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


spunko

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32 minutes ago, DurhamBorn said:

Patience harp,this is the critical period during a cycle turn.The last hands are being shaken out of hated sectors.The market is making sure the least people possible own the right areas as the cycle turns.Its critical at these times a contrarian faces into the storm.Remember we have many areas up 100%,200%+.Some of those can be trimmed to top up other areas.This cycle will see $200 oil and the big boys will live to see it.Ignore short term movements,markets arent linear.The amounts of liquidity being pumped ensures after a sharp deflation we will see an expansion cycle unfold.This cycle will be a distribution cycle for most assets as bonds and shares are sold to make up for lower living standards,only assets that can leverage that inflation will fly.

We are in the stage of the deflation now where governments panic.They are about to turn on the fiscal taps across the whole world aided by the central banks and the dash for real assets will begin.China is already in a full on industrial recovery that will expand quickly.They wont stop when they sniff inflation,other factors will be playing out then,political and geo-political.You will hear the term the roaring 20s before this decade is over.

The thread needs to remember the likes of Harmony Gold,Sibanye,Eldorado,even Royal Mail has doubled from the bottom,DRAX up 130%,the gambling companies trebling etc etc.We want people to throw in the towel and keep prices down while we funnel dividends in and trim and position.

BOE will print again very soon as will everyone else,watch for it being fiscal.

Bit in bold is bang on.Proper shakeout ongoing.It's difficutl holding the line here .COuldn't believe I was paying £9 for RDSB today.$34 for XOM t'other day...incredbile.I jsut feel like when I was a kid and there was a massive open goal playing footie and you hesitte because you can't get your head around the size of the opportunity

DB,have you got a view on the long temr prognosis for sterling?

Was chatting with someone aobut my concerns for it being brought forward a year or two.rumours of neg rates,more QE Covid response etc.Looks fubar tbh.Good for manufacturers though.

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39 minutes ago, DurhamBorn said:

Patience harp,this is the critical period during a cycle turn.The last hands are being shaken out of hated sectors.The market is making sure the least people possible own the right areas as the cycle turns.Its critical at these times a contrarian faces into the storm.Remember we have many areas up 100%,200%+.Some of those can be trimmed to top up other areas.This cycle will see $200 oil and the big boys will live to see it.Ignore short term movements,markets arent linear.The amounts of liquidity being pumped ensures after a sharp deflation we will see an expansion cycle unfold.This cycle will be a distribution cycle for most assets as bonds and shares are sold to make up for lower living standards,only assets that can leverage that inflation will fly.

We are in the stage of the deflation now where governments panic.They are about to turn on the fiscal taps across the whole world aided by the central banks and the dash for real assets will begin.China is already in a full on industrial recovery that will expand quickly.They wont stop when they sniff inflation,other factors will be playing out then,political and geo-political.You will hear the term the roaring 20s before this decade is over.

The thread needs to remember the likes of Harmony Gold,Sibanye,Eldorado,even Royal Mail has doubled from the bottom,DRAX up 130%,the gambling companies trebling etc etc.We want people to throw in the towel and keep prices down while we funnel dividends in and trim and position.

BOE will print again very soon as will everyone else,watch for it being fiscal.

Apologies I never saw this post before I posted my luvvies link 

I want to print it and frame it

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2 minutes ago, sancho panza said:

Bit in bold is bang on.Proper shakeout ongoing.It's difficutl holding the line here .COuldn't believe I was paying £9 for RDSB today.$34 for XOM t'other day...incredbile.I jsut feel like when I was a kid and there was a massive open goal playing footie and you hesitte because you can't get your head around the size of the opportunity

DB,have you got a view on the long temr prognosis for sterling?

Was chatting with someone aobut my concerns for it being brought forward a year or two.rumours of neg rates,more QE Covid response etc.Looks fubar tbh.Good for manufacturers though.

Sterling might hold up a while as the BOE prints because it removes systemic risk,thats what always catches people out not understanding that.I think sterling will be going down after that,but might recover mid cycle as the UK sees a full industrial recovery.By then you will have the likes of Anglo American and BP investing billions on Teesside etc.Im starting to see the chance of a really ferocious recovery cycle,but massive hurdles still to jump.Staus quo is over though.Its industrial broad based inflationary expansion or we go bankrupt.Both scenarios mean sterling based investors need real assets,whatever the dislocation now.

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23 minutes ago, DurhamBorn said:

Exactly the liquidity goes up to the basic production.China is spending massive amounts already on re-tooling,diggers,reach lifts etc.Everyone else will follow.The industrial recovery cycle is underway,but will be hidden a while and there will be false dawns,deflation bumps etc,maybe even big jumps down but the cycle is getting underway.If CBs stopped printing we would be in trouble,but there is no way thats happening.Taps are open and they are going to push until they avoid deflation.

got to be careful with these charts but here's a 20 year copper versus oil chart.Copper has been on a tear of late.Over time oil appears to lead copper

image.thumb.png.a9502c9bf186bf320a0091ff9bb6db8a.png

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3 minutes ago, sancho panza said:

got to be careful with these charts but here's a 20 year copper versus oil chart.Copper has been on a tear of late.Over time oil appears to lead copper

image.thumb.png.a9502c9bf186bf320a0091ff9bb6db8a.png

Base metals go first as they are ordered as orders land.Energy follows as the production ramps up and then even more as the production itself then produces.Energy prices falling is a massive boost for economies and it tends to run alongside CBs printing,but this time its on steroids.Extremes lead to extremes in the other direction.

