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


spunko

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Castlevania

I’m at around 10% cash. In retrospect I didn’t have enough in cash when things took a tumble in March. Although I did run it down to next to nothing to take advantage of cheap stocks. Now rebuilding it up, I’m saving a lot more due to lockdown; I’ve received a nice tax rebate since with another due in the next few months; I’m still receiving some dividend cheques and have trimmed some holdings that have done well. I may well take some money off the table next week too, to further bolster the reserves.

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M S E Refugee

I am toying with the idea of selling up and taking my profits and wait until the lockdown ends as this is when I believe we will see bankruptcies gather pace.

I really am conflicted what to do as I have made some big gains with the Miners such as Rio Tinto,BHP and Vale.

My wife's Sipp is up £25000 in the past couple of months.

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TheCountOfNowhere
33 minutes ago, M S E Refugee said:

I am toying with the idea of selling up and taking my profits and wait until the lockdown ends as this is when I believe we will see bankruptcies gather pace.

I really am conflicted what to do as I have made some big gains with the Miners such as Rio Tinto,BHP and Vale.

My wife's Sipp is up £25000 in the past couple of months.

Im thinking September now to sell out.  The helicopter cash will keep things going till at least then. 

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1 minute ago, TheCountOfNowhere said:

Im thinking September now to sell out.  The helicopter cash will keep things going till at least then. 

I listened to the David Hunter podcast. He seemed so sure of a melt up until labor day (1st Sep). If the S&P does hit 4000 just before then, can I hold my nerve or do I sell out and buy back later? 

Or do I care if I'm in for the long term?

It's an impossible conundrum. Only after the fact, can you be sure of what would have been the correct approach.

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14 minutes ago, Sasquatch said:

I listened to the David Hunter podcast. He seemed so sure of a melt up until labor day (1st Sep). If the S&P does hit 4000 just before then, can I hold my nerve or do I sell out and buy back later? 

Or do I care if I'm in for the long term?

It's an impossible conundrum. Only after the fact, can you be sure of what would have been the correct approach.

It's a conundrum we share, that was my exact thought and potential plan.

The only reason I'm bothered as like you say, I'm a long term holder is that while I have some money to invest, I want to maximise it's share purchasing power.  I don't have so much that I can completely ignore timing.  

Easy to make money when you've got money, as they say.

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Ellandback

Still sticking with my original plan to sell my pm miners on a double, managed to hit +25%, but the recent pullback has me at +15%, I'll be keeping these long term anyway so if I don't time it correctly no dramas. Reading the above it sounds like you're considering selling all holdings prior to the second shoe drop, that hadn't crossed my mind. DH has recently increased his calls (which are conservative by his own admission) so this crack-up may have a while to run yet and his deadlines have a habit of slipping so that should give us all sufficient time to see the lay of the land before acting. 

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DurhamBorn

One of the key drivers of the cycle we are entering in a dash for assets.Some high tech,some as simple as potash.Whenever the political cycles reach this stage over the millennia inflation isnt far behind.Im more interested in the cycle now than if another shoe drops later in the year.Mainly because i have no idea on the structure of any falls now due to liquidity flowing,but i do have a very good idea of how the cycle is going to unfold.Cross market work is now more important for instance because i dont think big oil will go lower than it did because i dont think oil is going lower than it did,even if it got close in a sell off.Giving up profits short term doesnt bother me,if it happens.As far as im concerned i bought all my oil/energy sector investments in March and apart from some top trimming for portfolio structure 2028ish is the next selling area.Im spending zero energy on if Repsol goes up or down next week,month etc.Im not selling it and am very happy with the entry prices.

The main risk to us now is if companies we own go under,solvency is key to get through the bottleneck.Rather than concentrate on price,removing companies that have ran up that might have solvency issues is probably better,and re-deploy in other areas.Things like below i expect to allow more mergers in telcos and governments to allow higher profits in exchange for investment and toeing the political line.BT has clearly stopped its divi in the shor term to provide political cover for a better deal and to ramp up spending to help government.Government needs reflation areas to invest,and they will,in exchange for better terms.Western governments are going to work together,that is certain now.The cycle is underway,the first stages will see continued shakeouts and jolts.

 

https://www.telegraph.co.uk/business/2020/06/03/chinas-drive-digital-supremacy-likely-fail-huawei-going-nowhere/

Here to read,

https://outline.com/

We should not be distracted by Donald Trump’s idée fixe on trade tariffs, cars, and soybeans. The actual fight is going at a more sophisticated level, managed by the professionals of the Washington establishment. Trump is best understood as a bellwether. As Henry Kissinger so tellingly put it, he is “one of those figures in history who appears from time to time to mark the end of an era and force it to give up its old pretences”.

