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

[Talking Monkey]

14 minutes ago, sancho panza said:

Persoanlly,I think melt up is a bit of an emotive phrase.I thinkw hat we'll see is headline S&P/FTSE figures be relatively stable but underneath the surface a huge sea change in where the strenght is.ie we'll see the likes of the tech stocks eg AMZN,AAPL,FB etc drop back and see strength in commodities eg big oil(decl we're moving more long big oil).

The structural set up is in place for a major crash/depression but the moving parts aren't in position yet imho.Obviously DYOR.(Hussman said somethign similar the other day)

I'm not sure we'll see S&P 3500.Not even sure we'll see S&P 3000 but then we might.Turning points are tough to call where we are.

We're positioning for strenght in market sectors that prosper froma weak dollar.............and CNA lol

I definitely think S&P at 3500 is a bit of a stretch even with rate cuts and QE by the Fed

[sancho panza]

2 minutes ago, Talking Monkey said:

I definitely think S&P at 3500 is a bit of a stretch even with rate cuts and QE by the Fed

reality is that as I understand it,FB/AMZN/Uber etc are making nothing to jsutify their current valuations.3500 is only possibl if their valuations go higher.

Check out the insanity.Berekely makes an all time high,as if the outlook for UK facing hosuebuilders is better than two years ago.?? Interesting times.Soemone is going to lose a shirt on this one and I hope it's not me,.

[Talking Monkey]

3 minutes ago, sancho panza said:

reality is that as I understand it,FB/AMZN/Uber etc are making nothing to jsutify their current valuations.3500 is only possibl if their valuations go higher.

Check out the insanity.Berekely makes an all time high,as if the outlook for UK facing hosuebuilders is better than two years ago.?? Interesting times.Soemone is going to lose a shirt on this one and I hope it's not me,.

I put a tiny short on them this morning, can't see them barrelling much higher

Looking ahead to the Big Kahuna I do wonder how much the reflation stocks will go down with the general market, so keeping a fair bit of powder dry for then

[Yellow_Reduced_Sticker]

11 hours ago, Talking Monkey said:

I definitely think S&P at 3500 is a bit of a stretch even with rate cuts and QE by the Fed

I think it could EASILY happen, S&P friday climed to 2,970 

just look what the markets did yesterday, bet theres folks on here that were coming in thier panties with JOY i certainly would of been, RM hit 1.94 again mid-week i bought the last 2 times it hit this bargain price and missed this time cos stressed out exchanging contracts! RM closed £2.18 on friday ...ya would of been UP over 20% in 3 days! (CREDIT where CREDIT is DUE...THANKS go out to: @DurhamBorn for the info)

in the book "stock market logic" there is a bit that mentions buying the S&P 500 the day before thanksgiving (NOV) and selling in mid- january - it you go back 30 years and check around that 6/7 week period - ya'll be surprised how well it has played out...HOWEVER as we are entering a totally different investing scenario it may well NOT happen, and markets CRASH and us good folks here will be buying the BARGAINS ..so we CLEAN UP in the years ahead!

[Barnsey]

12 hours ago, Talking Monkey said:

I definitely think S&P at 3500 is a bit of a stretch even with rate cuts and QE by the Fed

Seems quite a stretch I know but look what the PPT, sorry, "Working group on financial markets", did after the bloodbath last year. Basically massive stealth QE, chucking money at corps on the agreement that they buy back their stock. The Fed always keep stating at their recent meetings that they'll do whatever it takes to maintain the expansion, and with that recent experience of what happened last year, they are standing ready and able. Combine with a lot of retail investors sitting on the sidelines after getting burned last year, most of em' sadly are the dumb sheep, and if they see the S&P break higher they'll probably experience FOMO on a huge scale.

Fed coming out the other day with their spontaneous announcement of buying $60bln per month of T-bills through until Q2 2020 was quite telling, well before the FOMC meeting at the end of this month, they have now started to acknowledge that they need to act, and will try to play catch up from here on. It's all about the market psychology of the Fed truly backing off it's tightening stance and supporting the markets, data still pointing to a recession/deflationary bust next year but we have a window here of a few months for things to crazy. These events often end in an "everything is awesome" melt up, especially given where we are in the grand scheme of things.

