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

[Sasquatch]

14 minutes ago, DurhamBorn said:

The thing to remember mostly though is this thread is a macro strategy thread.Its about reading the longer term cycles and roughly where we are in them.

A macro road map at no point says "buy xyz".It doesnt in any way say if a company is cheap,expensive etc.Investing styles and allocations are endless.Even all things being equal where someone invests ages 25 compared to me at 48 makes a big difference.For myself im not really interested in increasing wealth,im more interested in keeping it where it is inflation adjusted and gaining an income that lets me live my pretty simple life.

Im very happy though to be able to buy companies i think the cycle will help at prices down 50% to 80% from their highs.Then its a case of sit back and let the cycle play out.

My oil road map said oil was going down to $40 from $60 and maybe $15 .It didnt tell me the price Shell would go to.It did mean though i got an average price of £12.35 on the stock.It doesnt tell me if Shell will go to £5,or even bust.It did allow me to buy over 50% down from its highs.My road map says oil over $200 in 28.If thats right,or even just the direction Shell should be £40+.Im actually confident if it survives (always an if on anything) it will hit that price.I have no idea if next week it will be £15 or £10.In macro strategy longer terms calls are much easier than short term ones.Thats why its difficult on an open forum and thread,because human nature is to want answers to tomorrow,loss hurts,and emotions take over where contrarian macro investing is all about letting things play out over a longer timeframe,a full cycle.

 

 

Another top post DB. Many thanks for your continued valuable input.

[Don Coglione]

17 hours ago, Craig said:

CRUD? 

Not sure I can invest in something called that! 

CRUD by name, CRUD by nature...

Anyone else jump in this morning and have their arse handed to them?

Obviously, I bought for the medium to long term...

[Harley]

50 minutes ago, sancho panza said:

Learned something this morning and that's some futures are physically settled

Isn't that the man difference between US and European option types (cash versus physical settlement)?

[DurhamBorn]

4 minutes ago, Cattle Prod said:

Possibly the big retail pile into USO, requiring contracts to be bought? It's be pretty funny if all those new robinhood traders got a few of barrels of crude delivered to their front lawn . 100m bbl is bigger than all the Cushing tank farms 

I wish BP hadnt sold their massive storage at Cushing,they could of piped back all that oil through their own pipes to their refineries.

[Barnsey]

28 minutes ago, DurhamBorn said:

The thing to remember mostly though is this thread is a macro strategy thread.Its about reading the longer term cycles and roughly where we are in them.

A macro road map at no point says "buy xyz".It doesnt in any way say if a company is cheap,expensive etc.Investing styles and allocations are endless.Even all things being equal where someone invests ages 25 compared to me at 48 makes a big difference.For myself im not really interested in increasing wealth,im more interested in keeping it where it is inflation adjusted and gaining an income that lets me live my pretty simple life.

Im very happy though to be able to buy companies i think the cycle will help at prices down 50% to 80% from their highs.Then its a case of sit back and let the cycle play out.

My oil road map said oil was going down to $40 from $60 and maybe $15 .It didnt tell me the price Shell would go to.It did mean though i got an average price of £12.35 on the stock.It doesnt tell me if Shell will go to £5,or even bust.It did allow me to buy over 50% down from its highs.My road map says oil over $200 in 28.If thats right,or even just the direction Shell should be £40+.Im actually confident if it survives (always an if on anything) it will hit that price.I have no idea if next week it will be £15 or £10.In macro strategy longer terms calls are much easier than short term ones.Thats why its difficult on an open forum and thread,because human nature is to want answers to tomorrow,loss hurts,and emotions take over where contrarian macro investing is all about letting things play out over a longer timeframe,a full cycle.

 

 

Wise words DB, which is why for my own sanity I’m spreading risk across 25 companies (20 domestic) mainly through no fee monthly investing for the next 3 years or so, with small chunks thrown into the remaining 5 foreign companies every now and then.

[Craig]

28 minutes ago, RickyBacker said:

Only to reiterate my earlier 'graphene' call.
I also notice there is a piece on the BBC about a 'hydrogen sponge' that ties in well with DB's call on that possibility.

I know there's not a lot of love for it on here, but I reckon it's pretty inevitable that some of the crypto companies are going to succeed. Whether that results in massive gains for their respective currencies remains to be seen, but there's no doubt that some are making massive inroads into industry, finance etc.

[Dave Bloke]

1 hour ago, TheCountOfNowhere said:

Oracle bought out sun....have you see the Oracle share price !!!!

