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

[Loki]

I hope everyone's portfolio looks a bit reflated today  Now only a 3 figures/single digit 'loss' on mine, and that's only on CNA, NGD, INFA, AFC, and BP.  The first four I'd written off away, but AFC bounced this week.

Most healthy are RRE, DRX, AAL, AAU, and RDSB. 

DXY dropping nicely

https://www.marketwatch.com/investing/index/dxy

[Frank Hovis]

11 hours ago, Harley said:

I hold PMs in many forms as diversity is strength.  I own a variety of ETFs to reduce institutional risk.  All are physical rather than synthetic, although, per their prospectus', physical may not always be so all the time.

Surely holding the actual physical PM is the best way?

PMs have two big advantages IMO:

1. Hedge against inflation
2. They are off grid so do not come into government assessment for means testing (care homes, benefits) or any kind of wealth tax

I value the second higher than the first and holding an ETF defeats that.

There is also as you say institutional risk.  I own a sovereign as I own a wheel barrow.  There is no need to hope that an institution holding it on my behalf will give it to me if I ask.

Balanced againt that is, of course, security.  I want to be able to go away on long holidays and leave my place without alarming it like Fort Knox.

That concern means that I hold maybe a tenth of the gold I would wish to hold.

[Yellow_Reduced_Sticker]

"Coronavirus sparks Biggest monthly Fall in UK house prices since 2009"

 

https://uk.finance.yahoo.com/news/uk-house-property-prices-coronavirus-impact-housing-trends-down-fall-how-much-nationwide-072339863.html

 

@Barnsey @sancho panza AND other folks, Here's what you've been waiting for...MUSIC to ya hear-holes!

 

AND this is from a Tom Belger W***** WHO goes on and on about FOREVER HPI property ONLY ever goes UP!

 

So THINGS MUST be Dire in the housing market!

 

SH*T... I  better get me skates on and rent me room out QUICK!

[TheCountOfNowhere]

1 hour ago, Yellow_Reduced_Sticker said:

"Coronavirus sparks Biggest monthly Fall in UK house prices since 2009"

 

https://uk.finance.yahoo.com/news/uk-house-property-prices-coronavirus-impact-housing-trends-down-fall-how-much-nationwide-072339863.html

 

@Barnsey @sancho panza AND other folks, Here's what you've been waiting for...MUSIC to ya hear-holes!

 

AND this is from a Tom Belger W***** WHO goes on and on about FOREVER HPI property ONLY ever goes UP!

 

So THINGS MUST be Dire in the housing market!

 

SH*T... I  better get me skates on and rent me room out QUICK!

"Unsustainable low interest rate debt bubble sparks Biggest monthly Fall in UK house prices since 2009"

[DurhamBorn]

1 hour ago, Loki said:

I hope everyone's portfolio looks a bit reflated today  Now only a 3 figures/single digit 'loss' on mine, and that's only on CNA, NGD, INFA, AFC, and BP.  The first four I'd written off away, but AFC bounced this week.

Most healthy are RRE, DRX, AAL, AAU, and RDSB. 

DXY dropping nicely

https://www.marketwatch.com/investing/index/dxy

Iv made more since March than at any time since i started investing,much more.The 2nd best few months was last year during the gold miner run.Iv only a few scattered reds now and only a few painful reds ,the share that shall not be mentioned the worst,but a couple of others close behind,almost everything else is in profit and iv got quite a few 100% gains from March that i bought all ladders at once due to the speed of falls.I put a big stake in Playtech for instance right at the bottom and have sold some today as they about doubled.I expect them to go over £10 at some point,but im pulling 5 years living expenses out slowly.Buying that weekend when everything was collapsing was the hardest time iv ever bought.At one point £30k down on money i invested the day before  and repeat the day after.I had a few years of work done for it happening though,so i was able to remove almost all the emotional but i did feel slightly rattled with the wish id waited a day/2 days etc crap you always get.