Times have changed, the Fed HAS to protect markets as they have a new diligent focus on 401k pension funds for the boomers retiring at a rate of 10k retirees per day for the next 17 years.

Note, "initial pace"...NY Fed already forecasting Q4 GDP of just 1.3%, only 0.3% higher than the lows during the 2001 recession. Given the long term downtrend, I don't see why we couldn't see a new lower low for U.S. GDP growth, which hit -2.8% in the GFC.  I've been all too guilty of thinking the markets would be in the depths of recession right now, housing market on it's knees etc. As hard as it is for a pessimist like me, I have learned to really look at the fundamentals and liquidity and how the passive trend has really muddied things on a huge scale. Been quite the draining 2 years or so waiting for this to play out.

[DurhamBorn]

I know a lot of people are looking at the oil sector,and my road map says to start buying when oil goes below $42 (with a maybe below $20 short term drop in a deflation).However i have started to buy a few myself.I was waiting to buy in my SIPP most of the buys in this sector and im waiting on a transfer in.However i started buying Vermillion Energy yesterday.I really like its exposure to European gas price increases in the next cycle.They also have a nice model that means they wont be underwater long in an oil down draft.

I am wanting some of the big players and have a few (Equinor,Repsol) but im opening positions on some lower down the pecking order.Vermillion might deliver some more pain yet,but if it survives any big sell off (it might suspend the divi for a year in real extremes) i see this as a ten bagger in the next cycle,maybe a 20 bagger.

I also opened a very small position in Torc oil and gas an one in Encana Corp.These were only small positions,but i wanted to do some work on the sector and opening some positions does that.

DYOR etc this is not advice to buy for anyone,.

[DurhamBorn]

53 minutes ago, Barnsey said:

Seems quite a stretch I know but look what the PPT, sorry, "Working group on financial markets", did after the bloodbath last year. Basically massive stealth QE, chucking money at corps on the agreement that they buy back their stock. The Fed always keep stating at their recent meetings that they'll do whatever it takes to maintain the expansion, and with that recent experience of what happened last year, they are standing ready and able. Combine with a lot of retail investors sitting on the sidelines after getting burned last year, most of em' sadly are the dumb sheep, and if they see the S&P break higher they'll probably experience FOMO on a huge scale.

Fed coming out the other day with their announcement of $60bln per month for overnight repo through until Q2 2020 was quite telling, they have now started to acknowledge that they need to act, and will try to play catch up from here on. It's all about the market psychology of the Fed truly backing off it's tightening stance and supporting the markets, data still pointing to a recession/deflationary bust next year but we have a window here of a few months for things to crazy. These events often end in an "everything is awesome" melt up, especially given where we are in the grand scheme of things.

Times have changed, the Fed HAS to protect markets as they have a new diligent focus on 401k pension funds for the boomers retiring at a rate of 10k retirees per day for the next 17 years.

I think the average IRA/401k for the 50s to 60s age group is about $140k,60 to 70 about $200k,so like you say that is just enough to avoid a pension crisis,if those averages fall by say 20% then likely mass pain among pensioners.

The FED isnt doing much QE at the repo end,though people think its QE.What it really is though is the FED getting ready and getting the market ready for QE.Once the market thinks we have QE in small amounts again,its less of a shock when the real QE starts.

However i think the FED is way too late and cant avoid a sell off and debt deflation.The next cycle result will be the same whatever,the only question is the opening buy prices of the gainers.Im currently doing a pension transfer,long story that Democorruptcy knows,but the funds the IFAs are offering for conservative investors are around 60% bonds and cash,and on the surface look good for investors going into draw down,and for the next 12 months should be fine.However after that as inflation runs that sort of set up will prove a disaster.I expect they will see -8% to -10% returns + fees + drawdown amounts per annum over the cycle.In other words pensioners will see their drawdown funds go to zero in around 7 to 9 years.Many are expecting them to remain stable,or slowly decline at 2%.

[Sugarlips]

1 hour ago, DurhamBorn said:

I think the average IRA/401k for the 50s to 60s age group is about $140k,60 to 70 about $200k,so like you say that is just enough to avoid a pension crisis,if those averages fall by say 20% then likely mass pain among pensioners.

