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

[leonardratso]

10 hours ago, JMD said:

YRS, your self sacrifice to this forum is legendary ('buy-at-top human-guinea pig' being just one of your many guises).You now entreat us to your latest money offer, this time purporting to save us many $hundreds. Thank you, I shall certainly download and take a look... But rest assured none of this goes unnoticed, and nor should it go unrewarded - I therefore publicly pledge to clap you every Thurs. evening, 8:05 - 8:05:01 (start modestly and build; just like Captain Tom, however can't promise you a knighthood) the campaign starts here, who will join me!? 

ill give im the clap as well.

Just noticed my tiny punt in ITM, feck me its up 70%, ill sell some of that timorra mornin and use the proceeds to queue outside sainsburys then leave the queue just as its my turn and go to co-op next door.

 

[Viceroy]

On 28/12/2019 at 23:31, Viceroy said:

I’m looking to sell my US equity etfs v v soon. Martin Armstrong is sounding the alarm for the week of 13 Jan 2020. 

’If the US share market rallies into the ECM turning point on 18 Jan 2020, there may be a crash into January 2021. This remains tricky. So do NOT anticipate. Let the market make the decision for you.The Fed will stand behind US banks. They will have no choice. Trump has been now briefed (about the REPO crisis) but they did not brief him about the Mother of All Financial Crises...If we get the high on the ECM in January, then this will warn that the Liquidity Crisis will play out as it did in 1998 where they will sell assets in other investments to raise cash to cover losses in bonds.’

 

On 12/05/2020 at 20:35, Vendetta said:

Very interesting post @Viceroy

So in other words.... 

....’Dash for assets’ and resultant ‘Crack-up Boom’.....? Your article is pointing to 4 years of massive deflation yes? 2020-24 followed by inflation and commodity boom? 
2020.05 (start of Monetary Crisis) equates to 18th January 2020.Any significance of this date....?Spooky..... 😂

 

 

We're now into the Monetary Crisis cycle and he points to 2021-22, like another Bretton Woods.  This could be the catalyst for a major loss of confidence within the general public and then the stampede into tangible assets as currency loses its value? I can only guess tho?  So 2020-2024 is not necessarily just deflation, the inflation may come sooner.  But 2024 is showing as a peak for commodities, so boom times around then which Durhamborn also forecasts.

The ECM is a global view of economic confidence.  If a particular market rallies with one of those global cycle dates, it often coincides with a peak or low in that particular market.  The US equity market esp the DOW was making that move for the week of 13 Jan 2020 so Armstrong warned us (in the private blog) to be ready.  I've only been invested in US large value equity ETFs since 2016 and never sold during that time.  I bit the bullet this time as it conicided with such a strong cycle date on his ECM. Glad I did.  Sitting mainly in cash now with a view what to do next.  The all time high for the DOW came a few weeks later but it was v close.  So sometimes (not always!) Armstrong's timing is amazing.

He still forecasts the DOW to reach 40,000 within the next few years.  What companies will comprise those 30 stocks is another matter??

https://www.armstrongeconomics.com/armstrongeconomics101/ecm-armstrongeconomics101/the-ecm-the-market-crash/

'Hi Martin,
I don’t recall you ever commenting on the NYSE Composite Index. Just in case you don’t know. The all time high for the NYSE Comp Index is January 17, 2020. Right in sync with the ECM turn on Saturday Jan. 18. Most peoples focus is on the indexes that are tradable. So it is understandable that most people do not know the NYSE Comp index synced up perfectly with the ECM.'

[Viceroy]

On 13/05/2020 at 00:04, JMD said:

Hi Viceroy, wishing you a speedy recovery from your op (oh, and big thanks to your compatriot(?) the NHS New Zealand nurse who stood vigil by our pm's bedside, throughout the entire night apparently, during his stay in icu). That cynicism not directed at you btw! Instead thank you for the great post.                                                                                           Anyway, can I assume that as you visit here you are in broad agreement with this blog? Especially in relation to the economic cycle theory you have posted. Would be very interested to know if/how you divert from say DurhamBorn's thinking re the coming investment cycle in terms of how we fellow 'pleb' investors should position, ie. what are your own investment priorities and strategies. Not asking for details and hope I'm not prying to much, but new insights (or perhaps you are generally in agreement with rest of this forum?) from others is always valuable knowledge.

Thx for your wishes JMD! 

