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

[NogintheNog]

2 hours ago, Harley said:

But I liked this "A W-8BEN form is not required for US investments held within a SIPP as the IRS recognises our SIPP as a qualifying pension scheme and all qualifying US dividends and interest are automatically paid to you free of any withholding tax".

Confirmed, there was a 27p forex charge though

 

[NogintheNog]

Must admit, I suspect that the Exxon dividend will be cut, however if it is I'll be tempted to hit sell on the BASF shares for another swipe at Exxon!

[JMD]

9 hours ago, Harley said:

Cheers.  The very best explanation yet.  Maybe the only one.  Excellent.  Very comprehensive and coherent.  I couldn't have said it better!  I've been struggling to this clarity (and practically more) over the last year, starting with "feelings" and posts about value.  There's stuff there probably most will miss in their simplistic summations and/or will fail to internalise.

On a social level, it puts into true light such popularist talk as mortgaging the future and blaming boomers.  The political economy.  They seem to want to hang the wrong people.  Will they likewise accept a lynching from future generations for the current furlough money, business support, and so on?  They are doing nothing about all this now either.  But they are being played here too.  But they will find some convenient and self serving excuse.  People always do.  Blame the wrong people, feel better, change nothing, indeed suffer more. It has been seen a million times over.

The growth of mainstream financialisation since the 1980s is there for all to see but is complicated and seductive to all in its various consequences.  Very few people today are innocents, taking the financiers shilling but never asking from where it came and what that meant.  The excuse they did not realise or were tricked, if valid, applies to all.

And now they are embarking on financialisation mark 2 with the great reset.  A bad name though as it rhymes in trickery but does not repeat in form.  They have always been one step ahead.  More snake oil and its sellers will be along soon.  And people will shout for order from the very same that brought the chaos upon them and they will get it, just like they got Hitler, caesars, and so on.

The boomers brought the seeds of their prosperity with them by their timing and numbers.  But also the seeds of their own destruction.  But all very minor had that not been taken into orbit by financialisation.  People seemingly got a bit rich while the rich got proper richer.

Why apparently take things down the boomer angle?  Because it both highlights the actual mechanics (to those free enough to look) and the type of base perversion and mob rule ultimately inside most humans and with which we will have to deal.  There you go, the macro macro!

But like Nazi Germany, Rome, and many many others, it requires continual expansion to sustain itself.  And that never worked out in the end.  It ends in destruction whether through war or societal collapse.  That is the balancing of the nature of finance in the long term.  Being brought to account, here and as in heaven (ethics used to be an area of study!).  There is no sustainable trick, just good times and bad times.  Didn't they use to say you don't get something for nothing.  There is growth, real growth but I have less faith in that argument these days as that argument gets perverted and misused too.  And piddling against what they want and now need.

These are the glasses through which to see the current situation and plan.  The reality, the mob rule, the consequences.  With that post we have had the reality......

Have a nice day.

Great post Harley. But nothing wrong with articulating those types of feelings and values you say you have now moved on from as youve become more coherant. Tbh thats probably mostly what I do as I certainly struggle with the higher intellectual ideas. Not your main point I know but it leads me onto what I think is the elephant in the room... The problem as I see it is the left (I'm generalising I know) believe their own sets of 'feelings' and ideals are morally superior to say those of the right. Ie How often do we hear self declared 'progressives' (whatever that means) proclaim themselves to be 'compassionate' simply because they are, well progressives (truly Alice in Wonderland logic). I initially began to be very fearful of our current culture wars when I first learned of 'post-birth abortions' around 2012 I think it was. Since then so many pocket revolutionary outfits, like BLM, antifa, etc, have been warmly welcomed by the media and the 'intelligentsia' that it is now tragically clear to many of us that we are heading for one of those 'resets' that you mention.                                         As an aside, what I find personally interesting about today's political/social divisions and disingenuous moral gesturing, is how it has informed me, such that I actually have much more understanding, and insight, into previous periods of history, where for example similarly awful divisions and/or scapegoating took place. I used to think our long dead ancestors were somehow ethically ignorant, and in fact my school history was taught under the framework that people 'thought differently back then' (I think school history teaching today is even worse, but that's another topic).                                                                                                 Anyway, it is shocking how today's discourse has become so toxic. However, I think it is very telling that a first precept of today's modish left-winger thought is that he/she holds the view that they 'benefit' from, and sit somehow at the pinnacle, of the sum accumulation of human morality and wisdom... Lots of talk of 'bubbles' these days, but doesnt that sound very much like an idea too big too fail (and ready to pop)!!          

