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

[sancho panza]

20 hours ago, Bobthebuilder said:

While that is true for the wider market readers on this thread must know what they are up against. The houses that estate agents know can be bought cheap and easily extended, land to build on, etc always go to builders/ devolopers that they are pally with. Lots of brown envelopes changing hands of course. Some estate agents have there own builders who do the work and they fund it themselves,sad but has always been the way.The places they want are ones that can extend to the side, back and loft conversion. Worked on many myself i have to admit.

Bob, you've got me wrong.This is exactly what I'm saying.The idea that somehow a man off the street can make conduct a rapport building excercise with an EA over a period of time which will result in said EA turning down cool  hard cash and giving said rapport builder the lead on something worth having is the sort of thing that ends up with you waking up face down in your cornflakes.

If an EA offered me something then it means the people that line his pockets with cash on a weekly basis don't want it.

That may well happen in the coming years,as small developers tend to get crushed in the early stages of market meltdowns as they don't have the govt's ear.The people that have the govt's ear tend to go later in the cycle.

My attitude to EA's is very dismissive I admit.If they're ringing me for a bid they have no other options.We bought my Mum a flat in 2008 or so(can't remember completion year)-on at £175k or so(but it had to be one of four flats/corner plot/4th/5th floor/my dear old mum is eccentric/right view of the harbour etc.The EA assured me it was 'worth every penny','great invesmtent at that price''loads of other interested parties' etc etc.......I bid £115k,settled at £120k.The idea that rapport building would have got me anything otehr than shafted is utter bollocks.

A good friend of mine used to work as a conveyancer and some of the stories from local EA's and their quite blatant abuse of the isolated/elderly were soemthing to behold.

It's interesting you mention cool hard cash,because I have a good friend who's a developer-very straight guy who wouldn't do that sort of thing-I've often wondered if he'd get better discounts.

For what it's worth,I don't blame EA's/developers,that's business.It was ever thus.

[sancho panza]

11 hours ago, Viceroy said:

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.

I tend to avoid exact timing models as their author's can sometimes fit the chart to suit the theory and life is never normally that simple.

However,as I've said,some of his historical analysis is top grade ,much in the same way this thread refers to hsitory a lot.I remember him saying about big US blue chips a few years back,he wasn't worng was he?Look at teh Apple cahrt.we're still way higher than 2017.

 

[Bobthebuilder]

13 minutes ago, sancho panza said:

Bob, you've got me wrong

Sorry SP i misunderstood your post.

Its true, the best stuff does not usualy get to the open market in good times, it was very different in the mid 90s and around 2012 to some extent.

I was buying in 2012, probates, stuff needing work etc and got a small 2 up 2 down for £160k, I did not know the estate agent so did not get the one around the corner for £145k as it went to his builder mate.

Apologies.

[sancho panza]

7 hours 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. 

Are there any others alongsdie MUX(I'm assumign they're on your Panther list) that are on your 'Panther list'?

The reson I ask is that at some point,these will likely 10 bag if they're still in business.Crucially,they will still be cheap until jsut before the xponential phase whereafter their resurrection will provide a brief moment in the sun before they finally collapse.

Criteria

1) sh1tty managment

2) sh1tty balance sheet that wil make Chrsitmas 2020 but most likely not Christmas 2022

3) negative net income depsite $16 silver.

 

Feel free to bring any ideas forward for criteria/companies.

 

[sancho panza]

6 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

I msut admit that I'd be more likely to short everything except RDSB/SSE...but I haven't ehard of a few of them.

MSFT/visa/Google/Paypal/VW/ASML/AMZN/

Looking at the first one on the lsit gives me an eerie reminder of the golden days of the tech bubble, in a 'I wodner what happens next type' theme....

They'll probalby rocket from here

 

[sancho panza]

4 hours ago, Harley said:

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!

That's better advice than you'll get from 99% IFA's I suspect.

[kibuc]

9 minutes ago, sancho panza said:

Are there any others alongsdie MUX(I'm assumign they're on your Panther list) that are on your 'Panther list'?

The reson I ask is that at some point,these will likely 10 bag if they're still in business.Crucially,they will still be cheap until jsut before the xponential phase whereafter their resurrection will provide a brief moment in the sun before they finally collapse.

Criteria

1) sh1tty managment

2) sh1tty balance sheet that wil make Chrsitmas 2020 but most likely not Christmas 2022

3) negative net income depsite $16 silver.

 

Feel free to bring any ideas forward for criteria/companies.

