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


spunko

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9 hours ago, geordie_lurch said:

It's the principle isn't it - people need to stand up to such oppression and nonsense :Passusabeer: 

Problem is `you can't fill an empty stomach with principles`...either keep them to yourself and keep your job, or find an alternative employer.

That said, I can't see any reason why she couldn't do her job, she was just expressing a belief, she was not being prejudice.

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6 hours ago, janch said:

I'll wait until a share seems to have bottomed out before buying so even though I probably should have bought some potash before now I will probably buy some K&S AG/OCi NV this week if we have a "down" day

The problem is I do this, carefully observing, everything has flattened off/become stable, and then as soon as I click `buy` and look at the screen again the bugger drops further!

Moral of the story?...don't look at the screen again, that way you can think you bought at the bottom rather than knowing that you didn't :-) :-) :-)

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34 minutes ago, MrXxxx said:

Q. Can anyone explain the reason for this. Nex trading today, two massive/sudden trading spikes towards the end of the day (share buyers), why so sudden/severe?...is it instutional investors buying en masse?

Usually they're "block orders", really just large orders negotiated between institutions away from the markets that show up in the print at some point.  You can't read much into it other than that someone transacted at that price.  I'm not sure whether they are actually transacted through the exchange when the deal is done, or what the mechanism is.  You can't know if the buyer or seller initiated the transaction, so whether it's bullish or bearish, or neither.

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5 hours ago, DurhamBorn said:

They owned the wrong sectors at the end of the cycle.We owned the right shares for the macro picture.Some had individual problems,some are in sectors yet to ignite.

So what you are saying here within limits is there's no such thing as a bad share, just a bad time to buy/hold it, and if you can afford to hold it for long enough (and it doesn't go tits-up) eventually its`time in the sun` will come around again?

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17 minutes ago, MvR said:

Usually they're "block orders", really just large orders negotiated between institutions away from the markets that show up in the print at some point.  You can't read much into it other than that someone transacted at that price.  I'm not sure whether they are actually transacted through the exchange when the deal is done, or what the mechanism is.  You can't know if the buyer or seller initiated the transaction, so whether it's bullish or bearish, or neither.

Ah, I see, on a Dark market and then the data just fed into the system....if its a big sell off you could then get an insight into what big holders feel about the stock current potential though couldn't you?

Thanks for your input.

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45 minutes ago, Cattle Prod said:

If its those Swedish trackers, HL told me not available in an ISA? I'd appreciate any tips on a tracker that is.

Disc: I bought 1 BTC under 10k. I'm not too fussed about the tech etc, but the stock to flow model is compelling, as long as it's not banned. As Sidey says, it's very clean technically too, and easy to read, particularly on a log scale. My downside risk is about 6k. Upside, I think, and not because it should, but because the bitcoin community thinks it should and will continue piling in till it's a self fulfilling prophecy, hit 6 figures within a couple of years. Probably ~200k. I'll be out at 100k, and I'm not going to wait for Raoul Pals 1m. 

So that's a possible 10 or 20 bagger. Sounds great, but silver miners will probably do just as well. I may switch, as I don't believe in it like I do silver and it's really just a gamble. The handy thing is that it's been lagging gold and silver lately and has been smoothing out a few bumps for me.

I do have it in a SIPP so maybe it isn’t available in the ISA? I haven’t tried I just assumed

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Democorruptcy
11 hours 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.

The red figures on the screen are just figures, they don't turn into real money unless you click the sell button. A 75% drop is probably just a buying opportunity. I look at the current lower price and think; could I make some money out of this price? Re CNA I was well red but posted I was buying again in the 30's then sold when I posted it was 50. The original buy is still red but I've offset some of that red with real money. I suppose the alternative is to hold the 30's buys lowering your average price needed to sell them all and get out. However you don't go bust taking profits.

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On 16/08/2020 at 09:57, Cattle Prod said:

This is a fair point, Sancho. I have to admit my perception of the public sector is that everyone has been there for ages, which of course isn't true.

That said, I think a poorly paid new entrant to the public sector will have better union representation and protection against inflation both in pay rises and pensions, than a poorly paid new entrant somewhere in the private sector. There still could be a lot of friction. And of course all the early retirees will be golden. I'm going to start digging into how much of my council tax is going on those pensions. Quite a lot I suspect.

