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

[sancho panza]

3 hours ago, Bricormortis said:

 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.

I posted some coma scores for teh PM miner sector a few days back.From memoery neither FNV or WPM were good value but KGC/Barrick/EGO anda couple of tohers were imho.

Dyor natch

3 hours ago, Fully Detached said:

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.

that looks like a decent conservative allocation FD.

Pharma doesn't get mentioned because it isn't that cheap.You tend to find the shares talked about in this thread are unloved and under valued.Most pharmas are over valued on several levels.

Having said that I jsut bought our first ladder of GSK.

[JREWING]

44 minutes ago, sancho panza said:

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

 

 

Can't see it until the full dividend payments are reinstated.

BP cut by half.

RDSB two thirds.

I think both look lofty now relative to their dividends.

BP 4.6% yield currently. If BP went up to say 500p. 2.9% yield. Who's going to buy into that price at those yields when you can get yields from tobacco.

I think for now we will struggle to top 380p. If we did get there, I'd be out and buy in at the pull back.

BP is not the same company today as it was at the 500p a share time.

I hope I'm proved wrong, got more than most in it. But can't see it getting back up to pre Covid levels. Well not unless they bump up the div or maybe a huge buy back later this year.

[sancho panza]

42 minutes ago, Fully Detached said:

 

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.

[ThoughtCriminal]

3 hours ago, Fully Detached said:

 

•  

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. 

I'll let others on here far more qualified than me to answer regarding your portfolio, but as far as the house goes let me say this: if Brittany is an area you know and love then I'd say go for it. 

 

I myself am looking at buying in Northern Sweden whilst working here a month or so at a time. 

 

 

[sancho panza]

9 minutes ago, JREWING said:

BP is not the same company today as it was at the 500p a share time.

I hope I'm proved wrong, got more than most in it. But can't see it getting back up to pre Covid levels. Well not unless they bump up the div or maybe a huge buy back later this year.

I was jsut saying some have recovered others haven't.It's not the same supply picture,not the same demand picture,different world economy.

Some will run better than others.

[Loki]

30 minutes ago, JREWING said:

maybe a huge buy back later this year.

I'm almost certain durhamborn mentioned this very thing

[leonardratso]

33 minutes ago, Loki said:

I'm almost certain durhamborn mentioned this very thing

ive got your dopey eyed disease now, i read that as 'maybe a huge black guy later this year'

[Loki]

1 minute ago, leonardratso said:

ive got your dopey eyed disease now, i read that as 'maybe a huge black guy later this year'

The mind sees what it wants to see, luvvy. 

[Talking Monkey]

8 minutes ago, Loki said:

The mind sees what it wants to see, luvvy. 

I've got some just like that

[Loki]

7 minutes ago, Talking Monkey said:

I've got some just like that

Are you having a laugh?

[sancho panza]

[Hancock]

1 hour ago, Yellow_Reduced_Sticker said:

..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!!!

 

Maybe we stayed in the same place, but i went the other year and it is an awful place. 

[Lightscribe]

I know the consensus on here sticks to the roadmap without nailing down to a timeline (after all market stays irrational longer than you can keep solvent etc) and everything could change on a whim through CB policy on a sudden turn of action. 

I will however nail my colours to the mast and give my own estimate/guesstimate. May be a bit dystopian with artistic licence but it’s where I think we are heading.

2021 Q2 - Melt up. Whether that includes FAANGs (i.e David Hunter) is another matter. But certainly tech stocks embroiled in the whiplash of Covid semi-conductor backlog. i.e TSMC, Nvidia (ARM), Texas Instruments. That alongside with Oil, gas, energy, industrial metals and materials and rare earth. 

2021 Q3-Q4 - BK. No not Burger King, but the actual big kahuna burger with extra pickles (opposite to nothing burger). Everything crashes including gold/silver and BTC.

2022 Q1 - more QE. Post pandemic reality  hits (we know this is just the end of the cycle into the new). Jobs lost, inflation hits, post government support, under pressure for UBI. This is the true run in oil/energy/PMs (and IMO BTC). Food shortages in developing countries, costs spiralling.

