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spunko

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

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13 hours ago, Ponty Mython said:

I think this is relevant here:

https://www.ft.com/content/d28b9f98-d2fb-11e9-8367-807ebd53ab77

Citi tip gold to hit $2000, hmmm - reverse shoe-shine moment?

This leads to a question I have always pondered - analysts from the large financial institutions appear daily across the main-stream media, spouting their views on which way companies, indeed economies, might move. Never are they held to account but, based purely on the amount of time I used to spend in hotel rooms with CNN or Bloomberg as the only English language channel, these analysts usually turned out to be wrong. Why are they never called to account? Is it deliberate complicity by the media to allow the big-boys to pump their own book, then dump it when enough shoe-shiners have moved in?

They are generally gone somewhere else on the conveyor belt by the time the sh1t hits.

As I said to CP,I've seen some shocking examples over the years that my mum has sent to me ie friends of hers that have seen their life savings go down by 30% in 3 years in a bull market and be charged 5% of portfolio value in fees for the privilege.Hence why so many old biddies yabber on about bricks n mortar.

Ref Citi-it's not a shoeshien moment of any sort,it's them lubing  up the seats of their retail clients.The shoeshine moment comes when said retail clients are whispering to you to buy gold.

 

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21 hours ago, Agent ZigZag said:

A rule of thumb was that if the cost to buy the house was less than the build cost  then the house was undervalued. However due to low interest rates and job growth in the south this has distorted this rule especially against houses in the North of England. I wonder if housing is a long term inflation hedge within a government led economic cycle. Looking into the future I am seeing it as a potential burden unless your home provides a yield to cover the cost of taxation against it. With this in mind my current house that I bought a while back was a very large probate sale. I rewired it so that it was zoned  at ground, first and second floors in order that it can be easily converted it into three flats for rental and build a bungalow in the rear garden for my family thereby still enjoying where I live and covering the cost of council tax. If I was starting again I would buy the best house in the best area in the lowest council tax band. I still may do this instead

Excellent question

I was thinking about this the other day and I wish to caveat my previous comments that it is -if you can stay the mortgage term or won freehold-with a piccie from japan.For it to be an inflation hedge,you need inflation.

Not sure on the methodology

https://www.ceicdata.com/en/indicator/japan/real-residential-property-price-index

image.thumb.png.9c75842d22d1367ffcf3ca531e29b121.png

 

Edited by sancho panza

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5 minutes ago, sancho panza said:

They are generally gone somewhere else on the conveyor belt by the time the sh1t hits.

As I said to CP,I've seen some shocking examples over the years that my mum has sent to me ie friends of hers that have seen their life savings go down by 30% in 3 years in a bull market and be charged 5% of portfolio value in fees for the privilege.Hence why so many old biddies yabber on about bricks n mortar.

Ref Citi-it's not a shoeshien moment of any sort,it's them lubing  up the seats of their retail clients.The shoeshine moment comes when said retail clients are whispering to you to buy gold.

 

SP you reckon they are preparing to short at 1600-1700 ahead of gold going down when the big sell off hits, so are pumping gold

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10 minutes ago, sancho panza said:

They are generally gone somewhere else on the conveyor belt by the time the sh1t hits.

As I said to CP,I've seen some shocking examples over the years that my mum has sent to me ie friends of hers that have seen their life savings go down by 30% in 3 years in a bull market and be charged 5% of portfolio value in fees for the privilege.Hence why so many old biddies yabber on about bricks n mortar.

Ref Citi-it's not a shoeshien moment of any sort,it's them lubing  up the seats of their retail clients.The shoeshine moment comes when said retail clients are whispering to you to buy gold.

 

That's why I referred to it as a reverse shoe-shine moment!

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10 minutes ago, Talking Monkey said:

SP you reckon they are preparing to short at 1600-1700 ahead of gold going down when the big sell off hits, so are pumping gold

You've got to put yourself in their shoes.I'm a big fan of  the popular misquote of Occams razor ie simplest solution is the best.

