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

[Popuplights]

43 minutes ago, sancho panza said:

It's ironic because he pulled out of XOM at about $45 is waiting to rebuy at $33.....

Lolz. XOM now at 52 wk highs of 60 dollars. Just hitting the sweet spot for when I finally get the push, and get all the shares from the share save scheme out at once!

[Loki]

Can I not just leave my portfolio for the next 8 years and let it do its thing? I appreciate I wouldn't get the gains of the experts, which is fine, I am not an expert and more likely to mess things up, hence my aversion to faffing with my portfolio.

The impression I got from David Dreman's work is that this approach is fine if not optimal.

[Castlevania]

3 minutes ago, JMD said:

DB, that's a good reminder that portfolio diversification across this thread's favourite 'next cycle' sectors, along with rebalancing between/within those sectors actually improves overall portfolio returns, if capitol is redeployed into the 'other cheaper' sectors. Actually some experts say - for the non professional investors at least - that such rebalancing is more important than asset allocation. Of course when to do the rebalance is key, though again many financial experts say annually is sufficient (is stick to a system), but using market knowlege/skill I'm sure improves outcomes even more.                                                                                                                                                      I have a question about selling stocks. I have bought BP stocks at different prices (ladders). When selling these stocks, how does my platform provider(eg HL) decide which of my stocks to sell? Does it sell my 'lowest priced' ladders first, or my 'highest prices' ladders? ...Or given that we are talking about the finance industry, does it do something far more complex, and more opaque?!?

Shares are fungible, so it doesn’t matter which ones they sell. They’re all the same.

They calculate a weighted average cost.

[Cosmic]

8 minutes ago, JMD said:

I have a question about selling stocks. I have bought BP stocks at different prices (ladders). When selling these stocks, how does my platform provider(eg HL) decide which of my stocks to sell? Does it sell my 'lowest priced' ladders first, or my 'highest prices' ladders? ...Or given that we are talking about the finance industry, does it do something far more complex, and more opaque?!?

That's a bit like worrying about which £10 note you spend first...

[Popuplights]

13 minutes ago, Cosmic Apple said:

That's a bit like worrying about which £10 note you spend first...

I never break into a tenner.....

[DurhamBorn]

30 minutes ago, Popuplights said:

Lolz. XOM now at 52 wk highs of 60 dollars. Just hitting the sweet spot for when I finally get the push, and get all the shares from the share save scheme out at once!

I did the same back in early 99 when i left Glaxosmithkline,the shares were at an all time high and all my options came live the minute i left.Everyone was trying to stay an extra 6 months etc,i kept asking them to bring it forward and hurry up.In the end i went on the sick to make sure they coughed up.The shares have never been higher since i left.Hopefully you get out and sorted before a turn.

 

[Agent ZigZag]

23 minutes ago, Loki said:

Can I not just leave my portfolio for the next 8 years and let it do its thing? I appreciate I wouldn't get the gains of the experts, which is fine, I am not an expert and more likely to mess things up, hence my aversion to faffing with my portfolio.

The impression I got from David Dreman's work is that this approach is fine if not optimal.

This is more or less what I m doing as I do not have the skills to trade in and out although I am doing a bit of tinkering here and there.

My SIPP contains steady blue chip divi players and  is heavily weighted towards oil/energy shares. Like many Repsol has been my best performer with BP my worst with BP at break even point even after I laddered in all the way down to March 2020 lows. I then ran out of money. I would like a little bit of an over shoot in the oil and will likely trim my BP holding and take profit from the others to have a go another day at a better entry point than my first ladder.

My ISA is dominated by mining silver and gold shares and have done very well, Sibanye has been on an excellent run of late Again I would like to see one final hurrah in this sector and take all profits made leaving my original investments. If we get a deflationary bust then I will rotate into the sectors discussed in this thread for the dividend. My ISA I will continue to add the annual allowance.

[DurhamBorn]

35 minutes ago, Loki said:

Can I not just leave my portfolio for the next 8 years and let it do its thing? I appreciate I wouldn't get the gains of the experts, which is fine, I am not an expert and more likely to mess things up, hence my aversion to faffing with my portfolio.

The impression I got from David Dreman's work is that this approach is fine if not optimal.

