamBorn said:

https://www.amazon.com/Total-21st-Century-Trigger-Pandemic/dp/1892998262

Worth watching to see if we can get a copy in the UK easily.Iv read some parts of this and it looks like it really gets into where we are going.Likely this will provide lots of pointers to the cycle ahead.The west is going to re-tool and arm.Since the did what they did with China flu and Hong Kong,the UK will be using lots of soft power against China as well,and China is making a huge mistake thinking we are too small to worry about.

Hi guys. Longtime lurker, etc. etc. I listened to some of Gregory Copley's stuff this morning and was completely blown away - thank you so much for drawing this to my attention, DB. Managed to track down a place to buy his book - in eBook form at least:

https://www.strategicstudies.org/ISSA Store.htm#!/The-New-Total-War-of-the-21st-Century-PDF-ebook/p/206749218/category=0

(sorry Spunko, my first post after you approve me and it has a link in it - bloody spammers )

[MvR]

On 01/08/2020 at 17:36, Cattle Prod said:

Cheers, I'll try again

oooh.. this is nice.  I've been exploring the platform ( still discovering features after 15 years!), and came across the Scale Trader.. basically a little algo that lets you enter a ladder of buy orders, automatically shift them all up slowly if you're keen, exit tranches when profit targets are hit and automatically reset each ladder rung for another run.  A sort of DB-omatic.

 I've set it to run on MOS ( Mosaic potash) as an experiment..

You can even scale in to pairs trades. Here's a nice looking pair.  Long SPY / Short 4 x SHE, the Gender Diversity ETF ( ! ). 

[MrXxxx]

20 hours ago, Democorruptcy said:

BT are now very much into TV and that is a huge expenditure for the future. At the moment just the 12:30pm Saturday Premier League contract that expires 2022 cost £9.2m per game. It's not just about phones any more, it's a gamble on TV being able to tempt new or retain existing customers via a wider product offer

I think this is a good point....with Covid fear/hysteria now set-in to the psyche of the majority of the UK population people may be reluctant to turn up to venues, preferring to watch it in the safety of their own home/social bubble.

[Queasing]

True contrarian blog update 2nd Aug

https://truecontrarian-sjk.blogspot.com/

Quote

 

 we currently have renewed intense irrational exuberance which has spread to precious metals, so last week I unloaded all of my shares of GDXJ, GDX, SIL, SILJ, and related funds and kept only my coins. At the end of the week in response to absurd bullishness regarding mega-cap U.S. technology shares, I significantly increased my short position in XLK to 8.5% of my total liquid net worth and will add more this week if the excitement continues. I now have more shorts than longs and the most cash since February 2012--roughly 5/6 of my total liquid net worth.

The bottom line: get heavily into cash now to minimize your potential losses for the remainder of 2020 and to have plenty of buying power for what will likely become numerous compelling bargains.

 

 

[MrXxxx]

16 hours ago, Clueless Imbecile said:

Thanks for your comment.

As you say, I've stated what I see as some of the negatives of owning a property. Here are some of the positives I see....

1) I can finally stop worring about being left behind by rising house prices.

2) If I end up out-of-work (I work in software development, which is a very volatile industry), I might be able to claim benefits. From what I've seen over the past 20 years, the welfare state is far more generous to home owners than it is to savers. Last few times I've been out of work I have been unable to get any benefits because I had savings.

3) My pension is invested in equities, bonds & cash. Currently almost all of my non-pension savings are also in equities, bonds and cash. Owning a property would be a good diversifier.

4) I'm getting tired of agonising about investment decisions. I feel like I should be spending my leisure time doing something that is either healthier or more enjoyable. This is possibly a spiritual thing. I've been "living in scarcity" and "resisting the present moment". I'm starting to wonder if I should try to live more in the present moment and let the future take care of itself. Trying to anticipate and control everything is very stressful.

 

Cheers,
Clueless Imbecile

Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.

 

1. Check the relative/real prices in Cheshire, have they really performed that much better than any other investment?..my understanding is that it's only really the South (UK) that has, and this is about to change big time. Also, you arn`t out of the market as your parents have a property so when/if they have to move into a bungalow (or you inherit it) the capital is in the same sector.

2. How much are you really going to benefit (no pun intended!) from this?...with your skill set you won't be long-term unemployed, and with all the Covid expense they are going to tighten down on benefits....or perhaps that's `wishful thinking` on my part as someone who is currently paying for it?!

3. Is part of your pension plan not invested in REIT`s?

4. I empathise, as I felt the same initially when the learning curve was really steep; now its only steep. Initially I had a fear/panic of not doing anything, not knowing what to do,  reading too much conflicting info, and worrying about making a mistake.