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Ellandback
20 minutes ago, M S E Refugee said:

This isn't the Oil version of King World News is it, I have never seen a time where Gold and Silver weren't going to explode higher according to KWN.

Yes, there is that to consider but all the same.

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leonardratso
25 minutes ago, DurhamBorn said:

One of the key drivers of the cycle we are entering in a dash for assets.Some high tech,some as simple as potash.Whenever the political cycles reach this stage over the millennia inflation isnt far behind.Im more interested in the cycle now than if another shoe drops later in the year.Mainly because i have no idea on the structure of any falls now due to liquidity flowing,but i do have a very good idea of how the cycle is going to unfold.Cross market work is now more important for instance because i dont think big oil will go lower than it did because i dont think oil is going lower than it did,even if it got close in a sell off.Giving up profits short term doesnt bother me,if it happens.As far as im concerned i bought all my oil/energy sector investments in March and apart from some top trimming for portfolio structure 2028ish is the next selling area.Im spending zero energy on if Repsol goes up or down next week,month etc.Im not selling it and am very happy with the entry prices.

The main risk to us now is if companies we own go under,solvency is key to get through the bottleneck.Rather than concentrate on price,removing companies that have ran up that might have solvency issues is probably better,and re-deploy in other areas.Things like below i expect to allow more mergers in telcos and governments to allow higher profits in exchange for investment and toeing the political line.BT has clearly stopped its divi in the shor term to provide political cover for a better deal and to ramp up spending to help government.Government needs reflation areas to invest,and they will,in exchange for better terms.Western governments are going to work together,that is certain now.The cycle is underway,the first stages will see continued shakeouts and jolts.

 

https://www.telegraph.co.uk/business/2020/06/03/chinas-drive-digital-supremacy-likely-fail-huawei-going-nowhere/

Here to read,

https://outline.com/

We should not be distracted by Donald Trump’s idée fixe on trade tariffs, cars, and soybeans. The actual fight is going at a more sophisticated level, managed by the professionals of the Washington establishment. Trump is best understood as a bellwether. As Henry Kissinger so tellingly put it, he is “one of those figures in history who appears from time to time to mark the end of an era and force it to give up its old pretences”.

thats an interesting read, didnt know a lot of the chinese history, might have a closer look there.

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reformed nice guy
4 hours ago, ThoughtCriminal said:

Can I ask what percentage of cash people are holding? 

 

I just can’t see how sterling isn’t going to get trashed in the years ahead and my overriding thought is I need to be down to the bare minimum for living costs etc. 

 

Interested in hearing what the consensus is.

Iv taken the government £50k bounceback loan and using that as my cash reserve, with it sitting in a 1% business account. Thats my main cash allocation.

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ThoughtCriminal
4 hours ago, Harley said:

Above 25% in various cash and cash equivalents like short term bonds and NS&I.  And mostly exposed to Sterling.  So yes, a target on my back for bail ins and currency woes!  You?

I’m still sat on the sidelines gripped with paralysis by analysis. 80% cash, 10% silver, 10% gold.

 

Im overthinking the shares element. I probably just need to buy whatever DB does then come on here and blame him for any losers lol

 

I think ANYTHING is going to be better than sterling, whatever happens.

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DurhamBorn
6 minutes ago, CVG said:

It's not WHAT he buys, it's WHEN he buys it. B|

Iv got some nasty reds mixed in among things.Im hoping the share that shall not be named gets taken over,just so i dont have to look at it xD

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5 hours ago, ThoughtCriminal said:

Can I ask what percentage of cash people are holding? 

 

I just can’t see how sterling isn’t going to get trashed in the years ahead and my overriding thought is I need to be down to the bare minimum for living costs etc. 

 

Interested in hearing what the consensus is.

About 65% at the moment...I can see where you are coming from with this question, and all I would say is `Don't panic`, I think the impact of what we are currently seeing on inflation has a good 3-4 years before it starts to have an impact on cash, and there  is a `lot of water to go under the bridge` before then.

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5 hours ago, M S E Refugee said:

I am toying with the idea of selling up and taking my profits and wait until the lockdown ends as this is when I believe we will see bankruptcies gather pace.

I really am conflicted what to do as I have made some big gains with the Miners such as Rio Tinto,BHP and Vale.

My wife's Sipp is up £25000 in the past couple of months.

But do you have to sell everything only to find that it didn't go to play, and finding yourself sat in cash with the market too expensive to re-enter?...remember that profit whilst in cash is not increasing, its actually reducing...top slicing or `half n half` is actually the best of both worlds.

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