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


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  • DurhamBorn

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@Cattle Prod i think i speak for everyone when i say how thankful we are to have your superb knowledge of the oil sector on this thread and the way you gladly share that knowledge. The irony is m

12 months ago I didn't own a single share, now I am up to my neck in stocks! Thanks to all contributing to this thread, especially @DurhamBorn for starting it in the first place. It's been a fascinati

Iv had a lot of direct messages lately asking what shares to buy etc and how to position.I simply havent had time to reply to them,and am unable to.Im not a financial advisor and to do it properly you

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1 hour ago, Loki said:

Thank you, I have no thoughts to add - how did you discover these companies?  If I know your procedure I may be able to suggest some.  Of course I understand if you don't wish to disclose trade secrets!

My sources are:

Stockopedia - good for running screens and checking fundamentals. I am looking mainly for resource stocks currently, but after the crash I will adopt a Minervini type Quality+Momentum approach to pick the early leaders. Stocko is great for that kind of thing.

Vox Markets, Proactive Investers, Seeking Alpha 

Twitter - Great for quick sales pitches. Some really good people on there. Also lots of pumps and dumps and people selling spikes. Beware. I have 3 spikes in my arse from the early days. Yes, I am that stupid. Never again! I also like joining Twitter groups once I am in a stock as it helps my psychology to be around "friends". Yes, I am that soft.

Justin Waite (a Vox employee) on youtube showcases interesting companies. Argo was from him. He covers lots of companies though and the accusation is that he is a paid shill. People have to do their own due diligence!

I look for disruptive tech companies with large runways and irresistible growth prospects as well as resource companies. The only trade secret I can find is risk management. Mine has been appalling and explains my poor performance of 6% since March. As far I can perceive the game is 5% stock picking and timing, 95% risk management. Any mug can pick a stock - it's fun, like a hobby for me, but I would have to be in cloudcuckooland to believe it was the essence of investing.

 

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28 minutes ago, sleepwello'nights said:

I read it (just) and all lending compared to the same month in 2018 was down in percentage terms a few points.

The only increase was 16880 remortgages where more capital was taken out +8.3% with the average additional amount borrowed (in June) being £56,100.

So I can't see how this breaks records unless these mortgages overall are whoppers or high LTV.

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1 hour ago, Tdog said:

But up to this point there hasn't been a tightening of credit causing bankruptcies, job losses, and a "house price crash" which is the obvious sign to the man in the street of a debt deflation.

Credit has been tightening for two years.The Fed has been doing it.House prices where i live are at 2003 prices.South is falling now and will fall for 8 years in real terms.There are bankruptcies ,but not the big ones that hit the news yet.Sterling falling 30% has helped shield the UK for now.Not much longer though as sterling starts to rise.

Global liquidity supply is the big one,flat to falling while demands on it (debt) increased.

https://www.yardeni.com/pub/frodorcb.pdf

Edited by DurhamBorn
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Lots of Nickel miners not available on HL. Horizonte is the one it seems.

Came across 3NIL in there though- says it’s an ETFS and it’s 3xdaily long nickel. Bloomberg says it’s an ETC. 

Ok so sorry all if this is a bit of a basic question... but say if you were get x of this in your HL SIPP... and it goes up, that’s good. But if it goes down... do you just lose what you bought? 

Edited by Thorn
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37 minutes ago, Thorn said:

Ok so sorry all if this is a bit of a basic question... but say if you were get x of this in your HL SIPP... and it goes up, that’s good. But if it goes down... do you just lose what you bought? 

Well, the price goes down -- you've got the same number of 'certificates' but each is worth less (they can't be worth a 'negative amount', if you're concerned about losing more than your stake).  The amount of 'less' depends on the performance over the holding period (duh), BUT

I'd warn about leveraged ETFs -- they don't really work the way you think they might.  So, if you buy at £1 when nickel is £1 (for example), and nickel goes up to £2 after 6 months, you'd think the 3xdailynickel would give 3x the gain, so could sell for £4.  But it doesn't work that way -- in particular, day-to-day volatility and fees (taken 'off the price') kills their performance.  In that example the price might have only gone up to £2 (but it would almost certainly have gone up, at least).

The 'normal' result of holding is that the price doesn't do much (perhaps moves +/- a few %) but your holding goes down in value anyway.  Losses are, of course, magnified.

Anyway, I'd suggest that if you have to ask then you shouldn't invest in that sort of thing.  But, if you do, the advice is to consider it to be a trade measured in days, not weeks.

Now, this is a shame as it would be nice if they were the sort of thing that could be held for longer term gains, but they're pretty-much not.

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48 minutes ago, dgul said:

Well, the price goes down -- you've got the same number of 'certificates' but each is worth less (they can't be worth a 'negative amount', if you're concerned about losing more than your stake).  The amount of 'less' depends on the performance over the holding period (duh), BUT

I'd warn about leveraged ETFs -- they don't really work the way you think they might.  So, if you buy at £1 when nickel is £1 (for example), and nickel goes up to £2 after 6 months, you'd think the 3xdailynickel would give 3x the gain, so could sell for £4.  But it doesn't work that way -- in particular, day-to-day volatility and fees (taken 'off the price') kills their performance.  In that example the price might have only gone up to £2 (but it would almost certainly have gone up, at least).

The 'normal' result of holding is that the price doesn't do much (perhaps moves +/- a few %) but your holding goes down in value anyway.  Losses are, of course, magnified.