No I don't think you're prying at all - I come to this blog to get the same things you seek.  I lurked on ToS since 2004ish (I moved to NZ a few years ago due to work opportunity) and ended up here because Durhamborn's forecasts, analysis and correct calls are educating+ fascinating, and some also cross over with Armstrong's.  I blend the two trains of thought together and invest in the things i understand and what makes the most 'sense' I guess.. both offer a macro view but Durhamborn deep dives into actual investment ideas for the upcoming inflationary cycle and I'm learning a lot.  Many other posters on here also give really invaluable insight and I try to offer something relevant where i can.

The past few years since I started investing, based on Armstrong's forecast, I've been in US equities etfs + USD - so far that has paid off.  He's called it the most hated bull market in history and he's not wrong. He's calling this upcoming slingshot (the move from bonds->equity+commodities) as 'the trade of the century'.  My aim is to invest well enough to sell the high and buy a home with no/tiny mortgage.  Much of what is talked about here does resonate with where I (hope to) see things panning out. 

[Viceroy]

On 14/05/2020 at 03:14, JMD said:

Armstrong is interesting - though his publications are expensive, who buys/affords them I wonder?                                

I pay for his basic investor subscription at USD15 per month. The higher subs are for active traders and the info given is supposed to be used in tandem with your own trading system+strategies, not on it's own. I'm just a buy and hold investor so the basic one is fine for me.

I discovered him because of this documentary made about him - https://vimeo.com/ondemand/theforecaster

Whatever you think about him, it opened my eyes to the world of investing and cycles per se.

[DoINeedOne]

15 hours ago, Loki said:

@DurhamBorn and the contributors to his threads have taught me more about finance than all of my friends and family put together.

I've given up trying to talk to my folks about it.  The old man won't even contact his pension company to see how much is in bonds.  Neither of them have shown any inclination to open a S&S ISA despite me talking them through what I'm doing and why.

I agree friends, family etc.. i always get a weird look, had the same thing when trying to explain my job to them all - Now i don't bother i just get on with things but had this saved from a book which stuck with me and the way i feel

[kibuc]

On 19/05/2020 at 17:56, Castlevania said:

I know what you mean. They’re hugely volatile (on another level to junior gold miners).

I note Great Panther’s being anything but great as usual  If we do get 23 dollar silver then even that dog might join the party...

The only thing one needs to know about Great Panther is page 9 from their corporate presentation

Revenues 2018: 46% silver, 41%gold, all Mexico

Revenues 2019: 12% silver , 83% gold, 70% from Brazil

Growth plan for 2020: upping gold production in Brazil. 

GPL is a gold miner fully dependent on it's massive open-pit Tucano mine, which suffered from a pit wall accident in late 2019 and is being "reevaluated" ever since, and is located in Brazil of all places, where they're only now starting to feel the virus. Also, they have a horrible track record, including fatalities in unpermitted operations last year. I'd rather look for companies with high debt than companies with shit management and complicated assets. 

[jamtomorrow]

15 hours ago, DurhamBorn said:

Welfare spending has caused most of the problems as the rich have used that to suck assets and tax from the working working class and middle class and run it through welfare to themselves.This coming recession would be the perfect time to reform welfare,but with the left crying for all the wrong people governments avoid it.I see it as a duty to only earn the minimum now and lawfully avoid paying tax.Only council tax gets me.The government will use inflation to try to get on top of things,and thats why the young have a chance here to get themselves back into the game.

Don't worry DB, from everything I've seen on here the middle classes will be gone from this country in a decade, which will put the kibosh on that little racket.

Question for us here types is, what will the new racket be?

[Majorpain]

31 minutes ago, kibuc said:

. Also, they have a horrible track record, including fatalities in unpermitted operations last year.

Forgot about that, proper WTF moment.  For some reason its rather difficult to find the details on their website!

[Don Coglione]

44 minutes ago, kibuc said:

The only thing one needs to know about Great Panther is page 9 from their corporate presentation

Revenues 2018: 46% silver, 41%gold, all Mexico

Revenues 2019: 12% silver , 83% gold, 70% from Brazil

Growth plan for 2020: upping gold production in Brazil. 

GPL is a gold miner fully dependent on it's massive open-pit Tucano mine, which suffered from a pit wall accident in late 2019 and is being "reevaluated" ever since, and is located in Brazil of all places, where they're only now starting to feel the virus. Also, they have a horrible track record, including fatalities in unpermitted operations last year. I'd rather look for companies with high debt than companies with shit management and complicated assets. 

kibuc,

Every time I see that you have posted on this thread, I dread to open it for fear that you are going to reveal some shitty news about one of my mining holdings!

[Wheeler]

33 minutes ago, Knickerless Turgid said:

kibuc,

Every time I see that you have posted on this thread, I dread to open it for fear that you are going to reveal some shitty news about one of my mining holdings!

Don't worry. Every bit of shitty news boosts the share price!