This thread was full of people from nowhere those days saying everything was going to zero and to sell sell.The same time as the Fed were starting to right size the liquidity push.It always goes into the plumbing first,then the economy.Its a very tricky period now though.Im constantly tweaking things.Selling some more shaky stocks that have shot up and picking up more in areas like potash.

Iv made some mistakes as always over the last few years,some timing early,and some down right bad stock picking mistakes and some reds that should of been avoided that werent and the odd very amateur mistake thrown in to tut tut over..As always you try to learn from them.On the dollar calls though,id say my record is as good and anyone in the market.They have been 100% correct at every turn point.As a contrarian,its also been very pleasing that at almost every turn the market and the media have all been calling for the opposite direction. .My road map said the Fed would need to keep the dollar under 100 to right size and remove the systemic risk (and then rally the market) and that proved again 100% correct.Its about time i got offered a job with a big currency team somewhere.Id turn it down of course,i have to babysit.

This thread really helps me focus thoughts and learn from others.I think at the very least its been useful for people.

[JMD]

3 hours ago, Harley said:

@JMD the sectors I'm considering/buying, not all equal, DYOR:

Chemicals
Forestry & Paper
Industrial Metals
Mining
Beverages
Food Producers
Household Goods
Tobacco
Food & Drug Retailers
Health Care Equipment & Services
Pharmaceuticals & Biotechnology
Aerospace & Defense
Alternative Energy
Oil & Gas Producers
Oil Equipment, Services & Distribution
Software & Computer Services
Technology Hardware & Equipment
Fixed Line Telecommunications
Mobile Telecommunications
Electricity
Gas, Water & Multi-utilities

thanks Harley, I do remember your list now. I think we discussed it at the time, and how it very much overlapped with my 'themed' approach.

But it was the 'overseas sectors' that you mentioned in your post of a few days back that I was really asking about. I assumed you might be talking about emerging-markets? I ask because I am trying to get my personal investment risk-profile right and admit to only having recently woken up to the 'forced gov. bond buy-in(fin. repression)' risk - as per Russel Napier. One strategy Napier recommends is using emerging markets (he says EM's wont repress; his other strategy is gold). A lot is said about gold here, so was wondering if you had any thoughts on the EM's? ...I know buying EM's doesn't specifically protect against forced gov. bond buy-ins, its only a starting point, but needs more thinking. I hope i've made sense?

[Hardhat]

Portfolio is in profit again, currently up 7% overall. I'm overweight in PMs on purpose and expect to sell many later this year. 

The two shares I'm down most on (apart from CNA) are K&S AG (-45%) and RDSB (-16%). Both just timing errors.

Unsure whether to stick another ladder in now or wait for them to climb again.

Best individual stock is CWR up +75%. Wish I'd also bought ITM at the same time.

Also wanted to buy more in March but ran out of money 

[JMD]

3 hours ago, Harley said:

Various subsidy, etc schemes to reduce living costs.  I still remember the trickered (subsidised) items in a supermarket in Tahiti or wherever to address the unaffordable high importation(!) costs. But as with all government intervention (as we currently see), there will be winners and losers either deliberately or unintended.  Many remaining companies may try to automate.  We may see a more bifurcated market with the very large companies (government favoured and economies of scale) and the artisans.  Middle class companies (and workers!) may get squeezed.  Maybe builders will be able to hire from a bigger pool (unemployed architects and building controllers!!!), charge higher prices (can't automate) or, sorry but worth thinking about, go bust (rising material costs and people having no money).

Interesting subject. For a long time I've thought about policies such as part-time jobs to spread the work around more evenly (it would also reduce living costs, child care, etc), coupled with UBI. In fact Labour were talking about all this before last election, it sounded strange to most commentators then. In fact I bet John McDonnell's books contain a wealth of policies that may soon be coming our way. I think i'll research his tombes! Anyone know if he has put them up for free on the internet?