Oracle are doing something right, obviously didn't buy in 2000 :-)

[Harley]

18 minutes ago, Cattle Prod said:

Seconded Barnsey. I've been fairly vocal about the big integrated oilies, Shell in particular, and I hope my comments were helpful overall. I don't want to give the impression that I am massively invested in a small number of companies. Although Shell is my biggest holding, it is less than 10% of my total, and one of 56 total companies that I own across 14 sectors. Diversification is important IMHO. You have to be able to allow a company or two to blow up and disappear, because they will. I've referenced 'Antfragile' by Taleb a few times here, and one of the messages is that big, complex companies do not last over a long period of time (it's basic entropy). I'm only invested in my current holdings for the next cycle; after that, something completely different, like land and forestry. Interestingly, some of the longest lived companies around are big oil companies, reflecting the importance of oil as a commodity, but their time too will pass. The East India Company once ruled half the world!

Would I have many members if I opened a stealth like thread only accessible by those who have lost over $30k in one single event?  That wasn't my total life savings but boy it hurt.  Hurt so very much.  $30k, in one day, gone, never to return.  Worth a lot more than $30k now.  Tech boom, couldn't go wrong could it?  Few questioned whether to or not, just which hot stock to buy.  And I was not even chasing the hot stuff.   People top themselves one way or another over this stuff.  This game is for real and it'll effing kill you given half a chance and won't give an eff.  Dem der rules.

[JREWING]

9 hours ago, DurhamBorn said:

I think it just read like a trolling post Panda,because it seemed a bit ridiculous that someone would put their life savings into two shares that were among the ones talked on here.Of course people would see it as such on here because we are longer term investor mostly and its easy to forget some people maybe have never bought shares.The thread also attracts people on days when something big happens with the end of the world predictions and hyperbole so people are a bit more watchful at those times.

I think £50k is a very nice amount to build a quite balanced portfolio.It will contain risk,and probably elevated risk compared to some,but should still afford a decent diversification.Although its very tempting to go for two big companies like Shell and BP,it would be a mistake.You could make them the two biggest holdings,but better to have others too.This below is a portfolio i put together for my children the week of the big sell off.Its £35k and includes a few smaller holdings from 17 downwards but are under 1% so havent added them.Its still in flux at the moment,it did have National Express,but sold on a double,and the ITV stake has been sold by a third on a 30% increase and i intend to sell another 3rd,maybe tomorrow and increase a few holdings under 1% (OCI NV being one).It also doesnt contain any precious metals etc because it doesnt need to,iv for those myself.The count will be pleased to see no Centrica yet

This isnt advice,all people are different,and you need to do your own research etc.

1	ROYAL DUTCH SHELL	9.0%	[N/A]
2	VODAFONE GROUP	8.6%	[N/A]
3	BP	7.6%	[N/A]
4	BRITISH AMERICAN TOBACCO	7.6%	[N/A]
5	IMPERIAL BRANDS	7.5%	[N/A]
6	TELEFONICA SA	5.8%	[N/A]
7	REPSOL SA	5.5%	[N/A]
8	BT GROUP	5.2%	[N/A]
9	DRAX GROUP	4.7%	[N/A]
10	ROYAL MAIL	4.6%	[N/A]
11	PLAYTECH	3.6%	[N/A]
12	SSE	3.5%	[N/A]
13	GO-AHEAD GROUP	3.3%	[N/A]
14	ITV	3.2%	[N/A]
15	STANDARD LIFE ABERDEEN	3.0%	[N/A]
16	WPP	2.7%	[N/A]
17	MOSAIC CO(THE)	2.6%	[N/A]

DB. Many thanks, great info, much appreciated.

Bricks & Mortar. My appologies for the rant,  I should not have quoted you. Cabin fever, the old fella is going mad.

Democorruptcy. Cheers bud, nice words.

[reformed nice guy]

16 hours ago, reformed nice guy said:

Cant find one I can trade live currently on Hargreave landsdowne : (

CRUD says market is closed so must be EU/UK based

Just following up on this. This morning I went on to take a punt on this wisdom tree CRUD ETI. 

Clicked on and it was $1.98

Had to fill in a sophisticated investor checklist. Only took 2 minutes.

Buy price had went up to $2.28

Doh!

[DurhamBorn]

12 minutes ago, Cattle Prod said:

Seconded Barnsey. I've been fairly vocal about the big integrated oilies, Shell in particular, and I hope my comments were helpful overall. I don't want to give the impression that I am massively invested in a small number of companies. Although Shell is my biggest holding, it is less than 10% of my total, and one of 56 total companies that I own across 14 sectors. Diversification is important IMHO. You have to be able to allow a company or two to blow up and disappear, because they will. I've referenced 'Antfragile' by Taleb a few times here, and one of the messages is that big, complex companies do not last over a long period of time (it's basic entropy). I'm only invested in my current holdings for the next cycle; after that, something completely different, like land and forestry. Interestingly, some of the longest lived companies around are big oil companies, reflecting the importance of oil as a commodity, but their time too will pass. The East India Company once ruled half the world!