2022 Q2-4 - CB start to raise interest rates. Government gold/silver/crypto regulation. Executive Order 6102.

2023. UBI implemented. Increased automation and AI in all jobs. Retail, office space left decimated in city centres turned into residential for large scale government/bank owned rental. (Lloyds recently stating becoming biggest BTL owner). Skilled migration and HK money into the cities. Physical cash phased out.

2024 - mortgage defaults as people come out of 2-3 year fixed deals onto standard rates. Government support in exchange for assets. 

2025 - 2030. From here is where things could change massively. Government take overs, majority stakes in land, transport and infrastructure. Digital currency takes over. Tax, UBI, transactions are all processed in real time and verified on the government blockchain. Sharon tries to claim extra credits in addition to UBI, computer says no. Trevor has location confirmed at that  address for 359 days out of 365, his food, living purchases all been tracked to that address. 

2030 - onwards 

This is the ‘you will own nothing’ stage. There may or may not be a major war over commodities at this point, alongside a currency reset. Global government and currency. I hope this doesn’t happen. 

 

[JMD]

6 hours ago, Fully Detached said:

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.

I am still a learner here myself, but fwiw your strategies/allocations look broadly similar to mine (hope that doesn't despirate you too much!). However, and not meant as advice obviously, but after reading your post two aspects jump out at me. Pharma (as SP has already commented) offers little value imho, and tbh I disagree with your point that yet more medication is required to treat our so called 'mental health' problem. Anyway if we do get a BK, I am currently looking at the medical device companies. I also think etf's are risky, so would only be tempted after BK, and only then Asian/EMs/frontier market ones for the easy market access to those regions.

[JMD]

41 minutes ago, Lightscribe said:

I know the consensus on here sticks to the roadmap without nailing down to a timeline (after all market stays irrational longer than you can keep solvent etc) and everything could change on a whim through CB policy on a sudden turn of action. 

I will however nail my colours to the mast and give my own estimate/guesstimate. May be a bit dystopian with artistic licence but it’s where I think we are heading.

2021 Q2 - Melt up. Whether that includes FAANGs (i.e David Hunter) is another matter. But certainly tech stocks embroiled in the whiplash of Covid semi-conductor backlog. i.e TSMC, Nvidia (ARM), Texas Instruments. That alongside with Oil, gas, energy, industrial metals and materials and rare earth. 

2021 Q3-Q4 - BK. No not Burger King, but the actual big kahuna burger with extra pickles (opposite to nothing burger). Everything crashes including gold/silver and BTC.

2022 Q1 - more QE. Post pandemic reality  hits (we know this is just the end of the cycle into the new). Jobs lost, inflation hits, post government support, under pressure for UBI. This is the true run in oil/energy/PMs (and IMO BTC).

2022 Q2-4 - CB start to raise interest rates. Government gold/silver/crypto regulation. Executive Order 6102.

2023. UBI implemented. Increased automation and AI in all jobs. Retail, office space left decimated in city centres turned into residential for large scale government/bank owned rental. (Lloyds recently stating becoming biggest BTL owner). Skilled migration and HK money into the cities. Physical cash phased out.

2024 - mortgage defaults as people come out of 2-3 year fixed deals onto standard rates. Government support in exchange for assets. 

2025 - 2030. From here is where things could change massively. Government take overs, majority stakes in land, transport and infrastructure. Digital currency takes over. Tax, UBI, transactions are all processed in real time and verified on the government blockchain. Sharon tries to claim extra credits in addition to UBI, computer says no. Trevor has location confirmed at that  address for 359 days out of 365, his food, living purchases all been tracked to that address. 

2030 - onwards 

This is the ‘you will own nothing’ stage. There may or may not be a major war over commodities at this point, alongside a currency reset. Global government and currency. I hope this doesn’t happen. 

 

I agree Lightscribe. But to cheer my self up, I think I'll watch a Rob Zombie horror film before turning in. After all much more appealing to watch a daft highly innappropriate fictional flick, than to contemplate being in your own inescapable economic/dystopian horror show!!!

[Castlevania]

7 hours ago, Hancock said:

Maybe we stayed in the same place, but i went the other year and it is an awful place. 

You’re not under the age of 25

[Loki]

@Lightscribe I was going to post last night something about the next cycle not being all sunshine and light despite it being a 'good' one, and wondering if it wasn't simply building control systems and getting the financial system ready for the end of that cycle. (5g for the CBDC, energy rationing via smart meter, etc)

 

[planit]

 

@Lightscribe

I am glad you did that as I was thinking about the same.

