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

[Barnsey]

 

[Hancock]

1 hour ago, Barnsey said:

There are no certainties, will SDLT be reinstated in September? CRE is in decline, do the powers that be want to crash housing too?

I bet yourself and @goldbug9999 £50 each that SDLT will end as scheduled.

The housing assets they own are in GBP, keep propping housing up and both will be worth sweet FA.

[BWW]

1 hour ago, Barnsey said:

...

We keep thinking this will play out like 2008, but that was people being reckless with borrowing, so they reigned the excess in for years. This is an exogenous, nightmarish, once in a century global health disaster. That paves the way to justify quite the opposite, much more continued spending and job support well beyond what we've been used to in our lifetimes.

Sorry but no it's not. It's just a pretend one and a bit like the eathquakes on the west coasts of the Americas the big one is now overdue and could arrive out of the blue anytime IMO.

[goldbug9999]

9 minutes ago, Hancock said:

I bet yourself and @goldbug9999 £50 each that SDLT will end as scheduled.

The housing assets they own are in GBP, keep propping housing up and both will be worth sweet FA.

My comments on this thread arnt really about housing, more about assets and markets generally.

[Barnsey]

5 minutes ago, BWW said:

Sorry but no it's not. It's just a pretend one and a bit like the eathquakes on the west coasts of the Americas the big one is now overdue and could arrive out of the blue anytime IMO.

It doesn't matter if it is or it isn't in our own opinions, it's being touted as such by the powers that be, and continued global fiscal spending/stimulus etc will be coordinated as though it is.

[geordie_lurch]

7 minutes ago, Barnsey said:

It doesn't matter if it is or it isn't in our own opinions, it's being touted as such by the powers that be, and continued global fiscal spending/stimulus etc will be coordinated as though it is.

The globally coordinated response (or plan) in terms of the removal of our freedoms, shutting down businesses, restricting travel in addition to the money printing in all Western nations is indeed unprecedented  However based on what we have all learned (not what we have been told by mainstream media) in the last 12 months the virus is nothing special unless the Western governments know more than they can ever let us know

[DurhamBorn]

They need inflation around 2.8% above rates for the whole cycle on average so they will print until they get that and sustain it.Over the cycle they will inflate away around 30% of assets held in cash and also bonds.

The only hope for ordinary investors in this cycle is to leverage that inflation as safely as they can,so a diversified portfolio that leans to companies who can increase prices while a steady depreciation charge.

The more indebted the government gets the more private sector assets go up.Its when governments go to extremes both ways that you get inflection points.The economy is awash with liquidity now.The CBs aim is to get it sloshing around so growth gets going and governments tax goes up.

[Barnsey]

 

[Hancock]

1 hour ago, goldbug9999 said:

My comments on this thread arnt really about housing, more about assets and markets generally.

But you responded to a comment about housing. Its pretty obvious the intention is to get inflation.

At almost anytime in living memory, cash gets inflated away over the mid-term.

[Hancock]

30 minutes ago, DurhamBorn said:

They need inflation around 2.8% above rates for the whole cycle on average so they will print until they get that and sustain it.Over the cycle they will inflate away around 30% of assets held in cash and also bonds.

The only hope for ordinary investors in this cycle is to leverage that inflation as safely as they can,so a diversified portfolio that leans to companies who can increase prices while a steady depreciation charge.

The more indebted the government gets the more private sector assets go up.Its when governments go to extremes both ways that you get inflection points.The economy is awash with liquidity now.The CBs aim is to get it sloshing around so growth gets going and governments tax goes up.

The more house prices go up the more people are taken out spending in the economy.

If i get a house for £250k then i'm free to participate in the economy with excess income, if i get one for £350k i've no money to pour into the the economy for the next decade.

Multiply that by many millions of people (including renters) and we're back to where we are now.

[Talking Monkey]

9 hours ago, Hancock said:

Your view is an opinion, but seems to be written as fact.

I will not be buying a house in the imminent future for fear of missing out, which is what you are more of less stating, to buy right now would be rather silly imho.

Life will be back to (new) normal come June (elections in May mean they're not going to slow the "return to normal"). We will also follow America where many states have already returned to normal; at this point real unemployment figures and closure of companies begins. Come September SDLT is reinstated, so the rush to buy houses will have faded by early July.

Then it is decision time.

If there was a time not to worry about fear of missing out on buying a house I would think it is now and the coming few years, the headwinds to residential property seem huge

[Talking Monkey]

4 hours ago, Loki said:

A new freezer?

Good spot no way was it one of us

[Hancock]

3 minutes ago, Talking Monkey said:

If there was a time not to worry about fear of missing out on buying a house I would think it is now and the coming few years, the headwinds to residential property seem huge

Exactly, especially in southern England where i'm looking.