Big banks have cut back their prop desks since Dodd frank/Volcker rule.Although there are exemptions.Key thing is that they make far safer/more via commissions than they do prop trading as generally,they did ok in the good times but got wiped out in the bad.See 2008.Traders who are geared to work toward an annual bonus won't take the decisions that people on this thread might to exit the market and take a rest.Generally that means at some point you hit a wall and need taxpayers money to sort it.

Hence a lot of these complex theories about gold/silver manipulation are jsut that.To carry out a complex programme like that,you'd need a lot of entities with varying interests to align for a common cause and history shows that only happens for short periods of time.

Key thing here is who they are pumping gold to...................and it's not readers of this thread,which if you're here,means you won't be using their judgement or advice

21 minutes ago, Ponty Mython said:

That's why I referred to it as a reverse shoe-shine moment!

The reference was to complex for me at this time of the day lol.

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15 hours ago, DurhamBorn said:

They have no understanding of leads and lags.Thats their main problem.They think Fed policy is loose,when its very very tight as well.Zero macro understanding.My friend called them macro tourists.

The Citi tip is for $2000 gold over the next two years. Pumping it up!

I saw the other day that David Hunter has upped his target for gold to $1800 this year, alongside targets of GDX to 45, GDXJ to 70, silver to 26. Does this still fit in with your roadmap @DurhamBorn ? A riskier bet from current levels.

I was thinking also that any further increase in dollar assets might be wiped out for us Brits by a slide down in DXY and the USD-GBP exchange rate.

Great work and discussions on hear guys. Always a great read.

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19 hours ago, DurhamBorn said:

Iv bought some US stocks,this is many of my holdings today,including US stocks.Only ladder one in them all,so not really happy about them shooting higher,but ladders remain in place for any pull backs.

refl.JPG

thanks DB, I've only recently started looking into the energy and potash sectors, so i'd better get a move on.

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19 hours ago, Democorruptcy said:

I suppose this will depend on competition in your area but one thing I've been surprised about recently is how busy storage container places are. I've had first hand experience of it because this year I've put my house stuff in one. I was nearly running out of time to find one because all 3 in the town were full. They all had waiting lists and I got lucky because I just happened to call in to check the progress as someone handed their keys in and I queue jumped. While I've been visiting it I've got chatting to some of the other container users and it seems that because council rates are so high and people are selling online - they are keeping stock of various things in containers instead of shops. I spoke to one bloke who has 20 on the go serving his various online businesses. It seems like money for old rope for people who have a bit of room for some.

Democorruptcy, you may be right about storage, it was in fact number two on my list - well I only had holiday-lets and storage to be fair. I was looking for property related businesses and storage sector fitted my criteria for also providing a 'living on-site setup'. Perhaps I should have a rethink, perhaps I ruled out storage too early - my original thinking was that the sector had pretty much been sown-up with domination by the big corporates (I believe this has already happened in the US). 

    

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19 hours ago, CVG said:

I have no idea if this is a good business venture or not, but I came across it while retirement planning.

Buy some old (large) farm buildings up north and provide a recreational vehicle storage facility. Here owners can park up their beloved campers etc out of the damp and wet weather, while they are not using them.

thanks CVG, I did look into caravan storage, the returns were good averaging £600/annum for hard-standing (not undercover), but only for a secure site with fencing, cameras, etc. which meant big investment, planning issues. It entailed for me going into a specialist type storage which I thought risky unless experienced in this type of storage provision, or perhaps already owned the land.  

Did you find other more suitable business alternatives? 

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18 hours ago, Cattle Prod said:

Watch rates closely - I think the encashment value is inversely related to bond prices. You'll get a big payout now (40x? 50x?) because bond yield is so historically low. I have no idea if that will change by next year, but as the rest of your plan depends on that, keep a close eye. Anyone else? Think I have this right?

thanks CattleProd,, mine is only 35x, but I consider it good enough because I am sure pension funds will be 'raided' in some fashion over the next 10 years. Perhaps in the form of more taxes for the city institutions, an easy (necessary?) vote winner for when the public start feeling the effects of high inflation. 