[Boon]

8 minutes ago, Hardhat said:

Portfolio is in profit again, currently up 7% overall. I'm overweight in PMs on purpose and expect to sell many later this year. 

The two shares I'm down most on (apart from CNA) are K&S AG (-45%) and RDSB (-16%). Both just timing errors.

Unsure whether to stick another ladder in now or wait for them to climb again.

Best individual stock is CWR up +75%. Wish I'd also bought ITM at the same time.

Also wanted to buy more in March but ran out of money 

I regret not going in more heavily in March and April. Was waiting for 4,500 on the FTSE.

Anyone think the indices are just a joke at the moment? For the past couple of months I haven't bought anything apart from metals. 

Almost like I am waiting for another correction that may not come.

[TheCountOfNowhere]

2 minutes ago, Boon said:

I regret not going in more heavily in March and April. Was waiting for 4,500 on the FTSE.

Anyone think the indices are just a joke at the moment? For the past couple of months I haven't bought anything apart from metals. 

Almost like I am waiting for another correction that may not come.

If we get a second spike in the winter it'll hit that level.

Best keep a close eye on things and sell up if/when it comes back

[Harley]

Commodities: possibly the biggest opportunity in today’s markets

https://moneyweek.com/investments/commodities/601433/commodities-possibly-the-biggest-opportunity-in-todays-markets

"Anyway, at the end of April, he and a colleague, Lucas White, put out another interesting paper on one of the biggest opportunities they see in the market right now – the commodity sector. More specifically, the equities of commodity producers".

[Loki]

1 hour ago, DurhamBorn said:

Its about time i got offered a job with a big currency team somewhere.Id turn it down of course,i have to babysit.

We need to make sure Durham Juniors keep you in gainful employment then! 

As always thanks to you and everyone for contributing to this thread. 

[AWW]

9 minutes ago, Cattle Prod said:

The best security to have is discretion.

Exactly this.

A copper friend of mine reckons you need three layers to make it very unlikely that a burglar will find something. For example, in the freezer, in one of the drawers, inside a fish finger box (or whatever). In the garage, in a cupboard, inside an old paint tin etc etc.

A friend of mine has getting on for £100k worth of gold jewellery (he's Indian). They actually have a safe with a few small trinkets in it. The bulk of it is hidden in various mundane places around the house and in the garden. If they get robbed, the thieves will take the safe (and of course they'll be happy to open it, should they be unfortunate enough to find themselves being told to do so).

[Harley]

42 minutes ago, JMD said:

thanks Harley, I do remember your list now. I think we discussed it at the time, and how it very much overlapped with my 'themed' approach.

But it was the 'overseas sectors' that you mentioned in your post of a few days back that I was really asking about. I assumed you might be talking about emerging-markets? I ask because I am trying to get my personal investment risk-profile right and admit to only having recently woken up to the 'forced gov. bond buy-in(fin. repression)' risk - as per Russel Napier. One strategy Napier recommends is using emerging markets (he says EM's wont repress; his other strategy is gold). A lot is said about gold here, so was wondering if you had any thoughts on the EM's? ...I know buying EM's doesn't specifically protect against forced gov. bond buy-ins, its only a starting point, but needs more thinking. I hope i've made sense?

I think EMs could be a good long term play but everything right now is volatile.  I meant I was looking to buy in these sectors but a greater focus on overseas companies (not just EMs, especially any that are more likely to be maintaining dividends). The context was I was coming from a currently very FTSE focused portfolio.  I put sector choice first, then a mix of value (versus growth (but including Tech) and region.  Some EMs are hard/expensive to invest in though except via some fund, ETF, etc and trying to roadmap underlying currencies and liquidity is necessary but tough.  Note Napier was also talking (more to institutional clients) about the possibility of being outside the FCA realm (e.g. overseas) presumably to avoid some potentially adverse regulation but then this comes with its own risks and is hard for the retail investor.

