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

[JMD]

3 hours ago, M S E Refugee said:

If you had certain 1oz Silver Bars such as Johnson Matthey,APMEX and Scottdale Silver there nothing to stop a buyer taking the real bars off a seller then deciding to return you their fake Chinese versions claiming you sent the buyer fakes.

They would get their money back and keep the real Silver.

MSE, yes i agree that is a big risk for bars, especially with the potential £ amounts involved. I also think your BullionVault - 'compromise' - argument is a powerful one, and its ideas and information like that that make this thread so valuable i think.

However, i remember this topic being discussed very early thread, and the consensus then was to invest in Britannia coins and to sell later on eBay. Sasquatch and others here do this already. The problem i guess is as silver/gold rise in value, this will only encourage lots of Britannia fakes.

The reason i ask about this is that 'keeping open' a route to sell our pm's is crucial - both in terms of the practicalities of selling (when that time comes), and also how to invest/buy in the first place (especially if related or preffered selling routes are withdrawn in future). For example, i personally believe that we won't have the option of selling pm's for cash (at dealers) in the future, i.e. governments will want to keep tabs on commodities later in the cycle (i actually think cash will be controlled more and more, starting with high value items, until it is withdrawn entirely). However, I think selling via the internet (dark web?) using crypto might be a possible/probable option. I just think that investors accumulating large stores of physical metals (coins/bars) need to have this on their radar.     

[JMD]

2 hours ago, sancho panza said:

Cheers JMD,been away in Switzerland for a holiday seeing friends,and was that busy catching up and making sure the kids didn't wreck our friends hosue,I ended up witha lot of reading to catch up on.

My thesis...we'll see $ weaken here,gold and commodities move higher,most importantly we'll see supply squeeze on oil which added to weaker USD$ will see oil rise as we head into the BK.High oil prices will contribute to wider inflationary concerns/reduced scope of movment for CB's/broader defaults adding to debt deflation via drops in aggregate demand and corporate bond market yields moving hihger.

BK -as I currently see it-will consist of a debt defaltion in credit marekts running alongside price inflation in commodities as currencies weaken

AS BK looms,commodities will drop and everyone will head into teh USD for one l;ast time(I reference here an excellent discussion a few hundred pages back where the conclusion was that the USD had one last run in the sun-and I agree with that thesis).This period will liekly feature the motehr of all banking crises.

Ergo-the 360 trade as I call it becuase my aim is to come full circle-conssits of selling commodities,then buying UST's or USD cash,hopefully watch your commodity stocks drop and then repurchase with your cash

BK will be signified as proven to me after 60%-70% drop in Fang stocks hattip @Cattle Prod. No 60% off then the BK hasn't happened

Timings

First of all,I reserve the right to not sell a thing if I can't see a clear strategy/likelihood of getting our goldies/oilies/potash back.The Plan B trade is to jsut sittight

I don't have a crystal ball,and prefer triggers which I've already listed ie they'll make me feel like a bottom might be in/coming so DXY<85,UST yields higher,GSR sub 45(on monthly chart).Key thing is that I want to be sure we're approaching a bottom in the dollar.without that,I'll stick to plan B.

Last thing I want us to be is stranded in GBP/USD as gold moves to Errol's selling point.

That's the main thing I'd stress is that we're facing a huge test of contral bank omnipotence(and I think they're going to lose),you drop your PM exposure at your peril imho.

 

SP, thanks for explaining so fully. I will definitely be looking to trade this market down-up BK phase, hence my interest - but whether i just top-slice my pm profits or sell deeper, i haven't decided yet.

I am certainly no expert, but i wonder to help me understand the fundamentals more, are you broadly in agreement with Russel Napier?... I think the following article was posted here recently, not sure if you've already seen this? But if you have time to read it, i would be interested to understand where you agree/disagree with him (maybe you agree fully with his theory!).

https://themarket.ch/interview/russell-napier-central-banks-have-become-irrelevant-ld.2323

[Sasquatch]

1 hour ago, JMD said:

However, i remember this topic being discussed very early thread, and the consensus then was to invest in Britannia coins and to sell later on eBay. Sasquatch and others here do this already. The problem i guess is as silver/gold rise in value, this will only encourage lots of Britannia fakes.