The FED isnt doing much QE at the repo end,though people think its QE.What it really is though is the FED getting ready and getting the market ready for QE.Once the market thinks we have QE in small amounts again,its less of a shock when the real QE starts.

However i think the FED is way too late and cant avoid a sell off and debt deflation.The next cycle result will be the same whatever,the only question is the opening buy prices of the gainers.Im currently doing a pension transfer,long story that Democorruptcy knows,but the funds the IFAs are offering for conservative investors are around 60% bonds and cash,and on the surface look good for investors going into draw down,and for the next 12 months should be fine.However after that as inflation runs that sort of set up will prove a disaster.I expect they will see -8% to -10% returns + fees + drawdown amounts per annum over the cycle.In other words pensioners will see their drawdown funds go to zero in around 7 to 9 years.Many are expecting them to remain stable,or slowly decline at 2%.

Defined benefits I presume DB?

[Democorruptcy]

4 hours ago, DurhamBorn said:

I know a lot of people are looking at the oil sector,and my road map says to start buying when oil goes below $42 (with a maybe below $20 short term drop in a deflation).However i have started to buy a few myself.I was waiting to buy in my SIPP most of the buys in this sector and im waiting on a transfer in.However i started buying Vermillion Energy yesterday.I really like its exposure to European gas price increases in the next cycle.They also have a nice model that means they wont be underwater long in an oil down draft.

I am wanting some of the big players and have a few (Equinor,Repsol) but im opening positions on some lower down the pecking order.Vermillion might deliver some more pain yet,but if it survives any big sell off (it might suspend the divi for a year in real extremes) i see this as a ten bagger in the next cycle,maybe a 20 bagger.

I also opened a very small position in Torc oil and gas an one in Encana Corp.These were only small positions,but i wanted to do some work on the sector and opening some positions does that.

DYOR etc this is not advice to buy for anyone,.

I only had RDSB but sold it all on 30th Sept along with some other multinationals but kept my UK reflation shares. I'd got a recent RDSB divi, wondered if earnings season might cause some market wobbles what with the Fed cutting rates and I was expecting sterling to rise. Yesterday sterling did rise and such as RSDB did underperform. I'd like your below $20 to be correct to buy back in later!

[Barnsey]

How's this for a contrarian indicator...

And looky what happened the other day...

 

[UnconventionalWisdom]

6 hours ago, Barnsey said:

 

Times have changed, the Fed HAS to protect markets as they have a new diligent focus on 401k pension funds for the boomers retiring at a rate of 10k retirees per day for the next 17 years

What I dont understand though is that printing money to protect financial markets has to be bad for pensions. As I understand it, when people approach retirement or are retired, the pension funds shove everything in bonds and are happy with getting back a return that is just better than inflation. 

We are in a strange position where the pension funds ds now have to go for equities as the yields on bonds are crap. It's a recipe for disaster. 

[JREWING]

8 hours ago, DurhamBorn said:

However after that as inflation runs that sort of set up will prove a disaster.I expect they will see -8% to -10% returns + fees + drawdown amounts per annum over the cycle.In other words pensioners will see their drawdown funds go to zero in around 7 to 9 years.Many are expecting them to remain stable,or slowly decline at 2%.

I have a Lady friend drawing down a large capital lump as I write. I do worry for her.....

 

What advice would you offer. She's all in Fiat Sterling...

 

Inflation will kill her at your projections..

[DurhamBorn]

2 hours ago, UnconventionalWisdom said:

What I dont understand though is that printing money to protect financial markets has to be bad for pensions. As I understand it, when people approach retirement or are retired, the pension funds shove everything in bonds and are happy with getting back a return that is just better than inflation. 

We are in a strange position where the pension funds ds now have to go for equities as the yields on bonds are crap. It's a recipe for disaster. 

Its even worse than that,a lot of pensions go for corporate bonds in junk companies.Like you say even the conservative ones are having to buy gilts and treasuries on tiny interest rates.Whats happened is everyone thinks inflation is dead,but it isnt,its doing what it always has through history,its waiting for velocity to start to move.

Imagine a £200k pension with an £8k draw down and 1% fees.Then imagine instead of increases we get falls of even 5% a year.Within 5 years the pension has been cut in half.