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18 hours ago, MvR said:

I'm exploring the idea of building a 70 ft trip boat/cafe boat/hotel boat. Something that can work as either, or as my home if I can make money elsewhere. I've spent the last couple of years renting out day boats and doing occasional skippered hires, so I know the market.  It would be hard work and wouldn't make a lot of money, but well maintained and operated, it would be solid asset I can live in, or generate an income from. I could raise my prices with inflation whilst the capital is being paid off so free cashflow would only improve.

 

thanks MvR, that's a very interesting project, you've obviously done your work and research. It certainly fits with the type of strategy I want to deploy, only for me I would prefer to remain on dry land!

And I think the points you make are very relevant to this thread. Personally I will be investing say half of my capitol into the markets as per the main discussions on this thread. But I also want to invest in a business that will provide an (inflation proof, ref. next cycle) income/residence home for me. Do I want the moon on a stick, perhaps... but no harm in trying.

 

 

DurhamBorn, you did until recently operate a import business and you have written about your current employment which I believe you say is only temporary. In regard to my question about suitable businesses, can I ask a (hopefully not too cheeky!) question, as I do think it pertinent to this thread's deflation/reflation general discussion... your import business could in one sense be viewed as exploiting (in business sense) the conditions of the last cycle, I wonder are you perhaps considering a new business venture for the near future, one that will capitalise on the next cycle?   

Edited by JMD

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5 hours ago, Nicolas Turgeon said:

The Citi tip is for $2000 gold over the next two years. Pumping it up!

I saw the other day that David Hunter has upped his target for gold to $1800 this year, alongside targets of GDX to 45, GDXJ to 70, silver to 26. Does this still fit in with your roadmap @DurhamBorn ? A riskier bet from current levels.

I was thinking also that any further increase in dollar assets might be wiped out for us Brits by a slide down in DXY and the USD-GBP exchange rate.

Great work and discussions on hear guys. Always a great read.

I havent changed my target on gold because i have done zero work on it since i sold most of my gold miners.I sold because my targets hit.The capital made on them exceeded what i hoped for by quite a large margin.In context they returned more profit in absolute terms in a short space of time than iv ever made before.Some of the reflation companies i bought with some of the capital are actually now themselves up over 10% some approaching 20% so compounding the gains.Iv actually had the best 3 month period in my portfolio since i started investing aged 14.Iv also missed a lot of upside.For instance i wanted £10k in Drax,but only got £2.5k in before it ran fast.Thats because i stick to buying in ladders and although sometimes like now you feel like you wish you had just bought the lot experience tells me that involves emotion.Others like Schlumberger and many of the ones i put up here a few weeks ago all rocketing,but all only have 1 ladder in them all.Its times like this that like all investors i need to remind myself why i put the work into the roadmap,and then set ladders.

The market is on a sugar rush expecting QE,but there is a lot of financial dislocation ahead.

 

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1 hour ago, JMD said:

thanks MvR, that's a very interesting project, you've obviously done your work and research. It certainly fits with the type of strategy I want to deploy, only for me I would prefer to remain on dry land!

And I think the points you make are very relevant to this thread. Personally I will be investing say half of my capitol into the markets as per the main discussions on this thread. But I also want to invest in a business that will provide an (inflation proof, ref. next cycle) income/residence home for me. Do I want the moon on a stick, perhaps... but no harm in trying.

 

 

DurhamBorn, you did until recently operate a import business and you have written about your current employment which I believe you say is only temporary. In regard to my question about suitable businesses, can I ask a (hopefully not too cheeky!) question, as I do think it pertinent to this thread's deflation/reflation general discussion... your import business could in one sense be viewed as exploiting (in business sense) the conditions of the last cycle, I wonder are you perhaps considering a new business venture for the near future, one that will capitalise on the next cycle?   