The reason i ask about this is that 'keeping open' a route to sell our pm's is crucial - both in terms of the practicalities of selling (when that time comes), and also how to invest/buy in the first place (especially if related or preffered selling routes are withdrawn in future). For example, i personally believe that we won't have the option of selling pm's for cash (at dealers) in the future, i.e. governments will want to keep tabs on commodities later in the cycle (i actually think cash will be controlled more and more, starting with high value items, until it is withdrawn entirely). However, I think selling via the internet (dark web?) using crypto might be a possible/probable option. I just think that investors accumulating large stores of physical metals (coins/bars) need to have this on their radar.     

I have bought but not sold on ebay (other than recently getting rid of a quarter sovereign on ebay as it had a bulky box and also paperwork which was beginning to irritate me in terms of storage! The buyer was super happy with his purchase even though, in my opinion, he overpaid at £120 incl delivery). I might shift some proof sovereigns as well in the near future as again they are accompanied by relatively large boxes. Only reason I own them is that I picked them up cheap in antiques auctions last year for probably half of their current ebay value. 

I haven't decided what to do with silver britannias when I eventually decide to sell. I bought most of my holding in the first half of 2019 so looking good at the moment, despite the price mark up for coins over bars/bullion. If it comes to pass that a single britannia is 'worth' say £100 in fiat, I may try a few on ebay and see how it pans out. I doubt I will fancy selling sovereigns on ebay if they end around £1,000+ each. Just too much room for abuse by a zero feedback buyer with a one day old account. For these it will be a trip to London or more likely Blackpool.

 

[AWW]

8 hours ago, wherebee said:

I can't imagine anything more insane than buying or selling precious metals via ebay, and using paypal for settlement on top.

Buying and selling PMs via dealers perhaps?

Zero bad PM deals in 50+ for me. Mobile phones on the other hand...

[Jesus Wept]

I have been thinking of diversifying more into the telecom sector.

It looks undervalued.

I already hold a chunk of VOD and was planning on adding a few other sectors.

Whats the general consensus on Telefonica? Lots of debt valued at $21bn and paying about 7% dividend.

Any other favoured telecoms? 

[DurhamBorn]

26 minutes ago, Vendetta said:

I have been thinking of diversifying more into the telecom sector.

It looks undervalued.

I already hold a chunk of VOD and was planning on adding a few other sectors.

Whats the general consensus on Telefonica? Lots of debt valued at $21bn and paying about 7% dividend.

Any other favoured telecoms? 

Telefonica is now my 2nd biggest holding after Vodafone,i also own some BT and another i really like is Telia.Telenor isnt as cheap as the others,but might be a take over target so own some of them as well.

Telefonica does have too much debt,nearly all telcos do,but their networks are nearly all modern now and i expect free cash to start to grow and debts get cut quicker.They will also stuff a lot of debt into the O2/Virgin merger and remove it from the parent.Like VOD i think their towers business is worth much more than the market thinks.I think the sector in Europe will consolidate like the tobacco industry did during the late 90s onwards.

Its amazing to think,but 4 out of my 10 biggest holdings are telcos,and i got them all for free from silver miner profits,more than free actually as the silver miners produced even more profit than i have in them.

Luckily it seems potash is now taking up the baton from silver.Mosaic leading the charge so far.

[Ellandback]

Interesting article from our old mate Don Durrett:

Summary

• Silver is currently in a bull market.
• There are very few pure silver miners left, creating opportunities for investors.
• The GSR (gold-silver ratio) has been trending down from 122 to 70. This bodes well for silver prices.
• Gold is trading at an ATH (all-time high), but silver has a long way to go to reach an ATH ($27 to $49).
• A good trading strategy could net once in a lifetime returns.

https://seekingalpha.com/article/4367147-silver-miners-shine

[sancho panza]

6 hours ago, JMD said:

SP, thanks for explaining so fully. I will definitely be looking to trade this market down-up BK phase, hence my interest - but whether i just top-slice my pm profits or sell deeper, i haven't decided yet.

I am certainly no expert, but i wonder to help me understand the fundamentals more, are you broadly in agreement with Russel Napier?... I think the following article was posted here recently, not sure if you've already seen this? But if you have time to read it, i would be interested to understand where you agree/disagree with him (maybe you agree fully with his theory!).

https://themarket.ch/interview/russell-napier-central-banks-have-become-irrelevant-ld.2323

There's a lot in that article I'd agree with-QE didn't work(I have read it before),it jsut created asset bubbles based on bad debts,velocity moving higher,govts taking over from CB's,China having been a force for deflation now becoming a force for inflation,domestic insitutions being forced to buy govt bonds.