 

[DurhamBorn]

26 minutes ago, Panda said:

I have a Lady friend drawing down a large capital lump as I write. I do worry for her.....

 

What advice would you offer. She's all in Fiat Sterling...

 

Inflation will kill her at your projections..

If its sat in cash then she needs to get some inflation hedging in her investments.It sounds crazy,but if someone was 100% cash and didnt want to build a full portfolio id say put 25% in GDXJ and SIL.At least then if inflation runs youd be protected,.Of course a lot depends on size of the pot,age of the person,other pensions coming,inheritance etc etc.

7 hours ago, Sugarlips said:

Defined benefits I presume DB?

Yes,

[Thorn]

Anybody ever use P&F patterns to see when a stock hits a turn?

spent this afternoon checking them out and then checking against my stocks to see where they might be going...

Because holy crap it fairly narrowed things down a lot.

 

[JMD]

On 11/10/2019 at 20:13, kibuc said:

Top 10?  Try top 2, and you'd still have to be quite generous!

Yes, that space, junior in particular, is littered with abysmal executives who make a total mess of their relationship with local communities, straight-up lie in their newsletters, show total disregard to basic math or work directly with paid pumpers to skim their retail shareholders, or all of the above. If I had to give one name from gold and silver space, respectively, that I feel I can trust, it would be WDO and AXU. In terms of putting in hard work, getting shit done, releasing honest no-bullshit updates and always staying on the conservative side when it comes to predicting the future, it doesn't get better than Duncan Middlemiss. It doesn't hurt that he sits on two great assets, either.

I reckon it might be quite similar among the majors, but they usually carry much more momentum to stay afloat for much longer. In the junior space the lifecycle is much shorter and the realization about who's who comes much more quickly.

On another note, miners are so laughably cheap now that I'm considering selling a kidney. Some of them, like IPT and EDR, are 30% down from where they were in August, at the same silver price.

thanks Kibuc,

ouch!! (not your kidney proposition!) but the poor state of the mining sector management, much worse than I had envisioned.

On a related note I am probably going to invest more in the PM streaming/royalty sector as I think it provides a way of 'piggy-backing'/benefitting from the expertise/analysis of these companies, they select and fund mining projects in return for a % share of the silver/gold... i'd like a piece of this virtuous (investment) circle!?   ...Ok, under no illusions, but hopefully deviating away from Mark Twains definition of a gold mine, i.e. these companies lend money (as opposed to spending it) so perhaps more cautious and dare I say professional.  

Would you have a view on these type of companies? I have listed 3 large established ones (1st line, >$1bn cap), and 3 medium size younger ones (2nd line, $100m-$1bn cap). These look solid prospects to me. Are there any others that you personally favour or maybe hold?   

Franco-Nevada, Royal Gold, Wheaton Precious Metals                                                                                                                              Osisko Gold Royalties, Sandstorm Gold, Maverix Metals 

 

I'm thinking also about which small operators (< $100m cap) might be good ones, risky yes, but worth a punt if they have signed themselves up to a potentially lucrative project?

 

[Bricks & Mortar]

On 11/10/2019 at 23:03, sancho panza said:

I'm not sure we'll see S&P 3500.Not even sure we'll see S&P 3000 but then we might

- I'm a seat of the pants guy.  I read the numbers, process them in my head, retain some info, then just take a flyer at what I think about something.  This is one of those:

I can see the way to S&P3500.  36, 38,4000 even.   The move would pretty unpredictable.  It goes like this:
There's a lot of money in the US markets.  As a % of US GDP,  near record levels.  Oct last year, I remember the fear was real, and the shoeshine boys were recommending pulling money out the markets.  I doubt it all came back.  Some went off to bonds, antiques, bitcoin, PMs, or cash.  Last 2 months has been the same.  So I think there's considerable funds lying outside the markets.  And now the Fed is printing new funds.  And the markets had a good couple of days.  They might have more good days next week, on the back of the $60bn news.  And the Fed's still got QE that it calls QE, and rate cuts to play.   China trade deal would add to the good feels.  The good days might be sustained consecutively.  At some point in the near future, fear-of-missing-out might become a thing.  And the rising markets start to be sustained by money flooding back in.  At that point, how high the markets go, depends how much money comes back in, and the higher the markets go, the more money comes back.