What drives me absolutely insane about the public sector us that they will cut front line services first and retain an army of useless managers and pencil pushers in the offices. I'd be interested to hear your take on this. Cutting Leicestershire police like that is scary, have they cut the non front line positions by two thirds too?! It smacks to me of a "punish the public" mentality to me. If they're going to cut budgets, lets make sure it's visible etc etc 

Some of my council tax goes to Surrey Police, and I have no issue with that. I prefer local taxation, philosophically. But councils are largely fifedoms and unaccountable, I hope they get the shock DB mentions.

 

I can't recall or find it now, but I'm sure there is a page on wiki about the whole thing of firefighters (in the USA) being cut if budgets are reduced. The idea is that firefighters are a very visible frontline service. As you say, its the frontline (firefighters) that get cut rather than the waste of space pen pushers.

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8 minutes ago, invalid said:

 

I can't recall or find it now, but I'm sure there is a page on wiki about the whole thing of firefighters (in the USA) being cut if budgets are reduced. The idea is that firefighters are a very visible frontline service. As you say, its the frontline (firefighters) that get cut rather than the waste of space pen pushers.

That's Washington monument or mount Rushmore syndrome. 

https://en.m.wikipedia.org/wiki/Washington_Monument_Syndrome

 

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6 hours ago, Sideysid said:

I’ve often stated on here with my crypto updates but haven’t for a while. I started out buying BTC in the early days then sold, ETH then sold, LINK then sold etc etc. Each time selling waaay too early and taking profit. 

I took a new approach after the BTC crash, I bought 1 BTC at $3k and put half on my hardware wallet and used the other half for trading. I’ve now managed to get that back up to 1 BTC now trading with ETH and LINK. Trading is fairly straightforward with crypto and all the home algorithm trading bots uses similar indicators like the MACD and support levels. 

LINK has done incredibly well (to think I had 10k of them at one stage :() and has literally went from $4 to nearly $20 in the space of a couple of months. It’s now retracing now, so I’m currently all back in BTC as it was pumping through heavy manipulation through $12.1k support level which means all the alts drop.

One to look out for that interests me in SXP. Binance themselves are using the system for its payment card. I myself have ordered one of the cards myself to test, as the 1%-4% BTC cashback seems too high for a Visa card that has to conform to EU maximum transaction fees (which doesn’t affect Amex strangely enough).

https://swipe.io

My view on BTC from here? There’s 46.8 million millionaires in the world. There’s a max supply of 21 million BTC, a lot of those have been lost or simply won’t be able to be mined so there’s 17.3 million in circulation.

In the midst of inflation running wild in the next few years, people are going to be hedging in everything they can to combat that. BTC will be the go to just as PMs. It’s very easy to invest now with HL offering trackers for both BTC and ETH, and bonus being tax free in an ISA.

Whether or not the powers that be allow this to all happen is another matter, with confiscation orders like in 1933 and 1966 (PS get a hardware wallet offline)

Thanks Sideysid, that's very interesting and helpful. Though I'm not clear if the XBT tracker is a physical etn and actually holds bitcoins, important that it is 100% physical I think, as derivative instruments won't deliver if Bitcoin does a 100x.

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leonardratso
10 minutes ago, JMD said:

Thanks Sideysid, that's very interesting and helpful. Though I'm not clear if the XBT tracker is a physical etn and actually holds bitcoins, important that it is 100% physical I think, as derivative instruments won't deliver if Bitcoin does a 100x.

why not just buy bitcoin then?

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8 minutes ago, leonardratso said:

why not just buy bitcoin then?

Yes I do. But the discussion had touched onto the advantages of buying within a tax wrapper. And as funds/ETFs should really come with their own set of health(wealth) warnings, I thought I'd mention how opaque many funds are - in the meantime Im sure it's on our financial conduct authority todo list!

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7 hours ago, leonardratso said:

why not just buy bitcoin then?

I have just downloaded Coinbase Pro and Kraken Pro and registered on both. I have been advised this is the best way to buy BTC direct. Just need to make sure I can get my money out quick! That’s what has always put me off!
 

I have a small amount of exposure to Bitcoin already via purchasing some ARGO the bitcoin miner (bought ARB share on H&L), as the BItcoin/etherium ETFs can’t be put in ISA? Just a SIPP - plus it’s not physical Bitcoin? 