It's the mechanics and timing where I think questions arise.At any point-most likely when the CB's can print no more due to inflation-the banks could go under and take some chunky asset markets with them.Post Basel 3,so much lending is predicated upon some pretty shocking risk weighting of loans,that's it's hard to see how it won't end in a chunky credit deflation.Even if Napier is right and the govts step in,then it will take some time to balance flows psot deflation.

Even during this -probably epic-credit deflation,we could see some chunky price inflation and that's where I find the predictions become harder if he is right, as the amount of moving parts increases exponetnetially in the scenario he envisages.Hence I'm content to play with oil/gold

So in short,whilst I agree with napier on many things,I think he's a little blase about the impact of a debt deflation on the banking sector.

Sorry if I seem to be splitting hairs.

Edit to add:

[sancho panza]

[wherebee]

8 hours ago, JMD said:

MSE, yes i agree that is a big risk for bars, especially with the potential £ amounts involved. I also think your BullionVault - 'compromise' - argument is a powerful one, and its ideas and information like that that make this thread so valuable i think.

However, i remember this topic being discussed very early thread, and the consensus then was to invest in Britannia coins and to sell later on eBay. Sasquatch and others here do this already. The problem i guess is as silver/gold rise in value, this will only encourage lots of Britannia fakes.

The reason i ask about this is that 'keeping open' a route to sell our pm's is crucial - both in terms of the practicalities of selling (when that time comes), and also how to invest/buy in the first place (especially if related or preffered selling routes are withdrawn in future). For example, i personally believe that we won't have the option of selling pm's for cash (at dealers) in the future, i.e. governments will want to keep tabs on commodities later in the cycle (i actually think cash will be controlled more and more, starting with high value items, until it is withdrawn entirely). However, I think selling via the internet (dark web?) using crypto might be a possible/probable option. I just think that investors accumulating large stores of physical metals (coins/bars) need to have this on their radar.     

Governments have tried this for thousands of years.  It doesn't work.  Because you can melt gold and silver down and completely conceal the origin, but keep the value, there will be an instant black market.  Walk into any dealer with one coin and if he says you have to provide ID, you refuse, I guarantee many dealers will find another way to get you a buyer.  You might not get full spot, true, but is gold is 10,000 a coin who cares.

Now, if you attempt to offload 50 coins at once, that's not going to happen without contacts.  But the odd coin here and there - no problems at all.

I wish I had been able to get some PMs over the past ten years, but as stated before moving around so much internationally made that not an option, so I had to go for miner shares.  If I did have PM's, I would not be worried about government restrictions.  I would, however, be worried about a 'windfall tax' on balances in pensions and banks.  It has already happened in 2 european countries in the past 20 years.

[Harley]

Part of the excellent "The End Game" series of podcasts, episode 6 has the exceptional Lacy Hunt who, as Grant says towards the end is a really smart and well trained and read economist!  One for the macro economically minded amongst us.

https://mcdn.podbean.com/mf/web/5u6heu/TEG_0006.mp3

Hats off to Bill and Grant for their excellent podcasts.  Charming, relevant, and very clever!

[Jesus Wept]

9 hours ago, DurhamBorn said:

Snip//

Its amazing to think,but 4 out of my 10 biggest holdings are telcos,and i got them all for free from silver miner profits,more than free actually as the silver miners produced even more profit than i have in them.

Luckily it seems potash is now taking up the baton from silver.Mosaic leading the charge so far.

Thanks @DurhamBorn for responding re. Telefonica.

Potash does indeed seem to be at the start of a significant push upwards....

Do you hold any Intrepid Potash? Up 18% yesterday? I think the whole sector will go up as one.
 

Have you any interests in the minnow potash developers and explorers? 
DAN, EML, SO4 et al.....? 

[DurhamBorn]

1 hour ago, Vendetta said:

Thanks @DurhamBorn for responding re. Telefonica.

Potash does indeed seem to be at the start of a significant push upwards....

Do you hold any Intrepid Potash? Up 18% yesterday? I think the whole sector will go up as one.
 

