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


spunko

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1 hour ago, HousePriceMania said:

If someone is in for £10M, or say 50x their annual income

C'mon man this is a serious forum we don't piss about with a lousy few mil. If you just want to play with spare change then off to reddit with you :Old: 

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12 minutes ago, Noallegiance said:

Hasn't affected the Chinese markets today, it seems.

I've heard a few negative references to China along the lines of more regulation (so far just the tech sector).  Recs to get out of the market/currency.  Jonathan Davis was one.  I have about a 3% combined exposure.  Sold one this week only for it to pop 3% the next day.  And WH offered a stock buy back (why? :ph34r:) at a healthy profit so I took it.  I suppose I should derisk a little, maybe just the currency side but there are some good opportunities and I don't buy the general long standing negativity to the extent of staying out of the market.  Indeed some of the recent tech sector rules look good or at least reasonable.

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1 hour ago, Majorpain said:

The "Non financial corporation" bar is the one to watch, as you can see its far higher in China than ROW (2018), as companies like Evergrande gorged themselves on debt to build the Housing/Factories that would turn China is the manufacturing powerhouse of the world.  Unfortunately now the economic cycle has turned, China is heading out of favor, and they find themselves with a load of debt that isn't reducing in value and a load of assets that are.  IMO real Chinese GDP last year was negative, this year its going to be even worse, if I'm right more Chinese companies should start reporting their in trouble with increasing frequency.

image.png.293e1a065da2bfbac0433bd6c303007b.png

Er, is the chart missing "financial corporations"?  Gotta have the total so you can assess the chosen definitions each country uses, as mentioned upthread.  You should always start with and reconcile the total on anything (I learnt that the hard way!)

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3 minutes ago, Harley said:

Er, is the chart missing "financial corporations"?  Gotta have the total so you can assess the chosen definitions each country uses, as mentioned upthread.  You should always start with and reconcile the total on anything!

Good point!  I suspect its actually mislabeled and does include financial corporations, matches breakdown chart below nicely.  This however all assumes that the Chinese are reporting the data accurately, which with shadow banks and corruption is guaranteed to not be right!

Why does China have so much debt? - Quora

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9 minutes ago, Funn3r said:

C'mon man this is a serious forum we don't piss about with a lousy few mil. If you just want to play with spare change then off to reddit with you :Old: 

Indeed.  Looks like I need to clarify for those who may have accidentally wandered into this forum as I thought this was well know.  The players here are heavily into this, as professionals.  Most of us work in the City in various jobs while at least one is based in Asia, although we do move around a lot.  Several like me run large family offices, some on our own behalf and some for clients.  Others are wealth managers and other sundry advisors.  Oh, and a few academics.  Indeed, I'm waving at DB right now as he sits by the window in the building opposite.  We amuse ourselves here with our various personas.  The only rule is there has to be a grain of truth, although I have told DB in the past I thought he was pushing it a bit at times.  Yes, we deal in £m's.  So the correct question is how much do you have under management (AUM).  I'm sorry if this was not understood.

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12 hours ago, HousePriceMania said:

Out of interest DB....if it's not too much of a personal question....are you a virgin how much do you have invested ?

Iv shagged 137 women in this country ,but have retired from that now,unless my partner dies/naffs off xD,i never counted abroad but a few on hold etc.When younger i loved women as much as investing.Infact one of the main drivers to have enough not to work was so i could travel around the country seeing different women.

Invested,enough to retire at 49,but not live a high spending lifestyle.Iv invested a lot in being able to be frugal.

 

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3 minutes ago, Harley said:

Indeed.  Looks like I need to clarify for those who may have accidentally wandered into this forum as I thought this was well know.  The players here are heavily into this, as professionals.  Most of us work in the City in various jobs while at least one is based in Asia, although we do move around a lot.  Several like me run large family offices, some on our own behalf and some for clients.  Others are wealth managers and other sundry advisors.  Oh, and a few academics.  Indeed, I'm waving at DB right now as he sits by the window in the building opposite.  We amuse ourselves here with our various personas.  The only rule is there has to be a grain of truth, although I have told DB in the past I thought he was pushing it a bit at times.  Yes, we deal in £m's.  So the correct question is how much do you have under management (AUM).  I'm sorry if this was not understood.

 

That's fine but whichever of you is the Bogging guy can you please stop doing this "dump ze market" thing every time I buy, kthx.