You sure can Loki,and what you could do is allow divis to mount up and if we see pullbacks top up then or add new companies.I make a lot of mistakes selling too early,and always have.Its cost me a lot of money over the years.However such has been the profits in a lot of areas they have simply got to a percentage level i was feeling uneasy about.

My partner has a portfolio in an ISA and she has very similar holdings to me,just less of them ,but i have only trimmed Royal Mail and Drax.Reason being she is still building it out each month as i add new positions,and its only worth around 8% of my funds.

 

[Loki]

@Agent ZigZag More or less the same, except I never got into seriously the miners and haven't had any mad gainz.  I gave up trying to work out which ones were any good and where they are in their cycle. I do own HOC and a tiny amounf of NGD, but that is it.

I do hold Jupiter Gold and Silver fund in my SIPP.

[Loki]

2 minutes ago, DurhamBorn said:

You sure can Loki,and what you could do is allow divis to mount up and if we see pullbacks top up then or add new companies.I make a lot of mistakes selling too early,and always have.Its cost me a lot of money over the years.However such has been the profits in a lot of areas they have simply got to a percentage level i was feeling uneasy about.

My partner has a portfolio in an ISA and she has very similar holdings to me,just less of them ,but i have only trimmed Royal Mail and Drax.Reason being she is still building it out each month as i add new positions,and its only worth around 8% of my funds.

 

Thanks mate, that's great to know.  I don't think I'll ever be up there with the big boys, I admit I don't have the right type of brain for it.  I like concepts but not numbers  which is why this macro thread is fascinating as I can 'see' the flows.

I will re-invest all the dividends too, as I only put 'spare' money into my ISA.

 

[Bobthebuilder]

16 minutes ago, DurhamBorn said:

You sure can Loki,and what you could do is allow divis to mount up and if we see pullbacks top up then or add new companies.I make a lot of mistakes selling too early,and always have.Its cost me a lot of money over the years.However such has been the profits in a lot of areas they have simply got to a percentage level i was feeling uneasy about.

My partner has a portfolio in an ISA and she has very similar holdings to me,just less of them ,but i have only trimmed Royal Mail and Drax.Reason being she is still building it out each month as i add new positions,and its only worth around 8% of my funds.

 

Thank you for that @DurhamBorn, it is a reassuring reply.

I am much the same as @Lokiand @Agent ZigZag. Nice to know others are in a similar situation.

Great thread as ever, thank you everyone.

[JMD]

1 hour ago, sancho panza said:

The point is,that BTC trading isn't prevalent amongst much of the population whereas gaming is.Of all the resaons I would stay out of BTC msot are related to my age and my lack of technical understandign of how it works.The only one that is fundamental is the energy usage issue given what's comign.If we had a billion people using BTC as currency,the world would have a massive energy problem.Ergo,it will likely never gain the traction it needs to become common currency and I struggle to see how that isn't jsut plain common sense and not a false argument?

Could a milion people use gold/paper/electric dollars as currency?easily.They already do.

Like I said,there's lot of moeny to be made in crypto.I don't doubt it.But there are logistical limits to what it can achieve as currency but maybe not as a store of value.The two are differnet themes.

I really think we are talking past each other SP, which i think is a shame. I did say context was everything - and so for example, I was comparing crypto mining to gaming, which I think is fair. To introduce crypto transactions/currency use is spurious unless we deduct the energy usage of the current global financial money system.                                                                                                                                                                              Ok this discussion is perhaps not for this thread, but SP I'd urge you to listen to the macro voices podcast of few months back where they dicuss digital bearer assets. Erik Townsend was convinced of its benefit (I can try and locate it if your interested?).                                                                                                                         But the main point I would like to introduce is that BTC, crypto mining, etc, is only part of the future crypto setup. And it is the block-chain itself that is the fundamental. Whether it be financial trading, including the digital bearer assets I mention, but also the future of money itself, or other professions such as legal work/conveyancing (see smart contracts), it will be the block-chain that will be the disruptor and enable/drive 'middle class job' automation. It will involve block-chain and probably BTC (though that's not a definite I do accept) that will come to support the blockchain's distributed database infrastructure (ie crypto coin mining provides the method of authenticating the block-chain). Of course all this will require big energy input, but how do you price the savings in millions of highly paid finance and legal Jobs?                                              Anyway, for any still reading this (of piste) post, I'll make your head hurt more (sorry!) by introducing the concept that most so called crypto 'coins' are not really coins, they are applications. Yes some are coins for future potential currency use. But mainly they are computer code to create block-chain applications, or to integrate legacy computer systems onto the block-chain. I fully accept that the terminology used is misleading and the knowledge is so dispersed ...it's almost as if 'they' wanted to keep it all shrouded in secrecy!! I learned all this stuff piecemeal and it was a real pain doing it that way. Perhaps those on here that are far more knowledgeable than me could recommend a good source for introducing crypto and the block-chain. Not to persuade for investment purposes, but rather to show how powerful the tech is and it's potential.