I think you have too small a gap between 2022 Q1 with the reality dawning and the 2022/2023:

Quote

2022 Q2-4 - CB start to raise interest rates. Government gold/silver/crypto regulation. Executive Order 6102.

2023. UBI implemented. Increased automation and AI in all jobs. Retail, office space left decimated in city centres turned into residential for large scale government/bank owned rental. (Lloyds recently stating becoming biggest BTL owner). Skilled migration and HK money into the cities. Physical cash phased out.

 

I think the 2022 Q1 you have will take more than 3 months and I don't see how they will be raising interest rates that soon after something so big. They have said they will ignore inflation whilst there are no salary rise problems.

 

[Lightscribe]

19 minutes ago, planit said:

 

@Lightscribe

I am glad you did that as I was thinking about the same.

I think you have too small a gap between 2022 Q1 with the reality dawning and the 2022/2023:

 

I think the 2022 Q1 you have will take more than 3 months and I don't see how they will be raising interest rates that soon after something so big. They have said they will ignore inflation whilst there are no salary rise problems.

 

That may be, it’s very approximate. I do think that 2022 is a key inflection point where things could speed up however. The BK and then inflation double whammy will hit more vulnerable countries and currencies up the top end of the supply chain.

Governments and CBs would need to act if swathes of the global population are struggling to support themselves. Although they’ve stated they’ll let inflation run, it may run too hot, too quickly and they’ll start raising small amounts sooner rather than later after enough QE. I think the speed of change during this decade will put many people (outside of this thread of course ) on the back foot.

[Don Coglione]

6 hours ago, JMD said:

I agree Lightscribe. But to cheer my self up, I think I'll watch a Rob Zombie horror film before turning in. After all much more appealing to watch a daft highly innappropriate fictional flick, than to contemplate being in your own inescapable economic/dystopian horror show!!!

The Harry and Meghan interview then?

[harp]

1 minute ago, Knickerless Turgid said:

The Harry and Meghan interview then?

She’s a whinging cunt with a dirty stinking chip on her shoulder. I’ve met Harry twice. Properly met him with no one else around. He was never comfortable in the family and was always looking for a way out. 

[MrXxxx]

7 hours ago, Lightscribe said:

2021 Q3-Q4 - BK. No not Burger King, but the actual big kahuna burger with extra pickles (opposite to nothing burger). Everything crashes including gold/silver and BTC.

Interesting, I (like others it appears) was thinking just the same thing this morning. I think the BK will be late Q4/early Q1 as impacts of further lockdowns, and reduced furlough funding hits job losses and filters through...initially some people will have a little `spending money` from statutory redundancy payments (forget voluntary severance, this wont happen), and then reality will `kick-in`...this is when we will see some civil disorder/city riots as people realize they have been Covid shafted.

[Fully Detached]

10 hours ago, sancho panza said:

Oooh, point proven - thanks!  

[Fully Detached]

7 hours ago, JMD said:

I am still a learner here myself, but fwiw your strategies/allocations look broadly similar to mine (hope that doesn't despirate you too much!). However, and not meant as advice obviously, but after reading your post two aspects jump out at me. Pharma (as SP has already commented) offers little value imho, and tbh I disagree with your point that yet more medication is required to treat our so called 'mental health' problem. Anyway if we do get a BK, I am currently looking at the medical device companies. I also think etf's are risky, so would only be tempted after BK, and only then Asian/EMs/frontier market ones for the easy market access to those regions.

Thank you, and very happy to be disagreed with!  Whatever I buy I will be looking for value, so based on previous posts as well, it looks like I have my answer re Pharma - perhaps a small amount at some point in the future for diversification but not a major part of my allocation. I also started looking into single country ETFs last night and I think that is a direction I like the look of for small exposure to emerging markets. 

[Castlevania]

12 hours ago, leonardratso said:

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;

 

That Jules fellow properly loves Phillip Morris International. Although what he stated about PMI, they’ve underperformed due to weak EM currencies would also apply to BAT. Should do well if EM currencies strengthen relative to GBP/USD.