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

[MvR]

4 hours ago, JMD said:

CP, that's good to hear. After i get fully invested i plan to investigate this area. The 'problem' i'd have i guess is that as my silver investments are all in my sipp/isa, it would mean selling them and then buying them again but on say the Saxo trading platform; and that would mean losing my sipp/isa tax advantages? I don't know nearly enough about these things yet as you can tell.  

My IG ISA ( and presumably all of them?) allows me to replace money taken out the same tax year without impacting your allowance. They call it a "flexible ISA".

DYOR obviously, but it seem to me that you could take most of it out each year if you've better use for it elsewhere, and then return it in March to rest for a couple of weeks before removing it again. Obviously don't forget or you'll have lost the benefit of all your previous year's ISA allowances.

[Ma2]

Very interesting article on electrification, some of it probably isn't of any great surprise to those on here having discussions around the energy cost of energy.

I suspect it's only half the story as data can be spun anyway you want and electrification will come with it's own costs, but will be interesting to have that discussion next time I'm told that renewables can't replace fossil fuels - maybe they just don't have to to the same extent...

https://www.vox.com/energy-and-environment/21349200/climate-change-fossil-fuels-rewiring-america-electrify

"One key aspect of electrification makes this transformation possible, and it represents perhaps the most astonishing finding in Griffith’s modeling: Large-scale electrification would slash total US primary energy demand in half, from around 100 quads to about 45-50. This a huge deal — it means America only needs to produce about half the energy with renewables that it is currently producing with fossil fuels.

And that massive drop in demand assumes no behavior change, no insulated buildings or double-glazed windows, no traditional “efficiency” measures of any kind. The transition from fossil fuel combustion to electricity, in and of itself, is the largest demand-side climate policy available.

How is that possible? The simple answer comes down to the fact that electric motors are more efficient than fossil fueled motors at converting primary energy into useful work.

The somewhat more complicated answer is this. You cut almost 10 percent off of energy demand right off the bat, says Griffith, because the Energy Information Administration has been overestimating, due to the way it accounts for nuclear and hydroelectric energy. (It’s too complicated to get into here.)

Another 10 percent of energy used in today’s economy goes toward “finding, mining, refining, and transporting fossil fuels,” Griffith says, and that demand goes away in an electrified economy. So it’s down to 80 percent left to replace.

Shifting from fossil fuel power plants to renewable energy saves another 15 percent, because carbon-free, non-thermal power sources rely on fewer energy conversions than thermoelectric sources. Electrifying transportation gets another 15 percent, because electric vehicles (EVs) are more efficient than internal combustion engine (ICE) vehicles. Electrifying buildings gets another 6 percent to 9 percent."

[Loki]

2 minutes ago, Ma2 said:

Another 10 percent of energy used in today’s economy goes toward “finding, mining, refining, and transporting fossil fuels,” Griffith says, and that demand goes away in an electrified economy

So we're going to increase the amount of electricity used, most of which is already generated by gas (http://www.gridwatch.templar.co.uk/) and yet somehow not need to find, mine, refine and transport hydrocarbons.

Absolute mad zealots.   

Of course we all know hydrogen will play a big part.  They didn't even mention it, and are still completely convinced we're going to be living in a green electric utopia.  You can probably guess how much regard I have for this writer.

2 minutes ago, Ma2 said:

Electrifying buildings gets another 6 percent to 9 percent."

Electric heating really took off when electricity became too cheap to meter.

[Ma2]

2 minutes ago, Loki said:

Absolute mad zealots.   

Of course we all know hydrogen will play a big part.  They didn't even mention it, and are still completely convinced we're going to be living in a green electric utopia.  You can probably guess how much regard I have for this writer.

Quite possibly mad

I thought the most interesting part was this around investing in infrastructure to create jobs - sits well with this thread

"Last week, Rewiring America made its big debut with a jobs report showing that rapid decarbonization through electrification would create 15 million to 20 million jobs in the next decade, with 5 million permanent jobs after that. For the most part, the media covered it as just another jobs report, saying basically what other clean-energy jobs reports have said."