I'm very interested in graphene, it really is a wonder material. I had no idea that it was investible already. I noted down Versarien and Directa Plus from your post the other day, thank you. Thread delivers yet again.

Shell is my biggest holding (from having only £1200 in it March 10th to now biggest) and its 8.8%.My biggest holding over the last 20 years was BAT Tobacco until i sold it above £50.That is again 2nd at 6.3% of portfolio average price £25.60.That is the maximum id ever have in my top 2 and will fall as divis roll in (if divis roll in ).Funny enough iv been considering land and woodland myself down the road.Maybe we could all form a company inject some equity and buy a wood.Harley can live on it and fix the fences etc 

[M S E Refugee]

https://www.loopllc.com/About/History

Will the joint ownership of this facility help the share price of Marathon Petroleum,Shell and Valero who are the owners of it now that there is diminishing storage space. 

[Don Coglione]

4 minutes ago, reformed nice guy said:

Just following up on this. This morning I went on to take a punt on this wisdom tree CRUD ETI. 

Clicked on and it was $1.98

Had to fill in a sophisticated investor checklist. Only took 2 minutes.

Buy price had went up to $2.28

Doh!

I jumped in at $2.67.

D'oh!

[Shamone]

24 minutes ago, Harley said:

Would I have many members if I opened a stealth like thread only accessible by those who have lost over $30k in one single event?  That wasn't my total life savings but boy it hurt.  Hurt so very much.  $30k, in one day, gone, never to return.  Worth a lot more than $30k now.  Tech boom, couldn't go wrong could it?  Few questioned whether to or not, just which hot stock to buy.  And I was not even chasing the hot stuff.   People top themselves one way or another over this stuff.  This game is for real and it'll effing kill you given half a chance and won't give an eff.  Dem der rules.

This is so so true. This game has to be played with no emotion. Can’t match some of you guys but still kick myself over the small amount I was going to put into Rhodium ETC a few years back. But it’s really pointless thinking like that. Great post, H.

[Don Coglione]

48 minutes ago, Harley said:

Would I have many members if I opened a stealth like thread only accessible by those who have lost over $30k in one single event?  That wasn't my total life savings but boy it hurt.  Hurt so very much.  $30k, in one day, gone, never to return.  Worth a lot more than $30k now.  Tech boom, couldn't go wrong could it?  Few questioned whether to or not, just which hot stock to buy.  And I was not even chasing the hot stuff.   People top themselves one way or another over this stuff.  This game is for real and it'll effing kill you given half a chance and won't give an eff.  Dem der rules.

Not in one day, but I am down over $30k on you know what!

[Harley]

1 hour ago, Knickerless Turgid said:

Not in one day, but I am down over $30k on you know what!

Actually, thinking back, it was in GBP and was 20 years ago so you can work out what that is now.  I bought my first flat for not much more.  I lost it in one afternoon in the US market.  About 5 stocks like Textronics (i.e. those feeding the hot stocks using then hot stuff like offshoring production to China, etc).  But I knew eff all.  And yes, right now my income portfolio is down even more, but there's been a lot of money printing, etc since then.  But then I was still in capital appreciation mode, not now.  But it still happens.  Carnival had a good story for me and my income portfolio up to just a few weeks ago.  Boomers all enjoying the increasing trend to go on tupperist light holidays.  And then out came CV.  80% down.  And TUI, taking Thomas Cook's lunch?  And Card Factory, with it's amazing cash flows and no debt?  Oh, and BP.  Have we all already forgotten the platform disaster?  Shite happens, all the time.  So first thing, understand your objectives and attitude to risk, or more accurately those of the person you are advising.  People have to study and do exams for this stuff for good reasons.  It may still be crap sometimes, but less so than most.  Or believe you're going to win at the game of survivor bias.  Good effing luck.  TBH, this is all very basic stuff and I'm sure there are plenty unregistered reading this thread who could do with a sanity check.  That £30k made me go out there and put in the hard work to better understand things.  Yet I'm still learning.  That said by all means "tilt at windmills" but there be dragons out there and they ain't "nice".  Cabin fever?  I think I'm the one with the least.  I'll spare the resume, suffice to say stress makes me focus to survive.  Always has.  Would be dead by now if not.

PS: "You" <> you, nor does "you're"!