[JMD]

5 hours ago, Harley said:

The young forget they have one massive advantage to handle the BK - time.  It's 100% in their lap how they use it and whether they repeat the sins (real or imagined) some of them shout about.  No-one else to blame of this one.  I hope they do well.

My worry about all this is the role of Brexit.  Are they building some unwelcome (to the average Jo) offshore state to replace the EU?  I always thought the real battle would be after Brexit.  Has it started?

Re. the UK post-Brexit, do you mean building/planning something like Boris's 'Singapore on Thames' idea?

[Harley]

39 minutes ago, JMD said:

Re. the UK post-Brexit, do you mean building/planning something like Boris's 'Singapore on Thames' idea?

Well that was the relatively nice version, if you like Singapore life.  No doubt we'll do a cheaper more exploitative version.  My one lesson is not to conflate Boris' ideas and reality, save for some goose stepping b'tard getting in my face.

[Harley]

Here's a "fun" website on a cold and wet October day:  https://www.portfoliovisualizer.com/

Asset allocation is king.  Then comes the rest.  I enjoyed playing with different portfolio mixes as I was looking at being more aggressive in the use of funds (making my upside allocation more aggressively equity based than the balanced portfolio approach of the floor allocation).

Here's an example comparing the 25%x4 allocation of the Permanent portfolio (portfolio 1) versus an all equity portfolio (portfolio 2), where the equity split in both portfolios was 50% US market and 50% rest of world.

What I noticed was you get fairly similar returns with both portfolios but with a lot less excitement (volatility) with portfolio 1.  That to me means a better portfolio to accumulate into with capital to be preserved.  I need to play some more to try other portfolios to see if I can increase the risk reward for that part of my funds I'm prepared to risk more.  Sure, it's the only the past, blah, blah, but it's still a great educational exercise.

https://portfoliocharts.com is still a favourite of mine but I liked the more simple style of this one.

PS:  What I liked was creating a dummy portfolio with 100% of each asset class in turn (such as commodities) to see how it performed.  The story so far, so maybe about to change(!) is: commodities have been a 30yr dog (indeed negative) and the S&P was a one way bet with adding other regions actually increasing risk and lowering returns!  Of course depends on when you invested.  But as long term trends, maybe good for calls on any baton changing (e.g. commodities, emerging markets, developed international stocks, etc).  You can also show the charts inflation adjusted if you have the stomach for it!

[Harley]

Blooming edit button!

 

[Democorruptcy]

6 hours ago, Castlevania said:

They told me it’s due to a financial transaction tax (think stamp duty) levied on all Italian shares. It’s 0.1% of the transaction when buying. I assume their systems aren’t set up for it. They charged me the usual online dealing commission which was good.

They also mentioned there’s a similar tax on French shares so would assume that again you’d have to call them up to buy any French companies - although 30% withholding tax on dividends has put me off buying the likes of Total and Orange. Plus they’re French.

As a software developer by last trade I've come to the conclusion that HL must have the shitest set of software developers around. Something like that is a simple look-up to cross check country code and match relevant stamp duty.

Something else I've suggested to them is if you have an ISA and a SIPP there, when making a transaction why not allow a % allocation for each account? No, you have to buy in your ISA, then go into your SIPP account and start again by which time the price has changed.