Have you any interests in the minnow potash developers and explorers? 
DAN, EML, SO4 et al.....? 

I only own the big potash companies (though they got so cheap in March their market caps got small),Mosiac especially got to an insane price in March under 8 bucks.The only areas i ever buy small companies is in the silver miners and medium in the gold miners.Im at the stage where im not chasing multi baggers,my portfolio now is hopefully positioned to outflank the inflation coming.Im aiming for a 6.5% compounding return over the cycle,though of course its very likely il way out perform that given the amount of doubles already and the slicing and slight sector rotation.Im pretty pleased now in that everything i own id gladly hold for the cycle if everything ran together,or id happily top slice anything i own and re-balance if we get sector by sector increases (and also big pull backs).

I think everyone on here should be very pleased with how we have navigated so far.

[wherebee]

Looks like the miners have a bit of a pullback.  GDXJ down to 58-59.  I hope it drops some more....

[Jesus Wept]

On 06/08/2020 at 19:30, Vendetta said:

Thanks for this @The_Doc
 

That is a good place to start. I have never really thought about my tax situation as I never had much disposable income, no investments in past, am PAYE and we both have inflation linked final salary pensions.

I did not even now what a SIPP was until recently 🙄 - or even knew much about S&S ISA allowances. Never too late to learn.

Many thanks for all the advice on here - I am learning a huge amount very quickly. 

I have just opened up a SIPP with H&L alongside my ISA. I only started an ISA in early March when I thought the markets would crash and have been investing a fair amount since then in my name and using wife’s ISA allowances too. 

I now have to consider the merits of putting most of these ISA funds into my SIPP.

Background info:

I am 45 and a higher rate tax payer. As part of a ‘public sector’ (I know - I am ashamed), workplace scheme.

I already pay into an ‘inflation linked pension’  which is ‘part final salary and part average earnings’. I started this 17 years ago in 2003. I will be no where near the maximum pot of £1m + etc....

I’d ideally like to retire at 57.

From what I have read about SIPPS so far: 

I can only access from age 57 (after 2028 change).

I can contribute as much as I wish up to £40,000 a year - and with tax relief of 45% - it would essentially mean that ‘to get £10,000 in investments I would only have to invest £5500 of my own money’??

It is exempt for inheritance tax (unlike ISA).

0.45% yearly charge on held funds.

I will obviously research this further and seek advice etc - however I would really appreciate any words of wisdom or guidance on here for people who have further down this road then me. Any pluses and minuses etc? 

How does one go about transferring ISA investments into the SIPP - just sell the shares to cash and then invest in SIPP and it occurs automatically? 

What are the positives and negatives of using yearly ISA allowances instead of SIPP? 
 

On the face of it a SIPP for next 12 years seems a no brainer - compared to an ISA? Is this correct? 

Can you still pay into it once you start accessing it at 57? What are tax implications of dividend income / lump sum etc at 57 onwards? 

Any things to be aware of when one starts accessing SIPP post 57years old? 
 

Thanks in advance.

[DurhamBorn]

HL is 0.45% but capped at a max of £200 a year in their SIPP (outside of fund holdings) my SIPP charge last year was 0.08%.Its very good value once you get over £100k in there and if you hold shares rather than funds,and of course arent over trading,long term holds.

Your questions arent really in the scope of this thread @Vendetta as they are more financial advice/personal choices etc rather than macro choice.A SIPP is nearly a no brainer for 40% taxpayers,especially when your close to being able to put in drawdown.Youd probably be best taking SIPP at 57,then final salary at whatever age there is no reduction,60 or state pension age id guess on most but its very complex and very personal.

[Jesus Wept]

27 minutes ago, DurhamBorn said:

HL is 0.45% but capped at a max of £200 a year in their SIPP (outside of fund holdings) my SIPP charge last year was 0.08%.Its very good value once you get over £100k in there and if you hold shares rather than funds,and of course arent over trading,long term holds.

Your questions arent really in the scope of this thread @Vendetta as they are more financial advice/personal choices etc rather than macro choice.A SIPP is nearly a no brainer for 40% taxpayers,especially when your close to being able to put in drawdown.Youd probably be best taking SIPP at 57,then final salary at whatever age there is no reduction,60 or state pension age id guess on most but its very complex and very personal.