 

I think the important omission from your list is a solid asset. Think Tahoe, New Gold, soon Endeavour, they all sit (or used to sit, RIP Tahoe) on a reasonable asset that they got into debt to overpay for or will have to do so in the future, and they all lack(ed) management skill to use it. If metals rip, debt will become irrelevant and those companies should rip because they'll be valued by their ounces in the ground, not the balance sheet.

[sancho panza]

20 minutes ago, Bobthebuilder said:

Sorry SP i misunderstood your post.

Its true, the best stuff does not usualy get to the open market in good times, it was very different in the mid 90s and around 2012 to some extent.

I was buying in 2012, probates, stuff needing work etc and got a small 2 up 2 down for £160k, I did not know the estate agent so did not get the one around the corner for £145k as it went to his builder mate.

Apologies.

No need to apologise Bob,I meant no disprespect, i think between our psots people reading the thread wil be under no illusions about thinking EA's will have their backs if they're nice to them.

It's fascianting to hear your testimony from the coalface.Like I said,I know a few small builders/developers but tbh they're not that switched on and I've never heard from a realiable source about cash changing hands so it's nice for me to have it confirmed.

My good friend who's a developer currently has two nearly completed properties in Brum about to hit the market and another 3 under construction.He's well financed but he's a real believer that property only goes one way.He can afford to adjust his prices down to exit the market but I do wodner how much of a squeeze we'll see on some of these back garden developers.

We rent,and I'm not interested in a back garden type development,but I also know it's good to buy when the squeeze is on.

 

 

On another matter,we've got the first shoots from our carrots and parsnips.My eldest has been asking me what's growing in the veg patch because we've got a few different types of green shoots.I've assured him something's growing I'm jsut not sure what.

I've had some problems with the spuds and am unsure whether it's early blight or I've over watered.I'll psot some picies in the survival thread later when I get time in case you have a chance to look(I've only jsut learned how to load photo's).It doens't look like blight but some of the leaves have gone a bit patchy and one or tow of the palnts have started wilting.

 

[sancho panza]

12 minutes ago, kibuc said:

I think the important omission from your list is a solid asset. Think Tahoe, New Gold, soon Endeavour, they all sit (or used to sit, RIP Tahoe) on a reasonable asset that they got into debt to overpay for or will have to do so in the future, and they all lack(ed) management skill to use it. If metals rip, debt will become irrelevant and those companies should rip because they'll be valued by their ounces in the ground, not the balance sheet.

Good answer.

I'm already laddered into New Gold.That's the key thing here.That bit in bold was what I was trying to say but couldn't articulate.Thanks.

Keep us psoted on your Pantehr list...what's Endeavoru buying?

[kibuc]

1 minute ago, sancho panza said:

Good answer.

I'm already laddered into New Gold.That's the key thing here.That bit in bold was what I was trying to say but couldn't articulate.Thanks.

Keep us psoted on your Pantehr list...what's Endeavoru buying?

Endeavour has been sitting on Terronera, a gold-silver deposit in Mexico. 33 mln oz Ag and 350k oz Au Probable and roughly the same amount Indicated on solid grades just wait to be mined, but in March they issued a warning that their draft PFS was overly optimistic and the actual economics will be "less robust", read: capital expenditure will be way higher and they are not exactly swimming in money at the moment. A combination of debt and equity financing will have to come at some point, but the asset is there.

[sancho panza]

12 minutes ago, kibuc said:

Endeavour has been sitting on Terronera, a gold-silver deposit in Mexico. 33 mln oz Ag and 350k oz Au Probable and roughly the same amount Indicated on solid grades just wait to be mined, but in March they issued a warning that their draft PFS was overly optimistic and the actual economics will be "less robust", read: capital expenditure will be way higher and they are not exactly swimming in money at the moment. A combination of debt and equity financing will have to come at some point, but the asset is there.

any others that you can think of like that off the top of your head.I'll draw up a lsit .....:-)

New Godl/?

[kibuc]

12 minutes ago, sancho panza said:

any others that you can think of like that off the top of your head.I'll draw up a lsit .....:-)

New Godl/?

Not really, there are some interesting deposits held by small explorers but the management and balance sheet is way too solid  

[DurhamBorn]

35 minutes ago, kibuc said:

Endeavour has been sitting on Terronera, a gold-silver deposit in Mexico. 33 mln oz Ag and 350k oz Au Probable and roughly the same amount Indicated on solid grades just wait to be mined, but in March they issued a warning that their draft PFS was overly optimistic and the actual economics will be "less robust", read: capital expenditure will be way higher and they are not exactly swimming in money at the moment. A combination of debt and equity financing will have to come at some point, but the asset is there.