What needs to be remembered though is after the oil shocks of the 70s oil has been in a pretty stable supply/demand balance and has reacted closely to loose monetary policy.Right now the demand shock is hiding the fact that supply is going to undershoot demand just as recovery cycles unfold.Its not certain,but the pieces are in place for a massive price shock to the upside.People are projecting 2040 oil use on tomorrow.That is their folly.

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Eventually Right
52 minutes ago, DurhamBorn said:

I agree with his call on us being in the deflation now ending a great dis-inflation cycle.David is a superb macro strategist and was a junior member of the Fidelity team back in the 80s,but hes making short term calls for the gallery when his real skills are over a cycle.Davids real experience is on liquidity and Fed reactions.He knows the Feds actions before they do.His job would be to provide an inflation/dis-inflation road map to the stock pickers.

Hi DB,

Would I be right in reading your post as: you don’t think it’s possible to build an accurate picture of what will happen in the short term (say next 12 months), or do you explicitly disagree with David’s call of a melt-up in the next 2-3 months, followed by the mother of all big kahunas?
 

His theorised trigger for the BK part 2, seems to be based on an imagined Fed policy mistake, because of concern about overheating markets, due to a melt-up. That seems a lot of “ifs” to me-if there’s a melt-up, and if the Fed then make a mistake then we get BK part 2. 

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6 hours ago, Eventually Right said:

Hi DB,

Would I be right in reading your post as: you don’t think it’s possible to build an accurate picture of what will happen in the short term (say next 12 months), or do you explicitly disagree with David’s call of a melt-up in the next 2-3 months, followed by the mother of all big kahunas?
 

His theorised trigger for the BK part 2, seems to be based on an imagined Fed policy mistake, because of concern about overheating markets, due to a melt-up. That seems a lot of “ifs” to me-if there’s a melt-up, and if the Fed then make a mistake then we get BK part 2. 

I cant and dont try to figure out short term as iv found it pointless over the decades.Longer term is much easier from a macro angle.I think David would admit that his skills arent really around short term trades,at least that wasnt his job at Fidelity at all.Its like the oil sector.Im pretty confident the numbers point to $200 oil,or in a bear case $150 minimum,but i have no idea how long it will take to start to really move,i would guess quarter one next year,but i also have no idea when the shares will respond.I am pretty confident the sector will provide 300% returns though,maybe more over the cycle.

We have lots of shares that have doubled,trebled and even more and others that are lagging.Markets are never linear and its crucial people relax.I dont even check my portfolio now most days,maybe once a week,and thats to check divis and re-invest them.I expect soon il be checking once every few weeks,and that will mainly be to read any results etc on holdings.I simply dont care about the ups and downs because im confident my portfolio is inflation leaning,well diversified and likely to outperform over the cycle.

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Last time I went in large on RDSB I was up over £2k in a week......

hovered over the sell button.....and now it's back to my buy price......good game, good game :Jumping:

Right, need the fresh air 

 

cover_3716111132017_r.jpg

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The Euronext exchange (Amsterdam, Brussels, Lisbon and Paris) went down Monday and they cancelled and/or are cancelling a few orders that were meant to have been executed.  Another good reason to keep your own records, etc up to date.

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UnconventionalWisdom
4 hours ago, DurhamBorn said:

I cant and dont try to figure out short term as iv found it pointless over the decades.Longer term is much easier from a macro angle.I think David would admit that his skills arent really around short term trades,at least that wasnt his job at Fidelity at all.Its like the oil sector.Im pretty confident the numbers point to $200 oil,or in a bear case $150 minimum,but i have no idea how long it will take to start to really move,i would guess quarter one next year,but i also have no idea when the shares will respond.I am pretty confident the sector will provide 300% returns though,maybe more over the cycle.

We have lots of shares that have doubled,trebled and even more and others that are lagging.Markets are never linear and its crucial people relax.I dont even check my portfolio now most days,maybe once a week,and thats to check divis and re-invest them.I expect soon il be checking once every few weeks,and that will mainly be to read any results etc on holdings.I simply dont care about the ups and downs because im confident my portfolio is inflation leaning,well diversified and likely to outperform over the cycle.

Added to this is that the monetary policy from the central banks makes it near impossible to predict what will happen in the short term. They have prevented recessions for so long that if it happens it will be big. They will do all they csn to ensure it doesn't happen on their watch. 