But it's up & up & up she goes... Where she stops, nobody knows.  I think if the markets were to go like that, we likely end up with a pretty disasterous crash, a la 1929.  That's not to say the eventual crash won't be disasterous if it doesn't go like that, it very well might be.  I just think the scale of a meltup adds to the scale of the crash at the end.

I'm not playing.  I have a pretty small sum to play with, and I'm gonna stick with PM miners.  Reasons include, that I'm a novice investor, and am just going to stick with pm's, because if I get caught in a crash, I expect them to come back.  And I want to play PMs in the next cycle, so if I'm building knowledge, I'll stick here.  Recent tradng has been getting rid of more basket-case-rubber-band type ones, and buying more solid, see-you-through-a-crash type ones.

It's one AM Saturday night, and I've been lubricating my soul a little.  Someone might want to fact--check my bit about the amount of cash in US equities.  I didn't check it, and to do so would destroy my seat-of-pants reputation.  But it would pretty much unravel my point if I was wrong.  I just realised, I'm uncomfortable with that wee detail because I'm more likely to go reference an internet comment on a site like Dosbods before I make it, than I am to read background before investing 10% of my net worth.  Hell!  All of my net worth, if split over 10 trades.

[JMD]

On 11/10/2019 at 21:16, Cattle Prod said:

It was more direct experience of them not paying the bills in joint ventures, a big no no. Since then you have had APEC reneging on a farm in deal to Providence Resources and probably destroying the company. As I said to @sancho panza, the russians in my experience keep their promises. I think the same principle probably applies to how they treat their shareholders.

However I took @DurhamBorn s point to be about consumption. India and China will drive consumption of energy, not production of it. The point about the Russians supplying China is a good one, and you could gain exposure that way. But look who the big airlines are in India. Air India simply watched Emirates et al take over their market, and the same us happening in Energy. They simply can't get their shit together. Oh and they stiffed Cairn out of a billion or so too. 

The rising tide will lift all boats, just go for solid western companies with good reserves governance imho. 

 

thanks Cattleprod, that's very useful.

It appears to be the consensus on the forum here to leave China and India well alone. Am I correct in thinking this is down to two main reasons - risk of corruption, stability, etc in those countries, PLUS why bother really, because if successful returns from reflation cycle play out as expected then would be better off concentrating on Western markets?

I ask because although it makes complete sense, I admit to not having picked up on this strategy before. But, does this extend to Asia in general, and/or emerging markets (south america, south korea), and/or frontier markets (ex-ussr, vietnam)? I have read posts explaining how they would buy world/country/em etf's after market correction/crash so I guess not but what are peoples thoughts. 

[JMD]

On 11/10/2019 at 22:52, sancho panza said:

I'm gradually gearing our portfolio to be probably 70% commodities-oil, gold, copper, gas, potash.

I was looking from a coma score perspective at some European utilities yesterday and couldn't help but wonder why CNA has dropped as hard from 140 as it has. Some Euro utilities are in much deeper doo doo than CNA and have dropped far less.

thanks SP for your previous information on oil/gas. Are you able to share any info., perhaps the sancho-coma-scores, on the European utilities you found?

On first read that '70%' allocation sounded very high, but I think I remember you saying that you expected those commodities to be first to run high, from which point you anticipated gradually/tactically selling in order to buy long term reflation stocks. If my recollection is correct is this still your plan? Its just that i'm interested in the time-frame for this, would you be making a judgement on a stock by stock basis, say between how 'high' some commodities had got against how 'cheap' a reflation stock was? i.e. it may take months or may take years to reinvest from commodities to reflation stocks.        

[DurhamBorn]

6 hours ago, JMD said:

thanks SP for your previous information on oil/gas. Are you able to share any info., perhaps the sancho-coma-scores, on the European utilities you found?

On first read that '70%' allocation sounded very high, but I think I remember you saying that you expected those commodities to be first to run high, from which point you anticipated gradually/tactically selling in order to buy long term reflation stocks. If my recollection is correct is this still your plan? Its just that i'm interested in the time-frame for this, would you be making a judgement on a stock by stock basis, say between how 'high' some commodities had got against how 'cheap' a reflation stock was? i.e. it may take months or may take years to reinvest from commodities to reflation stocks.        