FFS they cannot even do a cookie screen. You block their cookies and after submitting your choices it leaves you hanging there in the cookie screen and you have lost the page you started from.

Their software development manager should do the firm a favour and retire.

 

A recent pathetic annoyance is their new cookie message

[Loki]

4 minutes ago, Democorruptcy said:

A recent pathetic annoyance is their new cookie message

Pales in significance next to the (Block element via selector, I love you) rainbow and BLM banners.

I might have to look elsewhere, if there is anywhere not pozzed that is.

[Harley]

29 minutes ago, Loki said:

Pales in significance next to the (Block element via selector, I love you) rainbow and BLM banners.

I might have to look elsewhere, if there is anywhere not pozzed that is.

Careful now.  These people are the creme of the investment community.  Totally focussed professionals.  That you don't understand the financial relevance of these banners shows how much you need them.

[JREWING]

It may not be on everyone's radar but Trinidad's new Government has just given its first budget. And there were substantial changes in the imposition of its Supplemental Petroleum Tax (SPT). Essentially, this kicks in when the price of oil averages more than US$50 per barrel over a calendar quarter period. A tad under US$50 or a tad over US$60 and oil producers are fine but between US$50 and US$60 and they are heavily penalised. The reforms relate to small onshore and offshore producers as well as mature fields. Broadly speaking, for an asset or licence producing less than 2,000 BOPD, SPT will now kick in when oil averages over US$75 for a calendar quarter period. That's a major improvement in cash flow for Trinidad's small oil producers. The reforms will take effect from January 1st 2021 and will be in place until the end of 2022 when they will be reviewed. More broadly, Trinidad's Government has committed to reviewing the Petroleum Taxes Act with a view to simplifying it. The country is heavily dependent on oil and gas revenues and appears determined to attract investment into the sector.

There are several London listed oil companies with exposure to Trinidad. 

[Loki]

@Panda How do you know this stuff?!  I had a quick look and Repsol do too. 

[Green Devil]

Somebody mentioned Rolls Royce a few days back, look at it now ! 

[StrugglingMillennial]

Yes i think it was me, its pretty much doubled in five days 🤯

[Viceroy]

On 02/10/2020 at 13:27, Viceroy said:A Biden victory would probably also involve a Senate flip and then we have real problems with all three in the hands of Globalists. Just find a hole to hide in - it will get very bad.

 Their ONLY escape is MMT to keep the welfare flowing and destroying jobs to save the planet requires Guarantee Basic Income. A Trump victory buys us perhaps 2 years. I have been WARNING that what comes AFTER Trump is my great concern.

Armstrong and Hunter are on the same page as to where we’ll be politically in the 2030s.

[Harley]

14 hours ago, Panda said:

It may not be on everyone's radar but Trinidad's new Government has just given its first budget. And there were substantial changes in the imposition of its Supplemental Petroleum Tax (SPT). Essentially, this kicks in when the price of oil averages more than US$50 per barrel over a calendar quarter period. A tad under US$50 or a tad over US$60 and oil producers are fine but between US$50 and US$60 and they are heavily penalised. The reforms relate to small onshore and offshore producers as well as mature fields. Broadly speaking, for an asset or licence producing less than 2,000 BOPD, SPT will now kick in when oil averages over US$75 for a calendar quarter period. That's a major improvement in cash flow for Trinidad's small oil producers. The reforms will take effect from January 1st 2021 and will be in place until the end of 2022 when they will be reviewed. More broadly, Trinidad's Government has committed to reviewing the Petroleum Taxes Act with a view to simplifying it. The country is heavily dependent on oil and gas revenues and appears determined to attract investment into the sector.

There are several London listed oil companies with exposure to Trinidad. 

Ah, oil and Trinidad.  I can tell you Big OIl stories.  Funny as feck from the old days.  But have to save them for the pub!