Anyway, I'd suggest that if you have to ask then you shouldn't invest in that sort of thing.  But, if you do, the advice is to consider it to be a trade measured in days, not weeks.

Now, this is a shame as it would be nice if they were the sort of thing that could be held for longer term gains, but they're pretty-much not.

Thanks dgul- suspected as much.

... and seriously, many thanks for the info. Tricky bloody bastards out there... thank God for everybody on this thread. 

Does anybody else feel like we are in Kelly’s Heroes and it’s the bit where they lads have to pick their way through a minefield..? 

(Searching for gold, in fairness!)

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Nice little Sunday morning chart recap to go with your morning coffee. Covers equity indexes, commodities etc. One always has to be wary of confirmation bias with these videos if they're predicting something you're hoping for, but he seems fairly balanced.

Overall thesis is there are some bullish setups appearing in various markets as tests and breakdowns through support have failed to trigger sell-offs.

 

Edited by MvR
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13 hours ago, DurhamBorn said:

What the bond market is doing is acting as somewhere to park money.

There was a interesting analogy to gold and cars in Moneyweek on Friday. It is similar to owning Gold, which generates no yield, and paying Bullionvault or the bank to store it for you. Likewise, owning a car and paying someone to store it in their garage.  

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12 hours ago, DurhamBorn said:

Credit has been tightening for two years.The Fed has been doing it.House prices where i live are at 2003 prices.South is falling now and will fall for 8 years in real terms.There are bankruptcies ,but not the big ones that hit the news yet.Sterling falling 30% has helped shield the UK for now.Not much longer though as sterling starts to rise.

Global liquidity supply is the big one,flat to falling while demands on it (debt) increased.

https://www.yardeni.com/pub/frodorcb.pdf

I own shares in Begbies Traynor, who are insolvency practitioners for the SME market. They’ve been doing well the past few years. There’s a lot of companies going bust out there.

Edited by Castlevania
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8 hours ago, Thorn said:

Lots of Nickel miners not available on HL. Horizonte is the one it seems.

Came across 3NIL in there though- says it’s an ETFS and it’s 3xdaily long nickel. Bloomberg says it’s an ETC. 

Ok so sorry all if this is a bit of a basic question... but say if you were get x of this in your HL SIPP... and it goes up, that’s good. But if it goes down... do you just lose what you bought? 

Horizonte is available on hl or am I missing something?

https://www.hl.co.uk/shares/shares-search-results/h/horizonte-minerals-ord-gbp0.01/buy-and-sell-shares

It isnt available on the regular saver is that what you mean?

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42 minutes ago, spunko said:

Imagine the glee on the faces of the housebuilders when they worked out they could sell the same plot of land to two different parties. Hopefully they get their comeuppance one way or another. 

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6 minutes ago, Thorn said:

Yes you can get Horizonte alright there in a HL SIPP

Sorry misread your post HZM is the only one. Just wanted to make sure I had the right one on my watchlist.

I have KDNC as well and they have dealings with other lithium miners.

https://www.hl.co.uk/shares/shares-search-results/c/cadence-minerals-plc-ord-0.01p

Not advice, dyor ect.

Edited by stockton
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38 minutes ago, Tdog said:

Its vile that they've done this, but unless the contract did not say "leasehold" i fail to see how it was mis-sold. I bought a leasehold flat 22 years ago, surely i was mis-sold this if they were.

These people are just outright stupid.

I bought a leasehold house and then bought the freehold after two years.I waited until the day before we completed,other people had bought a new house and it was a builder part ex.I said oh its leasehold im dropping out unless you cut the price,think i said £10k or something (i knew i could buy the freehold for £4k in 24 months) so they did and then i bought the lease and was £6k better off.

Its a vile practice selling houses leasehold mostly,but the people who bought them knew they were leasehold and likely got them cheaper because of that.The real story is that people dont budget to buy the freehold,dont bother for decades and then it goes into marriage value and the cost shoots up.

I reckon if the government do anything they will make it so you cant sell a freehold on without first offering it to the leaseholder at a set price.Also probably stop ground rents increasing more than inflation.

This county is now full of people who have zero understanding of money,or investments or markets.They are like infants happy to take the gains,but cry on the falls.Just wait until HTB blows up.

 

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4 minutes ago, Loki said:

Here's one for you @durhamborn - Do you think there is any chance, no matter how slight, that things could just carry on the way they are, and the money carnival carries on until most of us are dead? (After which, it won't matter to us any way).

 

No,there are too many tensions now.We could go straight to a reflation,with the debt deflation limited,but we are getting a debt deflation and we are getting inflation,the only question is time and length.The Fed are way too tight and have been for two years.They are too far behind the curve.Look at some of the falls in UK stocks and even in US cyclicals.Many stocks are down more than any time in history.My road map said PEs down to 6 to 8 and many stocks are at that now.

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Mines on a 999 year lease at a princely sum of £10 per year, I always pay by cheque so it costs the cunt money to process it and ask for a receipt all of which takes the twat time.

The lease has been with the family of the original builder on the female side I believe and he used an agent to collect the monies, originally estate agents but as they went bust (3 of them) it then went to a specialist in Swansea who just collects lease money.

He has now stopped collecting the money i.e. the agent is not collecting it and split the leases into three batches, sold two of them and the other is unsold and mine is one of them.

So no money has been collected for 3 years now as I imagine it would cost more to actually collect annually i.e. he would loose money.

I watch and wait.

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