But if someone is in cash to use to buy a house, they'd be an idiot to invest in the stock market or gold or silver, with the intention of having to take it out in the next 6-24 months.

If someone stuck their 250k house deposit in a FTSE100 ETF 5 years ago, it would have turned out to be a bad bet.

[Talking Monkey]

1 hour ago, BWW said:

Sorry but no it's not. It's just a pretend one and a bit like the eathquakes on the west coasts of the Americas the big one is now overdue and could arrive out of the blue anytime IMO.

It is a pretend one more or less, I reckon the with covid rather than of covid distinction has allowed huge misrepresentation of the deaths. The big one has yet to come. No way was the last year the big one.

[Talking Monkey]

5 minutes ago, Hancock said:

Exactly, especially in southern England where i'm looking.

But if someone is in cash to use to buy a house, they'd be an idiot to invest in the stock market or gold or silver, with the intention of having to take it out in the next 6-24 months.

If someone stuck their 250k house deposit in a FTSE100 ETF 5 years ago, it would have turned out to be a bad bet.

However if from here someone sticks their 250k into reflation stocks I reckon 5 years from now they'll be well ahead. I know that's a simple scenario and there are other variables etc in a real life situation.

[BWW]

1 hour ago, Barnsey said:

It doesn't matter if it is or it isn't in our own opinions, it's being touted as such by the powers that be, and continued global fiscal spending/stimulus etc will be coordinated as though it is.

Now imagine what happens when there's a disease spread as easily as covid but with prognosis similar to aids in the early 80's. Diagnosis of full blown aids was certain death within weeks or months for the first YEARS. Only question was whether you got [even] 3 weeks or were lucky enough to get 3 months. The full therapy making it not-always-deadly took way over a decade. It's still deadly if caught too late/not handled correctly or you're unlucky and don't respond to the drugs.

The global impact of that would make 2020 look like a pimple on a brick.

[BWW]

28 minutes ago, Talking Monkey said:

However if from here someone sticks their 250k into reflation stocks I reckon 5 years from now they'll be well ahead. I know that's a simple scenario and there are other variables etc in a real life situation.

I was thinking about this the other day. I basically bought a mix of the reflation stocks on here [but restricted to FTSE partly for simplicity / esp. tax reasons] plus financials which are unloved here. From standing start over the last year, am almost fully bought in [so it should  all  crash soon then].

Just for fun I was curious to know how my picks [no funds, entirely individual stocks] have done vs buying on the same dates/amounts into an index ETF. Is there some simple software to do this?

[kibuc]

13 hours ago, Talking Monkey said:

Lovely I got some of them, I guess they'll probably halve  on Monday😃. Hey ho I was expecting a couple woukd have some dramas like this

Fear not, Fortuna knows how to manage its releases. They know it so well they could write a junior miner's handbook on the subject.

Shitty news: release on Friday at 11.59pm.

Moderately good news that was very clearly known on Friday: release on Monday pre-market to paper over the Friday's release.

Fortuna Silver Mines Intersects 1.93 kilos of silver and 6.76 g/t gold over 5.4 meters at the San Jose Mine, Mexico

https://www.juniorminingnetwork.com/junior-miner-news/press-releases/871-tsx/fvi/96003-fortuna-intersects-1-93-kilos-of-silver-and-6-76-g-t-gold-over-5-4-meters-at-the-san-jose-mine-mexico.html

Your money is in good hands.

[Talking Monkey]

23 minutes ago, kibuc said:

Fear not, Fortuna knows how to manage its releases. They know it so well they could write a junior miner's handbook on the subject.

Shitty news: release on Friday at 11.59pm.

Moderately good news that was very clearly known on Friday: release on Monday pre-market to paper over the Friday's release.

Fortuna Silver Mines Intersects 1.93 kilos of silver and 6.76 g/t gold over 5.4 meters at the San Jose Mine, Mexico

https://www.juniorminingnetwork.com/junior-miner-news/press-releases/871-tsx/fvi/96003-fortuna-intersects-1-93-kilos-of-silver-and-6-76-g-t-gold-over-5-4-meters-at-the-san-jose-mine-mexico.html

Your money is in good hands.

Whoop Whoop

[Harley]

1 hour ago, DurhamBorn said:

.......so a diversified portfolio that leans to companies who can increase prices while a steady depreciation charge.

This is worth a moment.  I assume you mean equity portfolio or are you also thinking of asset allocation?  What are your thoughts on an asset allocation?  One of my key topics!  Regarding equity, what sort of diversification are you thinking of?  Sectors, number of stocks in a sector, currency, equity versus funds, etc, etc?  Interesting as I'm currently working on a "to be" financial model to better guide my investing.  It's amazing how slow I am to use the same tools as I would use commercially.  I need my model to take me down to the target monetary holdings in each stock, etc in each asset class, even if some will currently be "tbd".  My approach is all a bit too vague for me atm. 