Dont forget most reflation stocks are connected to commods and their price increases.Even the transports do well because the oil price goes up,they hedge  years out and it forces people out of their cars.Its actually the cost of the basics that drive the cycle.Even the defence equipment makers gain because more conflicts are likely over resources,real,or just the threat.In this long dis-inflation people have got used to energy being almost free compared to earnings,that will change.Aldi can be cheaper than Sainsbury as much as they want,but they still have to fill their lorries with diesel.What catches people out in a reflation as well is the fact economies can be struggling yet commods going up in price.Thats because once velocity moves and people sense the currency being printed away they buy real assets.Allocation is going to be tricky for everyone and likely this thread ,if it is still going will focus more and more on that as we enter the cycle.

[Harley]

57 minutes ago, DurhamBorn said:

Allocation is going to be tricky for everyone and likely this thread ,if it is still going will focus more and more on that as we enter the cycle.

Indeed.  I've been banging on about allocation for some time, pretty much from when I took a properly structured top down approach to this investment malarkey in Q118.  Get that wrong and pretty much nothing except extreme luck makes up for it. 

Lots of historic data on the various asset allocation models to help reach an informed and tailored decision, but also allocation between sectors, floor v upside funds, investment vehicles, currencies, and counterparties. 

Personally, my whole investment monitoring system is focussed on allocations with a belief performance will largely follow.   Not that I have the allocations I want as that takes time and is the hard part.  For example, building an income portfolio where I have to compromise between speed of doing so and paying best price.  Yesterday's relative price action gave me a good morale boost!

I however wonder how well past data on asset allocations will fare in the future given we are in extraordinary times.  For example, there may be more upside for bonds (or not) given the increasing move to negative rates, but that cannot end well.  Plus we're in a bubble everything situation across most asset classes, at the broad level (but hopefully plenty of sleeping giants hiding out there).

We are at some sort of cycle turn (or worse) which will no doubt take longer than we want but now is the time to start thinking out the box most have been lulled into over the past years and threads like this, right or wrong, provide the stimulus to do so.

[Talking Monkey]

23 hours ago, DurhamBorn said:

I think the average IRA/401k for the 50s to 60s age group is about $140k,60 to 70 about $200k,so like you say that is just enough to avoid a pension crisis,if those averages fall by say 20% then likely mass pain among pensioners.

The FED isnt doing much QE at the repo end,though people think its QE.What it really is though is the FED getting ready and getting the market ready for QE.Once the market thinks we have QE in small amounts again,its less of a shock when the real QE starts.

However i think the FED is way too late and cant avoid a sell off and debt deflation.The next cycle result will be the same whatever,the only question is the opening buy prices of the gainers.Im currently doing a pension transfer,long story that Democorruptcy knows,but the funds the IFAs are offering for conservative investors are around 60% bonds and cash,and on the surface look good for investors going into draw down,and for the next 12 months should be fine.However after that as inflation runs that sort of set up will prove a disaster.I expect they will see -8% to -10% returns + fees + drawdown amounts per annum over the cycle.In other words pensioners will see their drawdown funds go to zero in around 7 to 9 years.Many are expecting them to remain stable,or slowly decline at 2%.

Just reading that looks like some epic pension crises coming towards the middle to end of the next decade. Would the Fed be able to prevent a 40-50% decline in the S&P during the market downturn

[DurhamBorn]

5 hours ago, Harley said:

Indeed.  I've been banging on about allocation for some time, pretty much from when I took a properly structured top down approach to this investment malarkey in Q118.  Get that wrong and pretty much nothing except extreme luck makes up for it. 

Lots of historic data on the various asset allocation models to help reach an informed and tailored decision, but also allocation between sectors, floor v upside funds, investment vehicles, currencies, and counterparties. 

Personally, my whole investment monitoring system is focussed on allocations with a belief performance will largely follow.   Not that I have the allocations I want as that takes time and is the hard part.  For example, building an income portfolio where I have to compromise between speed of doing so and paying best price.  Yesterday's relative price action gave me a good morale boost!