[Loki]

8 minutes ago, Ma2 said:

I thought the most interesting part was this around investing in infrastructure to create jobs - sits well with this thread

Yep, no argument there.  But this thread is more informed than that article I think.  It's just more climate change drivel that happens to mention infrastructure.  I don't think they understand anything on the level that the posters on this thread do!

[JMD]

4 hours ago, MvR said:

A Covered Call is a two leg position. You buy ( or already own ) the stock, and sell a call against it.  You have the same risk to the downside as just owning the stock, your upside is limited because your stock can be called away, but statistically, because SLV is more likely to have false breakouts and pullback along the way,  the odds are you'll do better than just owning the stock, or buying a call option.

The only problem is you can't buy SLV directly, but you can hold it if you get "put" the stock after having sold a put option which gets exercised.

And conveniently, a short put option has exactly the same P&L and response to price movement as a covered call. If your short put is exercised and you end up with some SLV, you can sell a covered call against it.

A simpler approach though, which saves on commission, margin, and doesn't involve owning the stock, would be to sell an At-The-Money put option every week, and buy it back when it's worth half what you sold it for, or it's about to expire. ( i.e. before it gets exercised ) Then sell another for the next week. Rinse / repeat.  

If you have a strong directional opinion, you can sell the put at a higher strike if you're bullish, or a lower strike if you're bearish. ( or use a more bearish strategy )  

If you think SLV could be peaking, but want to push for more without risking being caught in a massive correction, you could buy a put option a few strikes below the one you sold limiting downside, but reducing profit potential of course.

Thanks MvR, lots for me to think about there. I was ideally looking for a way to make my silver etf 'earn it keep'. I am holding the etf in the expectation of swopping it for gold etf as/when the gsr is favorable for me. Eventually, and well before a 2028 collapse, i would then sell the gold etf and buy physical gold (oh, and a safe!). I appreciate the additional risk element of doing options trading, which i would be happy with. But from what you describe i wouldn't really need to own the stock (covered call) to participate in trading.

I was perhaps overcomplicating things, because i was thinking in terms of leveraging my long-term silver investment, which is probably impossible in any case - i.e. whilst the etfs are sitting in my sipp? As you say, the 'at-the-money' trades are available, which i guess are potentially lucrative, but i'm thinking that if was only intending to do during silver bull/bear periods, then the platform costs might make it too expensive... e.g. might need to risk a fair amount of capital, say £5,000+, if only wanted a small limited downside risk, in order to make this worthwhile? (If i am asking difficult or even impossible type questions here, please ignore those questions, as i say i don't know the environment, but do think it might be useful for me in some shape or form). 

[JMD]

47 minutes ago, MvR said:

My IG ISA ( and presumably all of them?) allows me to replace money taken out the same tax year without impacting your allowance. They call it a "flexible ISA".

DYOR obviously, but it seem to me that you could take most of it out each year if you've better use for it elsewhere, and then return it in March to rest for a couple of weeks before removing it again. Obviously don't forget or you'll have lost the benefit of all your previous year's ISA allowances.

MvR, when you take it out (transfer between isa and the trading platform, and maybe back again, in same tax year), does that trigger a capital gain at all?

[leonardratso]

ill believe the electrification crud when i see it in action. What they should really do is put a generator next to a motor and get it to power itself in a loop. I once did something similar decades back when i accidentally printed off a massive report on a fanfold printer, it was piling up and couldnt be cancelled, so i fed it into the shredder opposite it, it was beautiful, and i only wasted 2 boxes of shredded trees.

More crackpot enegy saving ideas coming right up.

[Majorpain]

18 hours ago, Nippy said:

You're not being a big enough devil. Someone on here said that money is not wealth, and no-one disagreed. The MMTers say that debt is not wealth borrowed from the future for the simple reason that only wealth created now or in the past can to be consumed now. MMTers also reckon that for businesses to survive, Joe Public has to be able to buy the product (Henry Ford also argued this), so somehow or other, the population will always be able to afford to buy stuff in the shops, so long as production does not fall. Automation will help keep production up. This means of purchasing stuff might even be Citizens Income.