On a related note, I added a little bit to my silver holdings yesterday so that will probably mark an intermediate top - expect cheaper prices ahead. I will be taking some profits on other miners today so that should boost their prices as a counter effect.

 

[Democorruptcy]

Just read one of those "I have £200k to invest where should I put it" articles. Unusually the IFA in the article drills down where to put every £1 instead of vague suggestions.

What do we think of this lot?

https://www.thisismoney.co.uk/money/diyinvesting/article-8319821/Ive-got-200k-invest-it.html

[geordie_lurch]

38 minutes ago, Democorruptcy said:

Just read one of those "I have £200k to invest where should I put it" articles. Unusually the IFA in the article drills down where to put every £1 instead of vague suggestions.

What do we think of this lot?

https://www.thisismoney.co.uk/money/diyinvesting/article-8319821/Ive-got-200k-invest-it.html

I'm a relative newbie to all this but I think that's a handy guide for confirming some of the things I have been looking at so thanks for sharing.

[Harley]

2 hours ago, Democorruptcy said:

Just read one of those "I have £200k to invest where should I put it" articles. Unusually the IFA in the article drills down where to put every £1 instead of vague suggestions.

What do we think of this lot?

https://www.thisismoney.co.uk/money/diyinvesting/article-8319821/Ive-got-200k-invest-it.html

An interesting catch thanks.

Very interesting responses from the advisor (not that I would agree with all her comments) but I commend her for being so clear and specific.

First thing.  Important to read the article to understand the personal circumstances of the person asking, etc.  For example:  "I have £200,000 to invest. I am 67, a widow, and would like to draw down about £10,000 a year to top up my income. I have no debt. My children are independent".

Second thing is to look at how this portfolio fits with the lady's other assets and income streams in terms of risk, returns, allocations, etc.  And is that portfolio really going to deliver a quite high 5% yield or will it require a capital drawdown? 

Third thing is to look at the portfolio allocation.  The equity versus non-equity split is misleading as what is meant is largely individual stocks versus funds.  That is, 95% equity if one assumes everything other than gold is an equity or equity fund.  That's a concentrated portfolio, but if you want yield......Or is the plan to go for total return (so drawdown a mix of gains and yield rather than capital)?  Inflation assumptions/solutions?

Sure the multi-asset funds may have things other than equity (gold, bonds, etc) and the commercial property and even infrastructure funds may offer exposure to property prices rather than just rental yields. 

Also, adding say a commodity class to the portfolio is difficult so maybe could be done via commodity based equities (e.g. materials companies) so that could further change the perceived allocation. 

Fourth, look at the regional split.  This has not been done. For example, emerging markets versus developed markets versus US versus Europe and so forth.  Each market offers differing risks and rewards.    

Joint fourth, look at the sector split as above.  Also look at macro trends here and elsewhere, compare against @DurhamBorn latest missive(!), etc.  Also, needs a fundamental analysis to identify/validate the chosen equities, especially in terms of how well they track their sector.  Note the clever lady flagged SSE as a renewables company!

Fifth, look at running costs.  Are the chosen funds the best in view of their fees, charges and returns?  In this case, with the heavy individual equity focus, it would seem more about getting a low costs provider. 

Sixth, look at the institutional split.  For example, is there heavy reliance on a few ETF, etc providers?  Looks OK given most are individual equities.

Fifth, define an implementation plan to avoid sequential and other risks.  Also one that is tax efficient (e.g. dribble into an ISA, open a SIPP, etc). 

Probably loads more but the key point here is that the actual stock picking is just a part of the process.

PS: Alas, I assume the lady in the photo is a model rather than the actual lady so the life of an IFA is not that much fun!

[Hardhat]

1 hour ago, Democorruptcy said:

What do we think of this lot?

Where are all the AIM Silver miners?

[Democorruptcy]

48 minutes ago, Harley said:

An interesting catch thanks.

Important to read the article to understand the personal circumstances of the person asking, etc.

For example:  "I have £200,000 to invest. I am 67, a widow, and would like to draw down about £10,000 a year to top up my income. I have no debt. My children are independent"

Very interesting responses from the advisor (not that I would agree with all her comments) but I commend her for being so clear and specific.

What interested me was that some of the specific choices for a sector mirrored my own. Only one energy but it's RDSB, utilities SSE,  the multi asset fund is Troy Trojan which I have and think has held up quite well so far.  There's some in there I hadn't thought of but am now looking at. Like only one telco but it's Deutsche Telecom, which I don't seem to remember getting much of a mention in here?

38 minutes ago, Hardhat said:

Where are all the AIM Silver miners?