I however wonder how well past data on asset allocations will fare in the future given we are in extraordinary times.  For example, there may be more upside for bonds (or not) given the increasing move to negative rates, but that cannot end well.  Plus we're in a bubble everything situation across most asset classes, at the broad level (but hopefully plenty of sleeping giants hiding out there).

We are at some sort of cycle turn (or worse) which will no doubt take longer than we want but now is the time to start thinking out the box most have been lulled into over the past years and threads like this, right or wrong, provide the stimulus to do so.

I think thats right Harley.Myself iv never really taken much time on allocation in the broad sense,more leaning towards deflation/inflation and tilting my holdings.However going forward i intend to start to focus more on it.Mainly as my assets are now at a level where i can retire.Im 48 and by retire i mean create an income 150% of NMW with zero mortgage or debts before a full state pension (3 years NICS more needed) whenever.I am also structured in a way that i can approach £20k a year tax free (ISA,SIPP,).In affect capital growth doesnt interest me reall,but protecting from inflation and/or big capital loss (and from that earnings loss) does.Whats crucial is i think most asset allocation for what we are facing is wrong.If we do indeed see an inflation cycle then a 60% or more bond portfolio will prove a disaster in draw down.Cyclicals and broad based value shares with a leaning towards inflation look far better.If bonds are giving income of 1% then i figure silver and gold will do a much better job.

If the premise of this thread is right,and most people in draw down (or approaching it) are in allocations with big bond holdings and trackers then they could be in for a huge shock.Most draw downs iv seen seem to rely on 5% growth after or before fees at best.Even if its zero then draw down and fees on top with inflation wont be good.

4 hours ago, Talking Monkey said:

Just reading that looks like some epic pension crises coming towards the middle to end of the next decade. Would the Fed be able to prevent a 40-50% decline in the S&P during the market downturn

I dont think thats the main issue,i think its bonds paying 1%/2% when inflation runs to 8%+ that will destroy draw down pots.People seem to think its bonds up shares down,shares up bonds down,but they are forgetting their is another scenario that comes along now and again,stocks down,bonds down more ,commods up.

[reformed nice guy]

15 hours ago, JMD said:

Would you have a view on these type of companies? I have listed 3 large established ones (1st line, >$1bn cap), and 3 medium size younger ones (2nd line, $100m-$1bn cap). These look solid prospects to me. Are there any others that you personally favour or maybe hold?

I'm thinking also about which small operators (< $100m cap) might be good ones, risky yes, but worth a punt if they have signed themselves up to a potentially lucrative project?

 

I have been buying a small amount of miners, about 10% of my portfolio and only a few per month, in these stocks in the following order. I sold at the last peak (thanks DB!) and the amount Im using is less than I made - the rest is in divi stocks. I am using a similar logic - a mix of big, medium, small and geographically diverse. It might not be the best allocations and I am far from an expert, but Im hoping that the spread will help shelter from any specific regional problems. All available from Hargreaves. Hopefully the list at least provides some ideas for people to start researching from.

• Anglo American - international
• Barrick Gold - international
• Anglogold ashanti  - international
• Polymetal -Russia
• Gold fields - Australia, Peru, Ghana
• Kinross - international
• Sibanye - South Africa
• Yamana - Americas
• Centamin - Egypt
• Harmony Gold - South Africa
• Eldorado gold corp - international
• Acacia Mining - Tanzania
• Couer Mining - Americas
• Wesdome - Canada

[Clueless Imbecile]

Just wondering...

Do you guys have automatic dividend re-investment switched on in your share accounts?

When I buy equity index-trackers I ususally buy accumulation units so that the dividends get automatically reinvested. I believe that is where most of the compound growth comes from over the long term.

However, with individual stocks I don't automatically reinvest the dividends. My reasoning is that I think a handful of, say, up to 25 different stocks is nowhere near as diversified as a tracker fund that might have 100 or more different stocks. I therefore plan to let the dividends mount up as cash in my S&S ISA. I would then "rebalance" perhaps once per year and manually reinvest the dividend cash into whatever stock(s) I think appropriate.

Cheers,
Clueless Imbecile

Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.