[Harley]

12 minutes ago, Cattle Prod said:

About ten years ago I went away for 3 weeks, I hadn't much security choices in a rental, and left a stash of silver in a drawer in the attic. The best security to have is discretion. Only one other person knew it was there, and no one would ever have suspected I had anything worth stealing (or would just have taken the TV). When no one knows, you can hide it in plain sight imo (with some common sense precautions). I have a different system now of course, but I think wiring it up like fort knox says "come rob me please" and most home safes say "please come and pull me out of the wall". 

Dummy safe a must.  Distraction!

[Wheeler]

3 minutes ago, Harley said:

Dummy safe a must.  Distraction!

I've put my dummy safe in a dummy house in a fake town. That should fool them.

[JMD]

3 hours ago, Frank Hovis said:

Surely holding the actual physical PM is the best way?

PMs have two big advantages IMO:

1. Hedge against inflation
2. They are off grid so do not come into government assessment for means testing (care homes, benefits) or any kind of wealth tax

I value the second higher than the first and holding an ETF defeats that.

There is also as you say institutional risk.  I own a sovereign as I own a wheel barrow.  There is no need to hope that an institution holding it on my behalf will give it to me if I ask.

Balanced againt that is, of course, security.  I want to be able to go away on long holidays and leave my place without alarming it like Fort Knox.

That concern means that I hold maybe a tenth of the gold I would wish to hold.

FrankHovis, how would you rate using the 'vaulting' companies? Their storage costs seem acceptable, but the added premiums for buying/selling put me off them. Do you view them as also having institutional risk? 

Then again, I suppose you are paying for the convenience/service, compared to using say bank safety deposit boxes, or other 3rd party security company safety boxes. 

[Sasquatch]

16 minutes ago, Wheeler said:

I've put my dummy safe in a dummy house in a fake town. That should fool them.

I can see it. 6th bush in from the left.

[Frank Hovis]

5 minutes ago, JMD said:

FrankHovis, how would you rate using the 'vaulting' companies? Their storage costs seem acceptable, but the added premiums for buying/selling put me off them. Do you view them as also having institutional risk? 

Then again, I suppose you are paying for the convenience/service, compared to using say bank safety deposit boxes, or other 3rd party security company safety boxes. 

For me they're not meeting the offgrid requirement which is a prerequisite for my wanting to hold gold.

Sure my limited and widely spaced purchases could be tracked but I can say that I gave them away to family as presents who then sold them in pawnbrokers.  Prove me wrong.

The benefit of their being offgrid was brought home to only in the last few weeks because an elderly relative had to go into a nursing home and his wife mentioned how much she was having to write as monthly cheques to pay for it.  It was a lot and as they weren't wealthy their savings will soon be exhausted down to the limit they're allowed before the council steps in, about £20k IIRC.

They, or rather now she, will have gone from life savings of maybe £100k (might be a lot less - £50k maybe) down to £20k making everything saved over £20k worthless because if they hadn't bothered to save it then the council would have had to start paying earlier.

If however everything they had saved above £20k was in the form of offgrid PMs then they would still have had that full £100k (£50k whatever).

To me that suggests that the less you have in savings the more that you want them to be offgrid in the form of PMs; especially if you have episodic unemployment because then you get your benefits.  Plus a house as that doesn't form part of most means testing either for reasons best known to the government.

[JMD]

32 minutes ago, Cattle Prod said:

About ten years ago I went away for 3 weeks, I hadn't much security choices in a rental, and left a stash of silver in a drawer in the attic. The best security to have is discretion. Only one other person knew it was there, and no one would ever have suspected I had anything worth stealing (or would just have taken the TV). When no one knows, you can hide it in plain sight imo (with some common sense precautions). I have a different system now of course, but I think wiring it up like fort knox says "come rob me please" and most home safes say "please come and pull me out of the wall". 