Of the 46.8 millionaires that exist in the world (they own $158 TRILIION ) -  many are wary of using an app to buy Bitcoin and I don’t think ‘young people’ appreciate the tech barrier and the mistrust in buying bitcoin from us old techphobes (I am 45) . Once this is overcome and financial advisers start telling their clients to get 2-3 % of portfolio into BTC it will really run - like Gold and Silver. 
 

As inflation ramps up the rich will be looking for as many different vehicles/assets to store their wealth as possible.... property, land, equities, Inflation linked bonds, precious metals; gold, silver et al. All it takes is for Bitcoin to become 1% of everyone’s portfolio holding and BOOM 💥...... to the moon...... We may have that inflationary environment coming soon! 

 

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77ECFD1A-47B5-46D2-B1A6-D11512E079A5.jpeg

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Agent ZigZag

Doing alot of building and maintenance work at the moment.

Todays inflation figures are way out based on builders merchants and goods I am buying. I would estimate 10% increase in some areas. There would also appear to be a shortage of stock getting through especially timber. I wounder if such micro observations and conversations I am having will migrate to foodchain supplies and shortages? leading to further higher prices.

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It's all aggregated - high inflation figures in some areas will balance out falls in other areas.

Given they can choose the mix it seems a bit of a gamed statistic.

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A tremendous # on the lung

I was given a recommendation yesterday - Avacta - up 10% or so today. My buys usually have the opposite effect!

Anyone else invested? I believe they have a strong product lined up for the Covid saliva test that Hancock mentioned this morning

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leonardratso
23 minutes ago, A tremendous # on the lung said:

I was given a recommendation yesterday - Avacta - up 10% or so today. My buys usually have the opposite effect!

Anyone else invested? I believe they have a strong product lined up for the Covid saliva test that Hancock mentioned this morning

lot of verticals on that longer term chart, dont like the look of that.

Im in - with my 39pence.

 

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30 minutes ago, A tremendous # on the lung said:

I was given a recommendation yesterday - Avacta - up 10% or so today. My buys usually have the opposite effect!

Anyone else invested? I believe they have a strong product lined up for the Covid saliva test that Hancock mentioned this morning

Well if any of the government mentioned it (or even worse ordered it), you can be guaranteed it will be as good a useless (the product....come to think of it, both), so it will be throwing `good money after bad`! :-)

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6 hours ago, Vendetta said:

I have just downloaded Coinbase Pro and Kraken Pro and registered on both. I have been advised this is the best way to buy BTC direct. Just need to make sure I can get my money out quick! That’s what has always put me off!
 

I have a small amount of exposure to Bitcoin already via purchasing some ARGO the bitcoin miner (bought ARB share on H&L), as the BItcoin/etherium ETFs can’t be put in ISA? Just a SIPP - plus it’s not physical Bitcoin? 

Of the 46.8 millionaires that exist in the world (they own $158 TRILIION ) -  many are wary of using an app to buy Bitcoin and I don’t think ‘young people’ appreciate the tech barrier and the mistrust in buying bitcoin from us old techphobes (I am 45) . Once this is overcome and financial advisers start telling their clients to get 2-3 % of portfolio into BTC it will really run - like Gold and Silver. 
 

As inflation ramps up the rich will be looking for as many different vehicles/assets to store their wealth as possible.... property, land, equities, Inflation linked bonds, precious metals; gold, silver et al. All it takes is for Bitcoin to become 1% of everyone’s portfolio holding and BOOM 💥...... to the moon...... We may have that inflationary environment coming soon! 

 

4DBC391B-45B0-4058-8BAF-25F8C71973C9.jpeg

77ECFD1A-47B5-46D2-B1A6-D11512E079A5.jpeg

That figure is bollock.  Think about it.  In the UK alone there are probably over 5 million people with more than a million in property.  

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45 minutes ago, wherebee said:

That figure is bollock.  Think about it.  In the UK alone there are probably over 5 million people with more than a million in property.  

2.5 million apparently. There aren’t that many houses worth more than USD 1m in the U.K.

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sancho panza
On 17/08/2020 at 19:02, Majorpain said:

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.

Few nails hit on the head there MP.

Reality is that-as discussed in the macrob=voices podcast I psoted the otehr day- some socio demogrpahic deciles have been experiencing more of the inflation than others and there jsut comes a time when people realsie they can no longer afford the things they used to.I was talking with a friend today about how the pubs around us have been gradually emptying out over the years as the older end die of and the younger end jsut don't have the disposable income to use them.