Thanks @DurhamBorn - that’s very useful.

Apologies for straying ‘off topic’. I do suppose though that pensions will be very much affected by the global reflation policies in the years to come. I can see a ‘few rule’ changes down the road and no doubt that will impact on the stock market etc. 
 

Back to MPOTS (or STOMP) ! 

I continue to top slice the silver holdings into a select few POTASH plays: MOS, SDF and Nutrien and a little Intrepid.

I am also building on the Telcos. 
 

A very interesting journey.

The major key question now is by how much and for how long will these (and all other stocks) be hit by a NASDAQ / main market collapse.

When will the collapse come? Will it occur and what are the best strategies to employ? 
 

I am thinking sometime in September. Hopefully it will happen between me selling all my ISA holdings and buying them back into a SIPP! 😁

[JMD]

10 hours ago, wherebee said:

Governments have tried this for thousands of years.  It doesn't work.  Because you can melt gold and silver down and completely conceal the origin, but keep the value, there will be an instant black market.  Walk into any dealer with one coin and if he says you have to provide ID, you refuse, I guarantee many dealers will find another way to get you a buyer.  You might not get full spot, true, but is gold is 10,000 a coin who cares.

Now, if you attempt to offload 50 coins at once, that's not going to happen without contacts.  But the odd coin here and there - no problems at all.

I wish I had been able to get some PMs over the past ten years, but as stated before moving around so much internationally made that not an option, so I had to go for miner shares.  If I did have PM's, I would not be worried about government restrictions.  I would, however, be worried about a 'windfall tax' on balances in pensions and banks.  It has already happened in 2 european countries in the past 20 years.

That is an excellent point you make, especially if 10,000/coin. On reflection, I suppose i was jumping prematurely into that future internet dark-web scenario of mine, when our very own humble high-streets have historically always provided us with similarly 'able' dark (shady?) dealer types standing ready to transact deals. (just have to hope the high-street itself survives!.. damn these 'interesting times'!?!)    

[JMD]

13 hours ago, sancho panza said:

There's a lot in that article I'd agree with-QE didn't work(I have read it before),it jsut created asset bubbles based on bad debts,velocity moving higher,govts taking over from CB's,China having been a force for deflation now becoming a force for inflation,domestic insitutions being forced to buy govt bonds.

It's the mechanics and timing where I think questions arise.At any point-most likely when the CB's can print no more due to inflation-the banks could go under and take some chunky asset markets with them.Post Basel 3,so much lending is predicated upon some pretty shocking risk weighting of loans,that's it's hard to see how it won't end in a chunky credit deflation.Even if Napier is right and the govts step in,then it will take some time to balance flows psot deflation.

Even during this -probably epic-credit deflation,we could see some chunky price inflation and that's where I find the predictions become harder if he is right, as the amount of moving parts increases exponetnetially in the scenario he envisages.Hence I'm content to play with oil/gold

So in short,whilst I agree with napier on many things,I think he's a little blase about the impact of a debt deflation on the banking sector.

Sorry if I seem to be splitting hairs.

Edit to add:

Thanks again SP, (excuse my follow up question, last one promise!) interesting what you say there and your analysis, but have i then perhaps totally misread Napier?... 

i.e. is Napier being 'blase' - or is it that he sees massive government interventions ahead (in fact i think he predicts particularly dark political times, which might colour his thesis), not good for us, but such measures will provide (in his opinion) the necessary banking support (crucially his perspective/bias? appears to be more about the massive historical economic shift he sees looming), so he even talks up the Swiss banking system/economy, even though he must be aware of how the Swiss have been manipulating their CB asset base/currency (re your post on Swiss banking)?

 

[DurhamBorn]

14 minutes ago, JMD said:

Thanks again SP, (excuse my follow up question, last one promise!) interesting what you say there and your analysis, but have i then perhaps totally misread Napier?... 

i.e. is Napier being 'blase' - or is it that he sees massive government interventions ahead (in fact i think he predicts particularly dark political times, which might colour his thesis), not good for us, but such measures will provide (in his opinion) the necessary banking support (crucially his perspective/bias? appears to be more about the massive historical economic shift he sees looming), so he even talks up the Swiss banking system/economy, even though he must be aware of how the Swiss have been manipulating their CB asset base/currency (re your post on Swiss banking)?