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11 minutes ago, Majorpain said:

Good point!  I suspect its actually mislabeled and does include financial corporations, matches breakdown chart below nicely.  This however all assumes that the Chinese are reporting the data accurately, which with shadow banks and corruption is guaranteed to not be right!

Why does China have so much debt? - Quora

Indeed.  It's part and parcel of Asia to deal with "intercompany" in its various forms.  I avoid those "conglomerates" or companies effectively owned by oligarchs for this reason as it can get very murky and unwind quickly as one company acts as guarantor for another, etc.  I also ignore companies having an eclectic mix of businesses and those with noticeable "other flows" in their various financial statements.  For balance, other regions have their own issues, as we have seen and will really start to see if a BK, etc event starts. 

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27 minutes ago, Harley said:

I've heard a few negative references to China along the lines of more regulation (so far just the tech sector).  Recs to get out of the market/currency.  Jonathan Davis was one.  I have about a 3% combined exposure.  Sold one this week only for it to pop 3% the next day.  And WH offered a stock buy back (why? :ph34r:) at a healthy profit so I took it.  I suppose I should derisk a little, maybe just the currency side but there are some good opportunities and I don't buy the general long standing negativity to the extent of staying out of the market.  Indeed some of the recent tech sector rules look good or at least reasonable.

Iv been buying into China ,not a lot,but around 4% including Hong Kong.China saw how the US techs swung the election for Biden and its forced their hands i think.I like Asia for dividend growth going forward.

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"I've invested a lot in being able to be frugal."

^^^^ been working hard for years to get to this perfectly put point. It's coming together, hopefully just in time. 

Edited to add: like @DurhamBorn  says, the journey can be as rewarding as the destination!

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5 minutes ago, Funn3r said:

That's fine but whichever of you is the Bogging guy can you please stop doing this "dump ze market" thing every time I buy, kthx.

Feck, you're actually in the market right now!  :o

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15 minutes ago, DurhamBorn said:

Iv been buying into China ,not a lot,but around 4% including Hong Kong.China saw how the US techs swung the election for Biden and its forced their hands i think.I like Asia for dividend growth going forward.

Interesting support thx.  I need to be proportionate.  When I say China I mean HK as I "trade" individual stocks direct.  And yes, for the divs.  I'm enjoying some cement producers atm.  It's a bit like the crypto market where charts, etc actually matter!  Some stocks are banned because some/all UK retail brokers have applied rules for US citizens to UK ones!  Thankfully not IB, as one would expect given their focus.  Japan, Australia, and Singapore too but alas no broker provides access to Indonesia (looking interesting), etc so funds/ETFs there.  And another one that's a pain is Turkey.  Degiro did offer access but this has been suspended, apparently due to the currency fluctuations.  Shame given some emerging bargains after the turbulence.  A beer for anyone who knows of a broker offering access to these exchanges!

PS:. Yes, Turkey is classified as being in Europe!

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4 minutes ago, Heart's Ease said:

"I've invested a lot in being able to be frugal."

^^^^ been working hard for years to get to this perfectly put point. It's coming together, hopefully just in time. 

Edited to add: like @DurhamBorn  says, the journey can be as rewarding as the destination!

Exactly,and this thread is about trying to understand the macro roadmap,not just for investments,but life itself. @Harley always reminds us that there is a lot more to a sustainable life.I could of kept working,but i dont like it and dont need to.The last couple of days iv been working out how to put a French drain onto a small extension on the back of my house.Iv cooked for my kids twice this week after they finished work,healthy home made food and 6 fed for less than £5.I went for a speed walk up to an old wood i used to play in as a boy and when there had a few minutes under an old oak i remember a good friend climbing who died in his 20s.5 minutes sat there remembering him saying a few words.

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3 minutes ago, Harley said:

Interesting support thx.  I need to be proportionate.  When I say China I mean HK as I "trade" individual stocks direct.  And yes, for the divs.  I'm enjoying some cement producers atm.  It's a bit like the crypto market where charts, etc actually matter!  Some stocks are banned because some/all UK retail brokers have applied rules for US citizens to UK ones!  Thankfully not IB, as one would expect given their focus.  Japan, Australia, and Singapore too but alas no broker provides access to Indonesia (looking interesting), etc so funds/ETFs there.  And another one that's a pain is Turkey.  Degiro did offer access but this has been suspended, apparently due to the currency fluctuations.  Shame given some emerging bargains after the turbulence.  A beer for anyone who knows of a broker offering access to these exchanges!