[The Idiocrat]

1 hour ago, kibuc said:

Fear not, Fortuna knows how to manage its releases. They know it so well they could write a junior miner's handbook on the subject.

Shitty news: release on Friday at 11.59pm.

Moderately good news that was very clearly known on Friday: release on Monday pre-market to paper over the Friday's release.

Fortuna Silver Mines Intersects 1.93 kilos of silver and 6.76 g/t gold over 5.4 meters at the San Jose Mine, Mexico

https://www.juniorminingnetwork.com/junior-miner-news/press-releases/871-tsx/fvi/96003-fortuna-intersects-1-93-kilos-of-silver-and-6-76-g-t-gold-over-5-4-meters-at-the-san-jose-mine-mexico.html

Your money is in good hands.

Thanks for posting. Bunch of cowboys, fortunately I got out of my modest but profitable (+85%) holding and I will bid them adieu.

[DurhamBorn]

1 hour ago, Harley said:

This is worth a moment.  I assume you mean equity portfolio or are you also thinking of asset allocation?  What are your thoughts on an asset allocation?  One of my key topics!  Regarding equity, what sort of diversification are you thinking of?  Sectors, number of stocks in a sector, currency, equity versus funds, etc, etc?  Interesting as I'm currently working on a "to be" financial model to better guide my investing.  It's amazing how slow I am to use the same tools as I would use commercially.  I need my model to take me down to the target monetary holdings in each stock, etc in each asset class, even if some will currently be "tbd".  My approach is all a bit too vague for me atm. 

Im seeing things across several equity sectors and several countries.Im holding no bonds and at the moment consider cash as my bonds.Im around 32 companies in equity (and 8 gold and/or silver miners profits well sliced) and also a few investment trusts.Im increasing that number up to 36 to 38 as im buying ladders in Brazil.Iv sold out of a few companies ,but mainly top sliced everything that was up over 100%.My first aim was to hit my cycle 65% inflation road map and some companies had doubled that and more in a year.Im not intent on making the maximum,in fact id actually be very pleased if i died with what i already have inflation adjusted as im retired now fine on it.

I actually see stage one done as i bought very very heavily during the collapse last March.I didnt look at any balance sheets in detail,i simply bought the companies id already wrote down to buy.

On cash i have around 9 years living expenses in cash,6 if my lass leaves me  

Inflation is my main worry,iv spent the morning seasoning my new wok so popped to Lidl to get some bits including their egg noodles,about the closest cheaper ones to Lucky Boat No2 the takeways all use.They were 45p for 3 portions.Now 49p.Its feeding through everywhere.Im off out for a mower for £30,im getting spares for everything.

[Barnsey]

MOARRRRR is coming...

https://www.thebusinessdesk.com/yorkshire/news/2073030-a-couple-of-quarters-of-growth-is-not-going-to-be-enough

Vlieghe said: “What we’re ultimately trying to achieve is to bring back the economy all the way to its medium-term potential. Or to put it another way we need the labour market to return roughly to the state that it was in immediately before the pandemic.”

This he says is going to take a while even if we have rapid growth, because it means we need the unemployment rate to fall “quite far”.

As a result, he said he doesn’t expect many changes to policy in the near future.

He said: “My main message is don’t think of the bank rate being linked to short-term growth in the economy, as that’s not enough.

“Just because we’re going to have a couple of quarters of growth rates that may be unprecedented doesn’t mean the Bank of England should change its monetary stance and step on the brakes because everything is ‘great now’.

“We need everything to grow very fast because we need to close that gap, relative to the trajectory that we were on before.”

He added the only way to deliver 2% inflation sustainably is to get the economy back to full capacity and get the unemployment rate down.

However, he reiterated that there may be temporary spikes in inflation during the reopening and that it may have some impact on energy prices and therefore some cost increases.

“One-off price increases is not what we mean by inflation,” he said. “Inflation is the kind of pressure you see year after year.

“To my mind, seeing some strength this year, which I do expect, is not going to be nearly enough to then conclude this is an economy that doesn’t need monetary help anymore.”

[BurntBread]

5 minutes ago, Barnsey said:

Vlieghe from the BoE monetary policy committee: “One-off price increases is not what we mean by inflation”

Terrifying.

[janch]

There was an article about Nigel Farage getting involved in carbon offsetting in this Dutch company:

https://www.thisismoney.co.uk/money/markets/article-9409451/Dutch-firm-hires-Nigel-Farage-green-salesman.html

I've no idea what the company is like but if anyone is interested they are DGB Group NV:

It would appear some people must have read the article and decided to invest today.