More broadly,as you say, tehre comes that moment when people realsie the price of stuff is moving up and they're wages aren't,ergo there's little point saving it.

 

 

On 18/08/2020 at 10:26, 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.

I'm not as experienced as some on here but generally,I jsut sit on losers if my thesis hasn't changed.A lot of our goldies suffered 30-50% drops post purcahse eg Gold fields($3 to $2),Barrick ($16 to $10.).

That halving technique is something @Castlevania also uses and makes a lot of sense.My only problem is that when the Scottish play halved,I bought more...........

The important thing for me is that I reflect,consider my thesis and learn any lessons for the future.With the Scottish play,I allowed myself to be value trapped in.I didn't spray n pray enough,didn't use a rigourous laddering in process,allowed myself to be governed by sheer greed etc.If I had the trade again,I'd still invest in the sector but I'd spread myself more broadly, and more evenly across my ladders.

Relfecting on my greatest loss-Northern Rock-2007-we took a 50% hit on purcahse price and got a fair bit back.We'd been investing and buidling positions in various banks since the early 90's and had the bulk of our portfolio in them.Up until NR there was little need for me to understand fractional reserve lending,you jsut looked at the bad debts,the profits and kept reinvesting.Post NR,I refelcted at length that my knowledge of the economy and banking system was pisspoor.I taught myself about FRB and promptly sold what remained of our banking stocks including RBS at £4 or so( I took a bit of heat for that somewhat chunkyloss until the big drops happened then I was the man:D)

My key test-still-is whether I think the business will go bust and if not,then as long as the thesis holds,we'll stick in.There have been laods of shares we've owned that got mullered afterwards 50%+ that recovered over the years.Key thing is that you can average all the way down to pick up the bottom and we couldn't with the Scottish play.Got a lot wrong on that one.

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image.png.876361d615e2e9ad4889d915e7c43dda.png

 

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sancho panza

 

On 18/08/2020 at 16:26, DurhamBorn said:

I havent sold any that are under water and probably wont.They are part of a portfolio structured around a macro road map.Holding Centrica wasnt a mistake.Selling Sibanye on a double was a mistake,its nearly 5 bagged now.Thats cost me a lot more money than buying Centrica.Iv got some BT way down,but im very very pleased about that because i never expected to get the whole sector as cheap as i have been doing and still am.Markets arent linear and nobody on this thread can of under performed the market this year.

Its human nature to focus on shares that are down and torture yourself over them,but in reality they dont matter as much as the ones you sell too early on the way up.

 

An excellent reflection there DB,and a thought provoking one for me.My biggest mistakes have been selling stocks too early eg WTB,RTO referred to in previous post,prime examples.

On 18/08/2020 at 16:30, wherebee said:

But the sunk cost fallacy is a real thing?  What about those people that held onto RBS shares, for example?  Or those that didn't get out of Lehmans?

This is where you need to reassess your thesis ie has there been a fundamental change to the broad picture.Take Northern Rock/Lehman/Bear Stearns.There were people buying those stocks all the way to the bottom because they failed to test their thesis in light of new information(that was out there).There are people today buying banking stocks such as HSBC head to £3 because they don't want to accept the reality of their balance sheets in a psot covid world.

My thesis on CNA hasn't changed much,I still beleive it has a part to play in the UK economy and has some real potential to make investors a lot of money over time.Reality is that at the price we're in at the people who paid 30 pence are going to make way more than us but that's because I behaved rashly without due caution-and I should have known better.

On 18/08/2020 at 16:40, DurhamBorn said:

They lost the capital in them.If we hadnt seen the massive dislocation we had in March we wouldnt of seen the printing start and we wouldnt of seen silver miners triple and more for us.Its the nature of the beast.Its a different question though.They owned the wrong sectors at the end of the cycle.We owned the right shares for the macro picture.Some had individual problems,some are in sectors yet to ignite.Potash is up 100% since buying in March,oil stocks are down a few %.At the time there was no way to know what would move first and it doesnt matter.What matters is the bottom line.Im much more concerned about selling winners too early than the odd blow up.

That's my thesis.

key thing to remember for me, is that across a sector some shares will move up/down more than otehrs on the same news,for no clear reason and so it pays to be spread.

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