IMO at its simplest debt is consumption brought forward from the future to be consumed today, the problem with MMT is the debt markets run on confidence that they will receive something of value for delaying their consumption, if you go to the extremes of negative real interest or 6%+ inflation, then barring you actually getting you nominal money back, why bother saving?   Sure you can fool people for a while, but you cant fool everyone forever, MMT relies on people continuing to save in a rapidly debasing currency which really doesn't happen in the real world.  Its happening in Turkey now, where even the Dollar is going out of fashion! 

Automation will not solve all resource problems, .  If you have 20 billion people on the planet all after finite resources then you can MMT as much as you want, it isn't going to magic up some more Iron or Silver.  Big ones for future are water and energy.

[MvR]

1 hour ago, JMD said:

Thanks MvR, lots for me to think about there. I was ideally looking for a way to make my silver etf 'earn it keep'. I am holding the etf in the expectation of swopping it for gold etf as/when the gsr is favorable for me. Eventually, and well before a 2028 collapse, i would then sell the gold etf and buy physical gold (oh, and a safe!). I appreciate the additional risk element of doing options trading, which i would be happy with. But from what you describe i wouldn't really need to own the stock (covered call) to participate in trading.

That's pretty much what I'm doing in SLV and GLD, but like you say, you don't actually have to own GLD or SLV to get the benefits of covered call. Just sell a put at the same strike instead.

1 hour ago, JMD said:

I was perhaps overcomplicating things, because i was thinking in terms of leveraging my long-term silver investment, which is probably impossible in any case - i.e. whilst the etfs are sitting in my sipp? As you say, the 'at-the-money' trades are available, which i guess are potentially lucrative, but i'm thinking that if was only intending to do during silver bull/bear periods, then the platform costs might make it too expensive... e.g. might need to risk a fair amount of capital, say £5,000+, if only wanted a small limited downside risk, in order to make this worthwhile?

Interactive Brokers do a SIPP in which you can trade most options strategies, including covered calls. I think you need it to be worth at least £30k.   https://ibkr.info/article/1030

You can't sell naked options on margin in a SIPP... i.e. you couldn't sell a naked ( uncovered?) call at all, and you could only sell naked puts if they're "cash secured" i.e. you have enough cash in the account to buy the stock if the put is exercised.

For what you're trying to do though, that's not really a restriction.

In terms of costs, I think it's similar to most SIPPS.. an annual fee, and the other platform / data fees are negligible if you're trading more than a few times a month. ( which you would be selling weekly options )

EDIT: to add.. you talk about risking a fair amount of capital.. I'm not sure what you mean here, but if you're selling covered calls against stock you own, there is no extra capital requirement since you're reducing, not adding risk.  If you're selling naked ( or rather cash secured ) puts to get into a stock position or simulate a stock position, the capital requirement would be the same or less than just owning the stock.

Of course I may have misunderstood your concerns..

[Eventually Right]

6 minutes ago, MvR said:

Interactive Brokers do a SIPP in which you can trade most options strategies, including covered calls. I think you need it to be worth at least £30k.   https://ibkr.info/article/1030

 

 

 

Wow-was not aware you could trade options at all in a SIPP...

Thanks for the heads up MvR, I might need to investigate that!

[MvR]

1 hour ago, JMD said:

MvR, when you take it out (transfer between isa and the trading platform, and maybe back again, in same tax year), does that trigger a capital gain at all?

There's no CGT on any gains that happened in the ISA of course, but anything you make with the funds once you've taken them out of the ISA is taxable. Worth it for me as I'm better at options trading than stock portfolio management, but I'm an unusual case I guess. 

I'd always replace the money within the tax year though, plus the current year's allowance if possible, even if it means putting the options trading on hold for a couple of weeks.

 

[MrXxxx]

6 hours ago, wherebee said:

?

What I meant is that people selling houses don't focus on the `big picture` of getting a sale and having some profit in the bank, they always look at the 95% offer, think about `how much` they are losing, reject it, and are then still wait for a sale two years later....