PS:. Yes, Turkey is classified as being in Europe!

I know you dont like too many ADRs,but Telekomunikasi Indonesia ticker TLK is interesting,divi a bit skinny though,iv been watching it a while for a pullback,but dont own any yet.Cement producers look great in China.Copper price increases indicates they have being expanding the power network at speed,and when they do that construction follows with a lag.

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I've been looking at mortgaging my house. I currently own outright and wouldn't normally dream of doing it - but, 1% fixed for 5 years! It seems rude not to.

There are numerous 1% 5 year fixes on the market, most with a £995 fee.

My cunning plan is to take out a mortgage for either £100,000 or £150,000 and put a good chunk of it in 6%+ dividend paying stocks. It seems like a no brainer to me with the obvious risk being a BK. Hoping I can minimise the downside risks by only investing in cheap value stocks. Seems to me like the upside outweighs the downside considerably.

Any thoughts? Am I missing anything? Anybody else planning similar while money is so cheap?

Oh, may also be able to gain 20% immediately on some of by using my full SIPP allowance for the next couple of years.

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12 minutes ago, Starsend said:

I've been looking at mortgaging my house. I currently own outright and wouldn't normally dream of doing it - but, 1% fixed for 5 years! It seems rude not to.

There are numerous 1% 5 year fixes on the market, most with a £995 fee.

My cunning plan is to take out a mortgage for either £100,000 or £150,000 and put a good chunk of it in 6%+ dividend paying stocks. It seems like a no brainer to me with the obvious risk being a BK. Hoping I can minimise the downside risks by only investing in cheap value stocks. Seems to me like the upside outweighs the downside considerably.

Any thoughts? Am I missing anything? Anybody else planning similar while money is so cheap?

Oh, may also be able to gain 20% immediately on some of by using my full SIPP allowance for the next couple of years.

Pretty sure the standard advice would be "Don't do it"...but if I was in a position to, I would.  I assume you're still working?  (Just in case)

I see it is as front-loading the 'benefits', buying at the lows and the interest on the mortgage being negligible compared to gains

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59 minutes ago, Heart's Ease said:

"I've invested a lot in being able to be frugal."

^^^^ been working hard for years to get to this perfectly put point. It's coming together, hopefully just in time. 

Edited to add: like @DurhamBorn  says, the journey can be as rewarding as the destination!

Totally agree! Problem I have is that my wife doesn’t share the same thoughts and spends like crazy on shit. I remember when you said similar about your husband? Maybe we should do a partner swop? 😂

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17 minutes ago, Starsend said:

My cunning plan is to take out a mortgage for either £100,000 or £150,000 and put a good chunk of it in 6%+ dividend paying stocks. It seems like a no brainer to me with the obvious risk being a BK. Hoping I can minimise the downside risks by only investing in cheap value stocks. Seems to me like the upside outweighs the downside considerably.

Any thoughts? Am I missing anything? Anybody else planning similar while money is so cheap?

Be aware that a number of those products that are 'fixed' can be anything but in a real black swan event.  The UK has form for letting banks rip up the T&Cs if they can prove that the market is behaving in a way that 'nobody could have foreseen'.

Oops, sorry mr starsend, your fixed rate is now variable rate.  Take us to court if you wish.

I have, in fact, borrowed 25k on an offset mortgage (balance was zero) so I am paying zero interest as I keep 25k in that account anyway for bills etc, annual fee of 200 bucks, and have used that to invest 25k in oilies that have already given me 300 bucks in dividends.  With an offset I can justify the counterpartyfuckeryrisk (TM) in that if they suddenly change the T&Cs I just transfer the money over and pay it off for no charge.

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15 minutes ago, Starsend said:

I've been looking at mortgaging my house. I currently own outright and wouldn't normally dream of doing it - but, 1% fixed for 5 years! It seems rude not to.

There are numerous 1% 5 year fixes on the market, most with a £995 fee.

My cunning plan is to take out a mortgage for either £100,000 or £150,000 and put a good chunk of it in 6%+ dividend paying stocks. It seems like a no brainer to me with the obvious risk being a BK. Hoping I can minimise the downside risks by only investing in cheap value stocks. Seems to me like the upside outweighs the downside considerably.

Any thoughts? Am I missing anything? Anybody else planning similar while money is so cheap?

Oh, may also be able to gain 20% immediately on some of by using my full SIPP allowance for the next couple of years.