 

Governments cant do anything until the CBs print.The problem with banks (and insurers and others) is a derivative unwind would be so quick pumping liquidity into the pipes wouldnt be quick enough.The Fed is forcing down rates at the long end so that junk bonds also get cheaper to re-finance for companies.However they wont force rates down forever.If your the Fed you care about AT&T being able to re-finance,but you couldnt care less about a tech with 500 employees and zero profits.Thats why the big companies are rushing to re-finance and extend maturity while the window is open.

Once tech (and other sectors) cant access capital,they equity then falls and the chain reaction starts.

Fed isnt trying to stop an unwind,its trying to stop an unwind that takes down massive US corporates because they are needed to take on China etc.

 

[Jesus Wept]

30 minutes ago, DurhamBorn said:

Governments cant do anything until the CBs print.The problem with banks (and insurers and others) is a derivative unwind would be so quick pumping liquidity into the pipes wouldnt be quick enough.The Fed is forcing down rates at the long end so that junk bonds also get cheaper to re-finance for companies.However they wont force rates down forever.If your the Fed you care about AT&T being able to re-finance,but you couldnt care less about a tech with 500 employees and zero profits.Thats why the big companies are rushing to re-finance and extend maturity while the window is open.

Once tech (and other sectors) cant access capital,they equity then falls and the chain reaction starts.

Fed isnt trying to stop an unwind,its trying to stop an unwind that takes down massive US corporates because they are needed to take on China etc.

 

What do you think is the rough timing on this? 

[MrXxxx]

3 hours ago, wherebee said:

Looks like the miners have a bit of a pullback.  GDXJ down to 58-59.  I hope it drops some more....

:-) :-) :-) :-)...I was in this absurd situation the other day when I was hoping one of my stocks would drop so that I could buy some more, yet had another where I wanted it to rise as its become a bit of a `dog`...the stockmarket certainly brings out the schizoid in you!

[leonardratso]

silver n gold going for the tank now

 

[MrXxxx]

3 hours ago, Vendetta said:

Many thanks for all the advice on here - I am learning a huge amount very quickly. 

I have just opened up a SIPP with H&L alongside my ISA. I only started an ISA in early March when I thought the markets would crash and have been investing a fair amount since then in my name and using wife’s ISA allowances too. 

I now have to consider the merits of putting most of these ISA funds into my SIPP.

Background info:

I am 45 and a higher rate tax payer. As part of a ‘public sector’ (I know - I am ashamed), workplace scheme.

I already pay into an ‘inflation linked pension’  which is ‘part final salary and part average earnings’. I started this 17 years ago in 2003. I will be no where near the maximum pot of £1m + etc....

I’d ideally like to retire at 57.

From what I have read about SIPPS so far: 

I can only access from age 57 (after 2028 change).

I can contribute as much as I wish up to £40,000 a year - and with tax relief of 45% - it would essentially mean that ‘to get £10,000 in investments I would only have to invest £5500 of my own money’??

It is exempt for inheritance tax (unlike ISA).

0.45% yearly charge on held funds.

I will obviously research this further and seek advice etc - however I would really appreciate any words of wisdom or guidance on here for people who have further down this road then me. Any pluses and minuses etc? 

How does one go about transferring ISA investments into the SIPP - just sell the shares to cash and then invest in SIPP and it occurs automatically? 

What are the positives and negatives of using yearly ISA allowances instead of SIPP? 
 

On the face of it a SIPP for next 12 years seems a no brainer - compared to an ISA? Is this correct? 

Can you still pay into it once you start accessing it at 57? What are tax implications of dividend income / lump sum etc at 57 onwards? 

Any things to be aware of when one starts accessing SIPP post 57years old? 
 

Thanks in advance.

Why isas into sipp?...you have already paid tax on this `on the way in`, by moving them to the sipp you surely will be paying tax `on the way out` as well?

As for £1m lta, don't underestimate it, a final salary pension of £25k would be worth £750k (sum x 30years?) if I have this correct...as always though someone Will be along to correct me in a moment.

Check outpension thread under `Investing` for a good discussion on pensions...

...and aa always not financial advice to DYOR.

[Hardhat]

Bit of a smackdown on PMs, but oil (RDSB & BP anyway) up, BATS up.

My entire portfolio is only down 0.5% ... diversification is working.