[MrXxxx]

10 hours ago, JMD said:

Yes, and those Soyboys in blue (actually now back!?) have been joined by the latest incarnation of virtue-signaling performance artists - the Kneeler-Squealers. Its pathetic really. Then again even F1 has been 'taking-the-knee', although i note that 8 out of the 22 drivers refuse to do this. 

Christ, don't get me started!...and to cap it all it looks as though `Mother Theresa`is going to win the World Championships again!...I used to like him but hes become so self-righteous and woke I can't bare to watch the post-race interviews!

[Shamone]

7 hours ago, wherebee said:

One huge difference between the 1980's and now is that in the political classes in the 1980's you had a lot of people who had done either national service, or actually fought in a war.  They therefore had a good understanding of what a fight really was, what happens when things turn to shit and, most importantly, how big muscly men are fucking critical for getting things done.

You think people like Osborne or Abbott have ever been in a real fight?  Or seen someone killed?

Hence across all political classes for 40 years a willingness to let diversity and weak, small, female bodies into roles than really need thugs.

 

There will be a hell of a reckoning when it comes.  As per my other posts, if you are in a mult-cultural area in the west, you need to move.

Excellent post.

[MrXxxx]

8 hours ago, sancho panza said:

Last decent leader was Maggie. and she led a party that had a lot of idiots in it.

The difference between then and now is that the idiots had to listen to her, and not the other way around!

[JMD]

5 hours ago, MvR said:

That's pretty much what I'm doing in SLV and GLD, but like you say, you don't actually have to own GLD or SLV to get the benefits of covered call. Just sell a put at the same strike instead.

Interactive Brokers do a SIPP in which you can trade most options strategies, including covered calls. I think you need it to be worth at least £30k.   https://ibkr.info/article/1030

You can't sell naked options on margin in a SIPP... i.e. you couldn't sell a naked ( uncovered?) call at all, and you could only sell naked puts if they're "cash secured" i.e. you have enough cash in the account to buy the stock if the put is exercised.

For what you're trying to do though, that's not really a restriction.

In terms of costs, I think it's similar to most SIPPS.. an annual fee, and the other platform / data fees are negligible if you're trading more than a few times a month. ( which you would be selling weekly options )

EDIT: to add.. you talk about risking a fair amount of capital.. I'm not sure what you mean here, but if you're selling covered calls against stock you own, there is no extra capital requirement since you're reducing, not adding risk.  If you're selling naked ( or rather cash secured ) puts to get into a stock position or simulate a stock position, the capital requirement would be the same or less than just owning the stock.

Of course I may have misunderstood your concerns..

MvR, thanks for the great information. Was really interested in using the sipp option, but unfortunately it's restricted to IB approved sipp administrators, which limits the field to four small sipp providers approved by IB. I haven't heard of any of the approved sipp providers, but would have liked to have used my sipp at interactive investor, or any of the other big provider really for the added choice of funds/stocks.

[wherebee]

Unrealised Profit 29% since June 1 this year, which is mental.  Have sold out some GDXJ when it was up 100% from what I bought at and rotated into MOS and BP.  Basically 8k turned into 16k which I got those two with.

I'm going balls deep into the deflation/inflation projections.  I have about 100k in cash that we were holding back in case we needed building work on the house, but the pandemic lockdowns means no such work can realistically go on, and I think putting half of that into long term dividend stock is my plan over the next month or so - looking for small dips to go into oil, potash, shipping, maybe AG, maybe tobacco.  Avoiding banks, travel, and retail like the plague.  Avoiding small caps - I think it's an insiders market and I don't have the time to research each minnow.

I feel like I have been lucky on my miners and acknowledge my lack of confidence in whether they will go up/down/sideways from here.  Top slicing 10% here and there and investing instead into the oil/potash/shipping when cheap is I think more rational.

I took one substantial loss - I had a 8k investment in a ETF that was a general market short for the past few years in case there was a major collapse at a time when all my income was dependent on said global economy.  That halved in value over 5 years or so, so a 4k loss there that I just crystallised.  I think it is important to acknowledge losses on this thread as well as good news stories.