I think there will be a lot of money printing over the next year so the BK won't happen til at least the end of 2021. It will then depend how quick they are with fiscal policy- if they can ramp that up and get economic activity going quick enough, there might not be a BK. But as per the thoughts of this thread, that will result in reduction of consumer stocks (currently having stupid PE ratios) and an increase in the industrials. I don't think it's wise to wait for the BK, but maybe keep some aside if it does happen.

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Democorruptcy
2 hours ago, 5min OCD speculator said:

Got filled BP 20k @£1.96 O.o

BP doesn't look anything like the letters in TSLA, what happened, did the cat jump on your keyboard?

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1 hour ago, Harley said:

Apologies, an off topic post about WHT on overseas dividends.  I'll create a separate thread covering all aspects of overseas investing covering tax, brokers, etc.

I created a thread in "Investing & Money" but lost the cut and paste of my original post re. WHTs!!!!!  I'll recreate later!  :PissedOff:

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On 13/10/2020 at 11:17, working woman said:

Hi, I regularly read Dosbods and this thread in particular and occassionally comment.

 

Several posters talk about laddering in and hoping  to invest at the bottom of the Oil shares before they start the long term (10 years) uptrend that you all think will happen.

I have been following the share prices of oil companies  RDSB and BP. I also look at their moving averages.  I don't think now is the time to buy if you want to buy the bottom in those two.

In March, like other shares, they dropped, rose rapidly and are now going down again - a "Dead Cat Bounce".

(Hats of to Durham Born - I believe he was buying at the bottom of that crash and then decided to sell at the top of the bounce? DB what made you sell, did you have/use sell signals?)

Using Moving Averages, both RDSB and BP are still on a short-term downward trend based on their 20 and 50 day moving averages and still on a longer term down trend based on their 200 day moving average. So I wouldn't buy yet if you are wanting to catch a long term bottom.  

I read a book by a famous UK Investor Bernice Cohen. For long term trading/investing she uses the 100 and 200 day Moving averages. She buys in ladders/tranches just after the share price starts to rise and it goes up through it's moving averages.

1st ladder- when the share price crosses it's 100 day moving average

2nd ladder - when the share price crosses it's 200 day moving average

3rd ladder- when a Golden Cross forms, this is when the 100 and 200 cross each other and a good indicator of a long uptrend to follow.

This is her belts and braces, cautious approach. I'm sure she sleeps well at night.

She didn't say when she sells, but I imagine she probably sells in ladders when the prices drops below their moving averages or uses a Stop Loss.

She kept a daily hand written record of the FTSE 100 share prices and calculated their 100 and 200 day moving averages every day, to find the buy signals. Nowadays, the internet can do it for you.

I'm waiting for a 20 and 50 day Golden Cross which is a short term indicator that the share price has hit a short-term bottom and is starting to rise, and then follow Bernice's 3 ladder plan above.

If DB is correct and there will be a long-term uptrend over the next 10 years, with lots of ups and downs within it, you could also make money doing short term trades using the 20, 50 and 100 day moving averages.

I'm looking forward to seeing how this develops.

 

 

                                                                                         

 

Hey 

loved this article regarding moving averages 

when you wrote the article Shell share price was £9.61 (13/10/20) and you said it not bottom yet !! 
 

you said you are waiting for 20/50 day golden cross !!

have you got a graph to show what potential going to happen ? 

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Topped up the isa today and bought some more BP and RDSB. Will grab some XOM later as well.

Met up with some friends the other day and one of them was baffled with my desire to invest in oil as it's not very 'ethical'. He drives a BMW, goes on foreign holidays and has a nice lifestyle. We moved onto other topics.....

 

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1 hour ago, Democorruptcy said:

BP doesn't look anything like the letters in TSLA, what happened, did the cat jump on your keyboard?

I don't do electric cars.....but defo a bike in the future :)

And I definitely don't do cats!! Shoot the stray bastards.....in fact I came across a particularly manky looking one this morning O.o

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38 minutes ago, Junction25 said:

you said you are waiting for 20/50 day golden cross !!

have you got a graph to show what potential going to happen ?

I'll chip in if I may cos I find all these indies interesting :Geek:

It's when moving averages cross ie

709906015_download(3).gif.b9e9deb03bc4c5c4f58ce986a5127402.gif

so a 20/50 is a 20 day and 50 day cross

BUT I find these MAs a load o hogwash.......just draw a line and trade that.....

Have a look at a DAX chart from this morning, zee Germans went bonkers..... 

Took it down like an elevator to startle half asleep muppets like me, then it took off like a GT3 RS :)

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Democorruptcy
11 minutes ago, 5min OCD speculator said:

I don't do electric cars.....but defo a bike in the future :)

And I definitely don't do cats!! Shoot the stray bastards.....in fact I came across a particularly manky looking one this morning O.o

A cat on the keyboard is Betfairspeak for placing a dodgy bet :)

I hope the BP shares do very well for you.

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