They will get $20mill from pushing equity into the market i think as silver runs.I know Terronera is real and other assets are more hope,but i really like Aida in Chile,there is a chance for a half a billion 0z silver find there.Its a long shot,but in a silver bull,just a strike on high resources can sent things into orbit.Parral might also be interesting,probably only 40mill silver 0z,but always a chance of much more.They would love silver at $25 as they could fund the new mines then.

[Bobthebuilder]

1 hour ago, sancho panza said:

My good friend who's a developer currently has two nearly completed properties in Brum about to hit the market and another 3 under construction.He's well financed but he's a real believer that property only goes one way.He can afford to adjust his prices down to exit the market but I do wodner how much of a squeeze we'll see on some of these back garden developers

The biggest developer i know is currently doing only 1 at the moment, Paid £650k, side, rear extension, massive loft conversion and top notch fittings. He reckons it will be worth £1.5 mill at the end. Thing is, he bought it for his son to raise his young family in.

[MrXxxx]

9 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!

Best go for an ETF then...at least you will have some good news :-) :-) :-)

[Democorruptcy]

4 hours ago, janch said:

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?

Bonds got a brief mention in the article but were dismissed as the portfolio was looking for income and +0.22 yield was mentioned (Completely ignoring if the value of the bond increased)

[Democorruptcy]

3 hours ago, sancho panza said:

I msut admit that I'd be more likely to short everything except RDSB/SSE...but I haven't ehard of a few of them.

MSFT/visa/Google/Paypal/VW/ASML/AMZN/

Looking at the first one on the lsit gives me an eerie reminder of the golden days of the tech bubble, in a 'I wodner what happens next type' theme....

They'll probalby rocket from here

I had a look at the charts for all the healthcare and thought coronavirus bubble! 

[Errol]

https://investmentresearchdynamics.com/as-the-fed-goes-weimar-gold-silver-miners-will-go-parabolic/

[DurhamBorn]

Has anyone ever bought on Hargreaves on the phone for stocks they dont quote for online?

I went to buy Nexa Resources tonight,but not available on the platform yet its quoted on the NYSE.A very big zinc producer that should have a bull run in reflation,but also throws of 6 million oz of silver a year.

[kibuc]

14 minutes ago, DurhamBorn said:

Has anyone ever bought on Hargreaves on the phone for stocks they dont quote for online?

I went to buy Nexa Resources tonight,but not available on the platform yet its quoted on the NYSE.A very big zinc producer that should have a bull run in reflation,but also throws of 6 million oz of silver a year.

Is that an option? There's a solid number of tiny miners I was interested in at various point in time, mostly on TSX, which are absent on HL platform. Rio2 immediately comes to mind. 

[sancho panza]

21 minutes ago, kibuc said:

Is that an option? There's a solid number of tiny miners I was interested in at various point in time, mostly on TSX, which are absent on HL platform. Rio2 immediately comes to mind. 

We bought Rio2 via Interactive Investor.Aslo Superior Gold/and a host of other smallies via them or Saxobank

Both these allow mulitcurrency so erase the cost of forex you suffer with HL.

[Harley]

16 hours ago, Democorruptcy said:

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

........

Any excuse for me to use the immortal words of my MOT tester when I asked if it wasn't too loud:  "Of course it's loud, it's a Harley.  It's meant to....."!

[Harley]

16 hours ago, Democorruptcy said:

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

Fair point.  Just illustrating the bigger picture.  I will take a closer look at the stocks.  I like the sectors but most/all picks are not on my watchlist.  Asking too much but would be nice to know the IFAs logic. Still can't get over the IFA producing such a list rather than the usual fund list.  Love to know why.

[Harley]

13 hours ago, sancho panza said:

That's better advice than you'll get from 99% IFA's I suspect.

That comment is bit of a crossover of the EA ones!  I'd be wary of both parties.  Some are similar in a few wsys.

[Harley]

10 hours ago, Democorruptcy said:

Bonds got a brief mention in the article but were dismissed as the portfolio was looking for income and +0.22 yield was mentioned (Completely ignoring if the value of the bond increased)

Yep, that throws up my dilemma:  total return versus yield.  I'm beginning to favour total return using a formula like one of the largest company's in the chosen sector with the best fundamentals and a yield above the average for the sector.  Bonds could also have a place from a (before expiry) return POV.