In short yes i did set it up to exploit the cycle.I saw many companies closing and moving production there,so i decided to learn all i could,do the whole lot myself and undercut them and thats what i did.In affect i had to be an expert in about 10 different jobs that would be senior manager level in a big business.I challenged myself in that business to a really high standard.I actually started to run it down when it was doing very well,and iv just stopped now and sold my last stock.I now have no ongoing costs apart from some income tax and NI.

Its a very good question about the next cycle.I live a very frugal life and i have enough to retire.I enjoy many things that are free and have lots of interests.However there is a part of me that says really i should do something else once i leave where im working at the minute (bust should hit them hard soon,nobody sees it coming and i feel sorry for workmates etc,though i keep quiet of course).Im not sure what though.With the standard of people on this thread perhaps we could all set up a small Ltd company doing something and see where we can take it.

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7 minutes ago, DurhamBorn said:

.With the standard of people on this thread perhaps we could all set up a small Ltd company doing something and see where we can take it.

Please consider this application for the role of Virtual Coffee Maker.

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I made a decision 2 years ago to change my business from replacing boilers to repairing them instead, it might do me well going forward. As i posted before "what people need not what people want".

Can i apply for the maintenance position please?

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9 minutes ago, Bobthebuilder said:

I made a decision 2 years ago to change my business from replacing boilers to repairing them instead, it might do me well going forward. As i posted before "what people need not what people want".

Can i apply for the maintenance position please?

I went to Cuba years ago. Amazing car mechanics. There were no new cars coming into the country, so they got very creative with keeping the existing ones going. 

Only said to my Mrs last night "the era of 'just get a new one' is almost over (after 'no we don't need a new kettle'). Good move I think, Bob.

Edited by Cattle Prod

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Interesting oil day. Per my previous long post on onset of declining US supply coincident with bringing Iran from the cold, you get a Trump tweet about easing Iran sanctions on the day there is a surprise ~6m bbl draw on US stocks.

However, if draws continue, he's going to run out of bearish narrative! Next up, "I love Canada, and Trudeau"

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1 hour ago, DurhamBorn said:

Its a very good question about the next cycle.I live a very frugal life and i have enough to retire.I enjoy many things that are free and have lots of interests.However there is a part of me that says really i should do something else once i leave where im working at the minute (bust should hit them hard soon,nobody sees it coming and i feel sorry for workmates etc,though i keep quiet of course).Im not sure what though.With the standard of people on this thread perhaps we could all set up a small Ltd company doing something and see where we can take it.

It's got to be a totally self sufficient community where we build not for profit rental housing only. There would be enough projects to keep us interested.

Peace man.

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1 minute ago, Democorruptcy said:

It's got to be a totally self sufficient community where we build not for profit rental housing only. There would be enough projects to keep us interested.

Peace man.

The most profitable company i know is not for profit.The local housing association.The difference is the profit goes into their pensions,15 days average sick a year,flexi time and salaries.Mostly funded by the tax payer.Noticed they even had a Pride flag flying.Get that housing benefit in.

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Feeling a bit better today.  A fair amount of buying final ladders on most of the stocks in two income portfolios.  Plus a few new positions in new sectors, including certain housebuilders!  Now have 22 stocks in each at mostly 4% allocations

Looking for another 3 in each portfolio (6) which will be a challenge.  One bank looked promising until it was tipped in a magazine and the price shot up.  Just have to wait.  I've looked at about 100 company accounts since Saturday!  I also looked into some income trusts but was not impressed with their holdings, where they were disclosed.

I'm under no illusion I've bought at an intermediate (weekly) low which may get broken.  It's happened in BT, etc already where I bought at an optimal spot on the weekly only for the monthly to take it lower, several years of divs lower!  But then these are more annuity type portfolios.

But I need to invest some funds for yield and can't wait for the monthlies to turn in all cases.  But enough now to focus on value stocks in another portfolio.  A bit nervous about GDRs as used by DB though. 

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Been following the thread closely, mainly lurking! 

Really appreciate the advice and help from all, best thread on the internet!