[Fully Detached]

Obviously understand nobody can or will advise, but I would really appreciate any comments on this post, schoolboy errors pointed out, or things to beware of for example. I’ve been doing a crash course on this thread and also using Lyn Alden’s basic articles, trying to formulate a strategy to protect myself against inflation (and ideally outperform a little as well) – would really appreciate any opinions on this high level overview of my thoughts at this stage. It’s kind of a rolling plan because I have so much more to learn but at the same time I want to be ready to act at all times with different degrees of involvement as my knowledge hopefully grows.

With that, my current allocation is:

65% NS&I Index Linked Certs/ NS&I Cash ISA

15% Land

15% Physical PMs

5% Crypto

My immediate requirement is to get the bulk of the NS&I savings to be at least ready to buy shares with because I know they will not keep pace with real inflation, but I am not yet anywhere close to being able to pick stocks myself. So the plan is:

• Transfer NS&I ISAs to Eqi ISAs – all previous years investments
• Transfer 2021 allowance into Eqi ISAs in next couple of weeks
• Transfer 2022 allowance into Eqi ISAs after April 6th
• Sit in cash for now but use the time to identify sectors that I want to invest in
• Hope for pullback in equities, continue studying like hell…

• If pullback (or rapid inflation) hits before I am ready, invest all in ETFs and trackers
• Later move some into individual stocks when I am more confident
• Later aim for balance of 50% of equities ETFs and Trackers and 50% in individual picks

That plan then would give me an allocation looking something like:

50-60% Equities

5-10% Cash

15% Land

15% Physical PMs

2-5% Crypto

And then lastly, the sectors I am looking at based on comments in this thread are (as percentage of equities investment):

• Oil, Gas, Energy 30%
• Telcos 30%
• Miners 10% (less due to physical PMs)
• Pharma 15%
• Other 15%

I’m interested that Pharma doesn’t seem to get mentioned often in the thread – I would have thought that was a decent bet with vaccination boost programs seemingly a thing of the future and the almost certain physical & mental health impacts of lockdowns? And my “Other” sector would include things like alcohol and tobacco – basically all the things a thoroughly pissed off and miserable society might buy to try to cheer themselves up a bit.

On another note, I am also half tempted to bung about EUR90k into a house in Brittany, so at least we have something we could live in if needed, and then put the rest into equities. Really not sure about that but it’s a thought.

TIA for any comments, appreciate you guys get a lot of these questions but I hope I've done enough groundwork that a gentle nudge here and there to point out any idiocy would be OK.

[Bricormortis]

 At a glance Wheaton PM and Franco Nevada have declined in price probably more than the PM  miner sector average.  I get that they are royalty streamers,Any thoughts on these ? Im looking for opportunities for a modest ladder in, currently holding Barrick Endeavour Kinross and mostly Harmony.

[JMD]

1 hour ago, leonardratso said:

does it matter? each share is a homogeneous piece of the whole lot for that stock, doenst matter if you spend the 10 pound you took out of the atm today or the 10 pound you took out yesterday, youve still taken 20 out of the atm and will still have your change plus what you bought which if nothings changed should all add up to £20.

 

Thanks leonardratso, that's what I had always thought. However, many posts here talk of selling/trimming their holdings in terms of ridding themselves of their most expensive/high priced stocks. But I guess that is just a figure of speech in terms of ending up with a lower average figure after selling?                                                                                      But must admit I do have a nagging dought - which my crap maths skills prevents me from proving/disproving - and I can't help thinking it's rather similar to a 50% fall in price, requires a subsequent 100% price rise, before you are back to where you were in reference to a stock holding. Ie 'common sence' misleads, and a bit of basic maths shows the reality. 