If you believe BK might happen then I honestly can't imagine how it could be a good idea. A combination of broad market collapse and house price drop might result in a very urgent call from your bank with a simultaneous lack of funds to cover the equity requirement. Might easily end up in the red big time. I feel plans such as this belong in the "everything's going up forever" world (which may or may not be our world), just like that Norwegian (?) guy who sold everything and went full bitcoin (seems to have worked for him btw, as there was no BK along the way).

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53 minutes ago, Starsend said:

I've been looking at mortgaging my house. I currently own outright and wouldn't normally dream of doing it - but, 1% fixed for 5 years! It seems rude not to.

There are numerous 1% 5 year fixes on the market, most with a £995 fee.

My cunning plan is to take out a mortgage for either £100,000 or £150,000 and put a good chunk of it in 6%+ dividend paying stocks. It seems like a no brainer to me with the obvious risk being a BK. Hoping I can minimise the downside risks by only investing in cheap value stocks. Seems to me like the upside outweighs the downside considerably.

Any thoughts? Am I missing anything? Anybody else planning similar while money is so cheap?

Oh, may also be able to gain 20% immediately on some of by using my full SIPP allowance for the next couple of years.

https://en.wikipedia.org/wiki/Landsbanki

Played that game in 2008. 6% interest rates really was too good to be true!  Got my money back off the Govt with interest though, so luckily didn't get burnt.

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1 hour ago, Harley said:

I've heard a few negative references to China along the lines of more regulation (so far just the tech sector).  Recs to get out of the market/currency.  Jonathan Davis was one.  I have about a 3% combined exposure.  Sold one this week only for it to pop 3% the next day.  And WH offered a stock buy back (why? :ph34r:) at a healthy profit so I took it.  I suppose I should derisk a little, maybe just the currency side but there are some good opportunities and I don't buy the general long standing negativity to the extent of staying out of the market.  Indeed some of the recent tech sector rules look good or at least reasonable.

Re China, I find Louis Gave of Gavekal money managers thesis very interesting. He thinks China will 'sacrifice' its equity market, by more and more centralised regulation/control, in order to 'save' its own job market (they don't want risk of internal putsch/revolution). He also thinks its bond market will prosper while all the other world bond markets will continue to go to sh**. 

I get your point about trading China equities, but as i only do the long term, i don't for example even like holding my small allocation to Silvercorp (Canadian but its mines are in China). Big shame because has large silver reserves/low costs, but i'll keep for the very short term.

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56 minutes ago, Starsend said:

I've been looking at mortgaging my house. I currently own outright and wouldn't normally dream of doing it - but, 1% fixed for 5 years! It seems rude not to.

There are numerous 1% 5 year fixes on the market, most with a £995 fee.

My cunning plan is to take out a mortgage for either £100,000 or £150,000 and put a good chunk of it in 6%+ dividend paying stocks. It seems like a no brainer to me with the obvious risk being a BK. Hoping I can minimise the downside risks by only investing in cheap value stocks. Seems to me like the upside outweighs the downside considerably.

Any thoughts? Am I missing anything? Anybody else planning similar while money is so cheap?

Oh, may also be able to gain 20% immediately on some of by using my full SIPP allowance for the next couple of years.

As I have posted on another thread, I am considering doing exactly this. 0.99% fixed for 5 years, interest-only, £995 fee. Needs care, but having some level of debt is also a hedge against potential forgiveness or a jubilee; nothing would surprise me in today's fucked-up financial world.

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3 minutes ago, Don Coglione said:

As I have posted on another thread, I am considering doing exactly this. 0.99% fixed for 5 years, interest-only, £995 fee. Needs care, but having some level of debt is also a hedge against potential forgiveness or a jubilee; nothing would surprise me in today's fucked-up financial world.

Look at the covid response. How will they be able to justify letting people sink in a major economic collapse when they've shown that cash is infinite when trying to stop people catching a cold? At that's the feckin tories!

They've created moral hazard all over the place

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2 hours ago, DurhamBorn said:

Iv shagged 137 women in this country ,but have retired from that now,unless my partner dies/naffs off xD,i never counted abroad but a few on hold etc.When younger i loved women as much as investing.Infact one of the main drivers to have enough not to work was so i could travel around the country seeing different women.

Invested,enough to retire at 49,but not live a high spending lifestyle.Iv invested a lot in being able to be frugal.

 

There you have it.  All there in plain sight.  137*49=£6.7m give or take a decimal point!  Plus the secret stash offshore he alludes to.

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