(edit- should add a good friend pointed me here as it moved from hpc)

Not contributed much as other than my own story I can’t offer much yet in as I’m still quite a novice and something of a relative whippersnapper at 34. Most of my “wealth” is in cash for a house deposit as I’ve mentioned in an earlier post but starting to put some via a S&S ISA into VOD, BT, CNA, RMG for the longer run.

@DurhamBorn I wanted to ask about the big downturn for your place, do you think it’s specific to them or your work’s competitors, such as CAT? They seem to be booming at the minute and and they’re pretty involved in providing engines/generators for mining and some O&G stuff but do you think they’ll be subject to the same problems as your current place?

For what it’s worth I’m now working as a mechanical engineer, at one the oilfield services places mentioned (although I’m new to O&G) a few of my colleagues telling me about the good times of $150 a barrel, been a lot of cuts since and it’s a lot more modest now but I hope I can survive there long enough to see something like that again or may have to move industry all together. Really interested to hear from @Cattle Prod

Anyway, thanks all - I will try and chip in something useful in future! 

 

Edited by mh9000

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40 minutes ago, mh9000 said:

Been following the thread closely, mainly lurking! 

Really appreciate the advice and help from all, best thread on the internet!

(edit- should add a good friend pointed me here as it moved from hpc)

Not contributed much as other than my own story I can’t offer much yet in as I’m still quite a novice and something of a relative whippersnapper at 34.

@DurhamBorn I wanted to ask about the big downturn for your place, do you think it’s specific to them or your work’s competitors, such as CAT? They seem to be booming at the minute and and they’re pretty involved in providing engines/generators for mining and some O&G stuff but do you think they’ll be subject to the same problems as your current place?

For what it’s worth I’m now working as a mechanical engineer, at one the oilfield services places mentioned (although I’m new to O&G) a few of my colleagues telling me about the good times of $150 a barrel, been a lot of cuts since and it’s a lot more modest now but I hope I can survive there long enough to see something like that again or may have to move industry all together. Really interested to hear from @Cattle Prod

Anyway, thanks all - I will try and chip in something useful in future! 

 

We are booming as well,but its starting to drop a bit.We are lead indicators usually as we build the engines 2 months before OEMs build whatever they are going in.Saying that today i built 15 engines for Hong Kong,by the size and extra components on they look like they are for fire engines,or due to configuration water cannon :o.The better news is the company will have a superb next cycle.We power almost everyone else,only a few others make their own engines now,we build all DAFs mid range,lots for Scania,Hyundai,CLAAS tractor engines,Dennis,Komatsu,etc etc.

Edited by DurhamBorn

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Quite a hot day for FTSE income stocks compared to the overall FTSE.  FTSE up 1% while many of my stocks up 2-5%. Even better, the stocks I've yet to complete on didn't go up much!   I'm expecting a move into the income sector (FTSE in particular), hence my eagerness to get all my ladders in. 

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2 hours ago, Democorruptcy said:

It's got to be a totally self sufficient community where we build not for profit rental housing only. There would be enough projects to keep us interested.

Peace man.

Something people need but don’t know they need it yet. Some sort of prepper business.

Help of some sort for when SHTF.

Because this thread is better still - a place to help us learn how to dodge said S**t in the first place. 

If Durhamborn is like Mr Wolf in  Pulp Fiction for this proposed business I would like to be the lad with the car crusher. 

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DYOR etc but I think CNA is finally turning up after all... and got back into pm miners today ahead of the Fed next week. 

Has anybody been following these lads?

https://www.google.fr/search?q=petropavlovsk+stock&ie=UTF-8&oe=UTF-8&hl=en-fr&client=safari#mie=l,/m/0ckpkz6,Petropavlovsk PLC,POG,LON,Petropavlovsk PLC,/m/0ckpkz6,0

small market cap but then again check out the chart set to max time...that’s some long base for a Goldie and the TA books I’ve started say stuff like ‘The Longer The Base The Higher In Space’

Edited by Thorn

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