[Sasquatch]

1 hour ago, Loki said:

Can I not just leave my portfolio for the next 8 years and let it do its thing? I appreciate I wouldn't get the gains of the experts, which is fine, I am not an expert and more likely to mess things up, hence my aversion to faffing with my portfolio.

The impression I got from David Dreman's work is that this approach is fine if not optimal.

Same boat I think. I'm just not expert enough to get the timing right. I'm feeling a lot happier at the moment not checking shares/PM prices on a daily basis. I have a decent cash sum sat waiting and can add more when we get to the new tax year. If there is another March 20 event I'm piling in with more oil/energy/telecoms stocks and maybe a few more miners. I'm pretty much fully allocated with physical PMs other than the odd auction buy if it's a good price.

At some point this decade if things start to go parabolic then that's when I'll need to be on my toes. 

[leonardratso]

7 minutes ago, JMD said:

Thanks leonardratso, that's what I had always thought. However, many posts here talk of selling/trimming their holdings in terms of ridding themselves of their most expensive/high priced stocks. But I guess that is just a figure of speech in terms of ending up with a lower average figure after selling?                                                                                      But must admit I do have a nagging dought - which my crap maths skills prevents me from proving/disproving - and I can't help thinking it's rather similar to a 50% fall in price, requires a subsequent 100% price rise, before you are back to where you were in reference to a stock holding. Ie 'common sence' misleads, and a bit of basic maths shows the reality. 

of course its all notional,  it worrks out in the maths.

As long as the total worth (cash+(shares * NAV)) is more than you started with in just cash then somethings going right.

Course low share numbers and high fees can bugger your averages all over the shop, so its all got to be worth it at the end of the day, no point making $5 profit then having to spend £10 in fees to get at the now -£5. Can get messy. Not to mention SDLT and other shite against you.

 

[Calcutta]

My lazy mind is just waiting till the day I feel content chucking the whole lot in a tracker fund and living off the divs. With hindsight should have done it last year but the Nasdaq didn't fall properly and guaranteed I'd throw my life's work into the ftse at 5500 and see it hit 3000 the next week. So here I am, dreaming of BA and Lloyd's making me a rich man. 

[leonardratso]

14 minutes ago, Calcutta said:

My lazy mind is just waiting till the day I feel content chucking the whole lot in a tracker fund and living off the divs. With hindsight should have done it last year but the Nasdaq didn't fall properly and guaranteed I'd throw my life's work into the ftse at 5500 and see it hit 3000 the next week. So here I am, dreaming of BA and Lloyd's making me a rich man. 

fundsmith has done it for me, if id shoved a thick wedge into when i started it a couple of years back id be 80-90% up now, course it could have gone the way of woodford, but whereas woodford was a 'rockstar' uncle terry's more like an insurance salesman by comparison, funny how things turn out really.

[CVG]

25 minutes ago, Calcutta said:

My lazy mind is just waiting till the day I feel content chucking the whole lot in a tracker fund and living off the divs. With hindsight should have done it last year but the Nasdaq didn't fall properly and guaranteed I'd throw my life's work into the ftse at 5500 and see it hit 3000 the next week. So here I am, dreaming of BA and Lloyd's making me a rich man. 

I also worry about how to set the portfolio to autopilot in my twilight years (or for my wife after I kick the bucket). I would love for one of the major brokers to offer a balancing service whereby you set some parameters about X% in A and Y% in B and Z% in C and then they  automatically rebalance once a year or when certain thresholds are triggered. And then just have divs paid out to the bank account.

[leonardratso]

well, i got round to watching uncle tel eventually, i usually just skip thru it, but theres real shite on TV so i thought id watch him for a change, im surprised he had a Q&A where the first Q was someone going on about inflation coming and he started going about input costs and price setting etc, well, made me wake up a bit since it all started to sound familiar, so anyway, i know its not this threads bag, but does touch on similar concepts;

anyways Q&A is anyones interested, start hence;

 

[planit]

@Fully Detached

I hope you all the best in your plans, if anyone gets helped here and ends up with more choices in the future because they learnt and invested wisely then great. 