[DoINeedOne]

https://mobile.twitter.com/chigrl/status/1252582740949700610

 

US Oil Fund Halted

[Majorpain]

2 minutes ago, DoINeedOne said:

https://mobile.twitter.com/chigrl/status/1252582740949700610

 

US Oil Fund Halted

Total net assets $2.35Bn.  Not any more!

[Harley]

16 minutes ago, DoINeedOne said:

https://mobile.twitter.com/chigrl/status/1252582740949700610

 

US Oil Fund Halted

Shucks, our first ETF going into lockdown.  How cute!  But it's OK, it's derivatives based and none of the other (more mainstream) ones are, even those "synthetic" ones.  Are they?  And for the rest, I'm sure their underlyings have been wisely lent!

This, from etf.com, is priceless:

"USO, among the largest and most liquid oil ETPs available, delivers its exposure to oil using near-month futures. USO's huge asset base waves away any hint of closure risk, and its massive liquidity makes trading a snap. USO gets exposure to oil using derivatives, like all oil ETPs. Derivative returns can vary greatly from spot oil prices, but spot oil is uninvestable. USO holds front-month futures contracts on WTI, rolling into the next contract every month, just like our segment benchmark. This method is particularly sensitive to short-term changes in spot prices, but can also result in heavy roll costs. That makes USO a great vehicle for riding short-term moves in crude prices, but long-term holders may want to look at other options.USO is structured as a commodities pool, so expect a K-1 at tax time. Long-term holders will be taxed on any gains even if they didn’t sell shares. Alternatively, investors could also consider OIL, which follows the same strategy in an ETN wrapper. In all, USO does a great job of capturing the performance of the near-term oil futures market at a low all-in cost, earning it our Analyst Pick designation".

Like I was saying, shite happens!

PS:  Well there was that ETFS commodity fund back in the GFC which did not end well but let's not dwell on that minnow.  This is major league stuff!

[TheCountOfNowhere]

How long to a larger institution goes pop ?

There must be a few dominoes waving it the breeze right now.

 

 

[Majorpain]

11 minutes ago, TheCountOfNowhere said:

How long to a larger institution goes pop ?

There must be a few dominoes waving it the breeze right now.

I dread to think, like the GFC bad things happen when black swans hit and things go outside institutions models.  Like a futures market which goes zero bid and no-one actually wants the stuff.

[sancho panza]

3 hours ago, Cattle Prod said:

Seconded Barnsey. I've been fairly vocal about the big integrated oilies, Shell in particular, and I hope my comments were helpful overall. I don't want to give the impression that I am massively invested in a small number of companies. Although Shell is my biggest holding, it is less than 10% of my total, and one of 56 total companies that I own across 14 sectors. Diversification is important IMHO. You have to be able to allow a company or two to blow up and disappear, because they will. I've referenced 'Antfragile' by Taleb a few times here, and one of the messages is that big, complex companies do not last over a long period of time (it's basic entropy). I'm only invested in my current holdings for the next cycle; after that, something completely different, like land and forestry. Interestingly, some of the longest lived companies around are big oil companies, reflecting the importance of oil as a commodity, but their time too will pass. The East India Company once ruled half the world!

I'm very interested in graphene, it really is a wonder material. I had no idea that it was investible already. I noted down Versarien and Directa Plus from your post the other day, thank you. Thread delivers yet again.

Just wrote what I thought was a nice thank you post to you for all the education I've had on the economics of marginal oil wells,how they get closed and reopened,then my two year old cleared the screen....bless her.

if RDSB had stayed at £20 then wed have likely only had 10%-15% in oilies but those March lows were hard to leave alone.Time will tell.

Agree on hedging across companies across sectors.Allowing for some big blow ups should be a part of anyone's strategy.

4 hours ago, MvR said:

Apparently there were over 100k contracts still outstanding for the front month contract yesterday afternoon, and everyone was getting margin calls. 100k contracts, at 1000 barrels per contract = 100m barrels of oil that in theory someone needs to collect in May and find storage for.   God knows how it'll all play out..

I'm not sure he does.

[Loki]

So despite all this being futures contracts based there's a chance it could still seriously screw things up?

I barely understand real time finance let alone magical 8 ball futures finance...

[ILikeCake]

.

[Jesus Wept]

Anyone know how ‘Brent Crude’ sits in terms of storage facilities?

Specifically the question is:

’Will The storage problems we have seen with US WTI be the same for Brent etc?’

Additionally the bond market is “flashing red” - Predicting slumping inflation (DEFLATION) amid the oil rout. Any thoughts? Still thinking a surge in inflation after a year of deflation - or will this deflation be even more short lived? 
 

Can we rely on the FED et al. to be printing .....printing .... and inflating as much as possible.

If they don’t control the yield curve surely we’d get an Armageddon deflationary spiral of death.