Thank you again for all those showing thoughts and progress.  I'm not bright enough to do half as well without this thread (which I have read since the start but only recently started to actively trade)

 

[lid]

I thought a sipp was something you did with your drink until recently, nonetheless I've opened one and I've got the grand sum of 30k going into it from old frozen pensions.

I've re-watched Trading Places and I hear orange juice futures are where it's at. 

Nah all jokes aside I'm just looking to have a bit of fun and I've got some ideas from this thread to take a punt with them until I retire in 15/20 years. 

Cheers all

[AWW]

6 hours ago, wherebee said:

a 4k loss there that I just crystallised.  I think it is important to acknowledge losses on this thread as well as good news stories.

It certainly is. I made almost exactly the same loss on CNA; a 75% drop. I now have a rule that, if a stock halves, I re-evaluate it and either buy more or sell up.

I think of it as a reasonably cheap lesson. It's not a life-changing sum, but it's big enough to hurt

I would be interested to hear how the more experienced people on this thread deal with large drops. Even if you're buying and holding, 75% is huge - the stock would need to quadruple just to get flat.

[Jesus Wept]

32 minutes ago, AWW said:

It certainly is. I made almost exactly the same loss on CNA; a 75% drop. I now have a rule that, if a stock halves, I re-evaluate it and either buy more or sell up.

I think of it as a reasonably cheap lesson. It's not a life-changing sum, but it's big enough to hurt

I would be interested to hear how the more experienced people on this thread deal with large drops. Even if you're buying and holding, 75% is huge - the stock would need to quadruple just to get flat.

-30% for me. Once a stock has nearly lost a third....

Either sell it or buy more. (-50% is too much I think?)

(4/5 time’s sell it and cut your losses)

[Loki]

42 minutes ago, AWW said:

I would be interested to hear how the more experienced people on this thread deal with large drops. Even if you're buying and holding, 75% is huge - the stock would need to quadruple just to get flat.

Ignore it and hope for the best 

My logic is that my buys were made with the best info I had at the time and are all reflation stocks.  If no new information has come to light, there is no point selling and realising a loss. 

For example, AFC bounced back to a much less negative number.  INFA still down but technically doubled at points since March.

[geordie_lurch]

After reading the above about the state of the UK police I have just read the following which cites a Telegraph article 

Quote

Police forces in the UK have been criticised after they rejected an application in which the candidate admitted they do not believe human beings can biologically alter their gender.

The London Telegraph reports that a woman who applied for a job at Norfolk Constabulary was refused on the grounds of her “gender critical” opinions.

The woman, who is already a police officer of 16 years, applied to a total of 26 forces elsewhere in the country and was rejected by over half of them for the same reason.

In her application, the officer asked if “gender critical” opinions would be “a barrier to my application?”

“I must point out that I am gender critical, which means that whilst I am firmly against abuse and discrimination to trans people, I do not believe you can change your biological sex,” the officer explained.

https://www.zerohedge.com/political/uk-police-reject-job-applications-candidate-who-says-biological-gender-cannot-be-changed

[Craig]

7 minutes ago, geordie_lurch said:

After reading the above about the state of the UK police I have just read the following which cites a Telegraph article 

https://www.zerohedge.com/political/uk-police-reject-job-applications-candidate-who-says-biological-gender-cannot-be-changed

Well to be fair, she's clearly an idiot. Just write "aye, fine, whatever" and move on. Job done.

[Chewing Grass]

6 minutes ago, geordie_lurch said:

After reading the above about the state of the UK police I have just read the following which cites a Telegraph article 

https://www.zerohedge.com/political/uk-police-reject-job-applications-candidate-who-says-biological-gender-cannot-be-changed

So if you go by the truth and scientific fact and stand by it then your application gets thrown out.

I wonder (out of interest) how that would stand up in a court of law, the beacons of science, fact and swearing the truth.

Would be fascinating to watch the establishment eat themselves over it.