I've always wanted a safe but would be fearful the installers went rogue, or that my address details were leaked somehow - after all, too many violent thugs out there that would 'cheerfully force you' to open the safe (my own fault for watching too many Crime Watch programs). ...as an alternative, I suppose you could always install your own safe-box under the floorboards, then relay carpet, can't really see how this type of setup could be discovered? 

[Harley]

3 minutes ago, Frank Hovis said:

Sure my limited and widely spaced purchases could be tracked

Over £10K pa per supplier in UK?  Same as cash transfers?  But have access to your bank account transactions anyway?  Recent big reduction in the reporting limit in Germany?

[Harley]

1 hour ago, Boon said:

I regret not going in more heavily in March and April. Was waiting for 4,500 on the FTSE.

Anyone think the indices are just a joke at the moment? For the past couple of months I haven't bought anything apart from metals. 

Almost like I am waiting for another correction that may not come.

Snap.  But my PM, etc holdings have balanced everything out nicely, as is required of a wealth preservation budding PP (balanced) type portfolio.

I'm OK mostly waiting to see the monthlies turn in my targets just in case of another fall, with plenty of upside left to run if so.  Trading is a different matter.

I know it's probably not quite right but was amused by a comment that the US markets are up in value by the same amount as the Fed printing!

[JMD]

37 minutes ago, AWW said:

Exactly this.

A copper friend of mine reckons you need three layers to make it very unlikely that a burglar will find something. For example, in the freezer, in one of the drawers, inside a fish finger box (or whatever). In the garage, in a cupboard, inside an old paint tin etc etc.

A friend of mine has getting on for £100k worth of gold jewellery (he's Indian). They actually have a safe with a few small trinkets in it. The bulk of it is hidden in various mundane places around the house and in the garden. If they get robbed, the thieves will take the safe (and of course they'll be happy to open it, should they be unfortunate enough to find themselves being told to do so).

I like your friend's style. Magicians call that misdirection, its a powerful technique.  

[Frank Hovis]

7 minutes ago, Harley said:

Over £10K pa per supplier in UK?  Same as cash transfers?  But have access to your bank account transactions anyway?  Recent big reduction in the reporting limit in Germany?

Yes, kept below that but the records will be there for a few years if there are retrospective changes.

As I'm retired but not yet claiming any pensions (not old enough at 52 plus I don't intend taking any early unless something changes - like buying a big house) my annual cash surplus to invest is a lot less than it was when I was working but I will continue to drip some in each year.

[JMD]

43 minutes ago, Harley said:

I think EMs could be a good long term play but everything right now is volatile.  I meant I was looking to buy in these sectors but a greater focus on overseas companies (not just EMs, especially any that are more likely to be maintaining dividends). The context was I was coming from a currently very FTSE focused portfolio.  I put sector choice first, then a mix of value (versus growth (but including Tech) and region.  Some EMs are hard/expensive to invest in though except via some fund, ETF, etc and trying to roadmap underlying currencies and liquidity is necessary but tough.  Note Napier was also talking (more to institutional clients) about the possibility of being outside the FCA realm (e.g. overseas) presumably to avoid some potentially adverse regulation but then this comes with its own risks and is hard for the retail investor.

thanks again Harley, its good, especially for me, to gain more clarity about all these elements. I thought I had such clarity, but recent events have made me rethink my portfolio in terms of risk, simplicity, government interference. 

I am 'theme' focused, but I do also select by region. But yes, the em's would only be for if/when they get cheap, but I wanted to start lining potential choices up in advance. It will need to be funds/etfs for me as I don't have the stock picking skills. So EM's and Japan for me.

True as you say, very difficult for the small guy to operate outside the realm of future punative government regulation - financial repression (perhaps should start a campaign: 'Retail Investor Lives Matter!'). Physical metals is the obvious strategy, land is sometimes mentioned here. Are there others?