I am no expert but assuming you are careful with your trackers and know their downsides (look at the current effects of so many people investing in S&P500 trackers) then it's something I would do. ETF's can have other downsides so again do your research.

One thing that struck me reading your post was on the Pharmas. The stock market is forward looking so the effect of future vaccinations will already be priced in. If you invest in Pharmas now you are placing a stake on whether you think more or less vaccinations will be needed than the market thinks.

The point here is the markets normally over-react with fear  and we are coming out of a period with loads of fear about viruses. Also there is a lot of competition in the marketplace with vaccines now, an unprecedented amount of research has been done so pharmas might not even be able to make any money, perhaps this is the time when Chinese manufacturing has absorbed vaccines and the western pharmas will shrink.

Anyway, point is really think it through. I want to read some of the contrarian books talked about here  (as sentiment and psychology is important) and perhaps that would help you too.

[sancho panza]

3 hours ago, Popuplights said:

Lolz. XOM now at 52 wk highs of 60 dollars. Just hitting the sweet spot for when I finally get the push, and get all the shares from the share save scheme out at once!

Nice timing there .XOM/CVX recovering pre covid levels.RDSB abd BP still ahve some running left.

 

 

[Fully Detached]

12 minutes ago, planit said:

@Fully Detached

I hope you all the best in your plans, if anyone gets helped here and ends up with more choices in the future because they learnt and invested wisely then great. 

I am no expert but assuming you are careful with your trackers and know their downsides (look at the current effects of so many people investing in S&P500 trackers) then it's something I would do. ETF's can have other downsides so again do your research.

One thing that struck me reading your post was on the Pharmas. The stock market is forward looking so the effect of future vaccinations will already be priced in. If you invest in Pharmas now you are placing a stake on whether you think more or less vaccinations will be needed than the market thinks.

The point here is the markets normally over-react with fear  and we are coming out of a period with loads of fear about viruses. Also there is a lot of competition in the marketplace with vaccines now, an unprecedented amount of research has been done so pharmas might not even be able to make any money, perhaps this is the time when Chinese manufacturing has absorbed vaccines and the western pharmas will shrink.

Anyway, point is really think it through. I want to read some of the contrarian books talked about here  (as sentiment and psychology is important) and perhaps that would help you too.

Thanks for the reply - good point on the ETFs, I have lots to learn on that, but I guess what I was trying to say was that I would feel reasonably comfortable bundling into funds rather than individual picks if I felt sudden pressure to buy (e.g. if the market crashed 30% or inflation hit 5%). But research indeed, that's the plan.

Regarding pharma, you've given the answer I expected, i.e that the vaccines are priced in and there is probably downside to come there. But my feeling was more long term for the mental and physical problems that I see in the future, and not necessarily covid related. For example, a personal trainer told me before the pandemic that almost 50% of their clients were on some sort of anti-depressant medication. I can only see that increasing in the future, and I was looking at it more for the divis than for capital growth. But perhaps something to keep an eye on and look for better value.

[Yellow_Reduced_Sticker]

10 hours ago, Onsamui said:

Bearing in mind that all deaths have been counted as COVID.  See info on International Lawsuit against the perpetrators of the virus scam. They have irrefutable evidence of the DAVOS clique - Schwab and co are bringing in food shortages so we bend the knee to their new financial criteria  - you will own nothing and you will be happy.  

 

Do you have a link for the above?

 

In my eyes this COVID BS is the BIGGEST FRAUD in history perpetrated against human beings WORLD-WIDE.

 

AND when i read stuff like what you posted above, it gets my blood boiling!

 

Do people seriously think that the PSYCHOPATHS behind this COVID BS HOAX .... are going to be appearing at an International Court of Justice ?...then they are seriously deluded.

 

However, I'll gladly eat humble pie...AND hope I'm proved WRONG!

 

RANT-OVER...and apologies for being off-topic.

 

BTW, this post is in NO way having a pop at YOU...looking at your user name, ya on Koh-samui? LOVELY stunning place in 1990, went over that way SE-Asia 4 month back-packing trip, arrived in Koh-samui - intended to stay 3 nights ...we ended up staying 3 weeks, island was just getting built up, 120B for a bamboo-bungalow on the beach HAPPY-DAYS!!!