Harley made a good point about who the portfolio was aimed at. The IFA probably thought she had better not risk giving the old girl an heart attack!

[Harley]

28 minutes ago, Democorruptcy said:

Harvey

Harvey is a rabbit!  It does not roar, belch flames, or scare children!  I do however wish I had chosen Harvey, as in the film where only James Stewart could see it, as I think that would be quite a clever play on things (in keeping with DOSBODS generally and financials in particular), and given all choices should be based on idioms.

PS: "Harley" is the open road, independence, and true steel, all with a touch of perceived malice!

[Democorruptcy]

12 minutes ago, Harley said:

Harvey is a rabbit!  It does not roar, belch flames, or scare children!  I do however wish I had chosen Harvey, as in the film where only James Stewart could see it, as I think that would be quite a clever play on things (in keeping with DOSBODS generally and financials in particular), and given all choices should be based on idioms.

PS: "Harley" is the open road, independence, and true steel, all with a touch of perceived malice!

Sorry, while I could still see the rabbit I edited it.

I wish that 3iInfrastructure Fund had been on my shopping list for the recent big down days.

[Bricormortis]

global silver demand by purpose 2018 

[Democorruptcy]

55 minutes ago, Harley said:

Probably loads more but the key point here is that the actual stock picking is just a part of the process.

I'm not thinking of replicating the whole portfolio so I'm not going to overthink it 

[Bricormortis]

silver reserves of countries

Poland in second place ??

[JMD]

13 hours ago, DurhamBorn said:

One part of the reflation cycle ahead that we have ignored for a while due to the obvious shorter term need to focus on positioning etc is the fact we are entering a new cold war and spending on military (and military reach) is going to increase.This is a long,but very interesting article on whats ahead.

https://quillette.com/2020/05/17/cold-war-now-or-hot-war-later/

DurhamBorn, I think that US/China Cold war II will be 'only half' the story (unless you believe in a future hot war situation then I guess all bets are off!). If you have time to listen to the below podcast i'd be interested too hear if you think this significant. i.e. US/China tensions will increase, but how might this pan out re. global trade. 

The other part of the story I think is to understand why/how US isolation policy is happening - it begun in the 1990's, but no one seemed to have noticed until Trump. The below Zeihan interview introduces this policy phenomena, and its impact to and possible responses from, both the ME region and Japan.

I found the podcast very interesting, I would be interested in peoples thoughts.

 

 

[kibuc]

5 hours ago, Knickerless Turgid said:

kibuc,

Every time I see that you have posted on this thread, I dread to open it for fear that you are going to reveal some shitty news about one of my mining holdings!

It's the junior mining sector, what else did you expect  Well-run companies are few and far between.

[kibuc]

2 hours ago, Bricormortis said:

silver reserves of countries

Poland in second place ??

Correct. KGHM sits on ridiculous amounts of silver but only produces it as a byproduct of copper which is its flagship metal. There are also other resources, including the recently-discovered 1.2bln oz deposit (plus 11mln tonnes of copper) found by Miedzi Copper Corp but it's very unlikely to get a licence to mine it. All resources belong to the state, and KGHM as a company of strategic importance with significant state ownership gets first dibs, so a lot of deposits simply remain undeveloped.

[JMD]

4 hours ago, Democorruptcy said:

Just read one of those "I have £200k to invest where should I put it" articles. Unusually the IFA in the article drills down where to put every £1 instead of vague suggestions.

What do we think of this lot?

https://www.thisismoney.co.uk/money/diyinvesting/article-8319821/Ive-got-200k-invest-it.html

Democorruptcy, I haven't read your suggested article yet, but will do so, and will compare it with Lyn Alden's (free) monthly newsletter and who I think you might find interesting (link below).

I believe it may have been Harley who first mentioned Lyn Alden some while back, perhaps because she favours having a strong allocation to dividend stocks in her portfolio?

Anyway below is the American financial adviser, whos investment approach chimes with this blog, and she shares both her strategy and her portfolio each month. I always value seeing an advisors actual portfolio (putting money where the mouth is, etc... however the amounts she invests don't appear large, but then again the total transparency is refreshing).

https://www.lynalden.com/may-2020-newsletter/

 

[janch]

4 hours ago, Democorruptcy said:

Just read one of those "I have £200k to invest where should I put it" articles. Unusually the IFA in the article drills down where to put every £1 instead of vague suggestions.

What do we think of this lot?

https://www.thisismoney.co.uk/money/diyinvesting/article-8319821/Ive-got-200k-invest-it.html

My first thought was where are all the bonds?  On reading the article there are points about bonds (low interest/corporate v gilts etc) but I thought all IFAs loved bonds or are they all moving with the times now?