I have now accepted all of the above and made it acceptable through a) a few basics I.e diversification, risk levels tranche of funds (see @Harley posts for this), b) not panicking I.e my capital in current market will not `evaporate` overnight/in the short-term, and c) I will make some mistakes as all investors do, but they will be limited and outweighed (hopefully!) by my other decisions..one thing I know for sure, if I do nothing and stay in cash my capital value is only going in one direction!

Finally as for the Index question and Active vs Passive.  After doing lots or reading for/against I have come to my own conclusion that both are appropriate BUT the timing is important I.e when market is stable passive index following is a suitable, low cost, low time approach, but when its not an active approach is required.

As always DYOR/not advice etc.

[ThoughtCriminal]

1 hour ago, Queasing said:

True contrarian blog update 2nd Aug

https://truecontrarian-sjk.blogspot.com/

 

Interesting. 

 

Looks like I’m not the only one noticing the hubris.

[Jesus Wept]

2 hours ago, Queasing said:

True contrarian blog update 2nd Aug

https://truecontrarian-sjk.blogspot.com/

 

I am of the same opinion.

This morning I have just sold off all my indices trackers:

(Emerging markets, S&P, and Japan)

.....which were the first shares I had bought ( at the March 2020 lows) since the year 2000! (I also sold everything 4 weeks before the collapse then in Mar 2000 - paper shares - those were the days! It’s so much easier now - so you get much bigger/quicker collapses and more volatility I reckon as a result). 

I have also trimmed ‘a large’ SILVER position this morning and taken all the profits (a better than expected 35%) since buying in mid May.

What I have learnt? (obvious for others)

- Take profits and ‘trim’ regularly. 

- Use profits to diversify or hold in cash ready for market correction.

- Always have a good holding of cash ready for next leg down/correction.

- Don’t buy ETFs (where possible) - Future exceptions for me will be ‘physical’ PMs 

- Don’t buy Index trackers (etf) as they do not give a dividend - (mind they have been/can be very profitable) 

- Buy big companies that will pay dividends long term

- ‘Ladder down’.

- Use efficient ‘tax vehicles’ (ISAs, SIPP etc)

- it takes 2-3 days for cash to clear if you want to transfer to other buying accounts

- Sector buys: Potash, Miners, Telcos, Oil & Energy, PMs

- Strategy is to (mainly) hold big large capital/asset resourced companies that can weather the downturn (pay off long term debt at low IR) and that will potentially pay large dividends over time - but and hold in ISA etc.

I am also planning to also go short on the NASDAQ in the coming days.

I have been tempted to add some more BP, RDSB, VOD, MOS, SDF at present but will sit on sidelines for now as I think there will be a big correction soon which will take those companies to even lower lows.

Could we see RDSB and BP sub £10 and £2.50 respectively? They look very cheap even now. 
 

RDSB is currently £10.69..... 😳

 

 

[CVG]

3 minutes ago, Vendetta said:

have been tempted to add some more BP, RDSB, VOD, MOS, SDF at present but will sit on sidelines for now

Maybe you changed your mind after just watching me but some BP, RDSB, VOD (and BT) today!

[Loki]

5 minutes ago, Vendetta said:

Take profits and ‘trim’ regularly. 

I try and do the opposite as too much fiddling can end up making things 10x worse (And £11.95 per trade helps put too much faffing about in perspective - that's £23 to sell one position and buy another)

[Jesus Wept]

2 minutes ago, CVG said:

Maybe you changed your mind after just watching me but some BP, RDSB, VOD (and BT) today!

Maybe! 
 

RDSB has a ‘Current’ dividend of 13.68% if it paid what it did last year.
 

Obviously it won’t/hasn’t  - but in 5 years time when/if dividend returns - that would be a lovely return each year. 

[Jesus Wept]

1 minute ago, Loki said:

I try and do the opposite as too much fiddling can end up making things 10x worse (And £11.95 per trade helps put too much faffing about in perspective - that's £23 to sell one position and buy another)

I used to think like that but reckon £23 is ‘small potato’ compared to overall holding.

Also it depends how many different stocks you hold.

Question to all:

How many different companies / S&S do you hold generally at any one time. I.e what do you think is a ‘good size’ for a diversified portfolio? 
 

Obviously the more you hold and buy and sell will give more weight to @Loki argument of buying and holding and not trimming but selling entire holding of that stock. In a large portfolio of a variety of shares buying and selling regularly would soon add up.