[BurntBread]

6 minutes ago, Harley said:

Ah, oil and Trinidad.  I can tell you Big OIl stories.  Funny as feck from the old days.  But have to save them for the pub!

This is the pub!

[DurhamBorn]

"into the uninvestable basket"

"the great uninvestable asset today,oil"

@Cattle Prod will be pleased to see this guys understands the supply situation about shale from about 33.00

A good talk  on why holding the equity of energy companies is better than the underlying asset etc.A lot of where we are is macro,but sentiment is hugely negative.These guys mention the Fed wanting inflation and its good to hear people mention this as its being ignored by almost everyone.Fed history is crucial to where we are and where we are going.

 

[nirvana]

@DurhamBorn1 min in 'sheep get slaughtered'*....seeing as I posted that just last week I'm in for a listen! 

Will try and download this so I can listen whilst walking in the country and talking to the sheep 

*actually I think I said 'sheeple get slaughtered' cos I'm a sarcastic bastard...

[leonardratso]

1 hour ago, DurhamBorn said:

"into the uninvestable basket"

"the great uninvestable asset today,oil"

@Cattle Prod will be pleased to see this guys understands the supply situation about shale from about 33.00

A good talk  on why holding the equity of energy companies is better than the underlying asset etc.A lot of where we are is macro,but sentiment is hugely negative.These guys mention the Fed wanting inflation and its good to hear people mention this as its being ignored by almost everyone.Fed history is crucial to where we are and where we are going.

 

good to hear woody allen is still alive.

[JREWING]

1 hour ago, Harley said:

Ah, oil and Trinidad.  I can tell you Big OIl stories.  Funny as feck from the old days.  But have to save them for the pub!

Harley.

What are you thoughts on BP?

Been looking at their share price, the bumps over the past few years. It touched the all time low last week around £2.10.

Do you think that will be the lower of the lowest low to enter at, or is there scope for sub £2?

My train of thought is you see, since March the market has returned to 6000'ish. But BP and RDSB has not made any gains really. Losses.

Now should we have another crash, (even KAHUNA) will we see the Oiliies drop further or will they sit the next one out? Bad news priced in?

Just how low can BP really go? Timing your entry point is vital at the moment. Had my finger burnt on RDSB.

 

 

 

[nirvana]

I know I'm trying not to post here cos I'm a 'sarcastic twat' but I couldn't resist this one

@sancho panza

[Harley]

1 hour ago, Panda said:

Harley.

What are you thoughts on BP?

Been looking at their share price, the bumps over the past few years. It touched the all time low last week around £2.10.

Do you think that will be the lower of the lowest low to enter at, or is there scope for sub £2?

My train of thought is you see, since March the market has returned to 6000'ish. But BP and RDSB has not made any gains really. Losses.

Now should we have another crash, (even KAHUNA) will we see the Oiliies drop further or will they sit the next one out? Bad news priced in?

Just how low can BP really go? Timing your entry point is vital at the moment. Had my finger burnt on RDSB.

 

 

 

It depends on so much I could not begin to answer your question for you.  Like, for example, "thoughts" in what context (e.g trader v investor) and your personal circumstances.  Wearing my own (not yours!) value investing hat, I like big oil for many reasons, most of which have been discussed here.

I personally prefer to invest in stocks rather than ETFs, etc.  I therefore focus on the top 15 by market cap in each industry (minus some dogs) with a view to buy a few of these.  BP is big enough to be on that candidate list for that reason alone.  I hold some already from a while ago before this approach.  I may buy more as part of a portfolio rebalance as I am showing a loss on this and several others so room for a top-up.  But then I would like to buy a few other industry players. 

Would I buy now if I did or wait for a better price?  Timing is often a mugs game and as I'm wearing a value hat I'm not looking short term.  I'm looking at five to ten years with a view to protect the value of what I have.  If pence on the price worry me now, I really shouldn't be thinking about it. 

The daily and weekly technicals may well be bottoming with the monthly to follow.  But I've been burnt before going in too early where the daily and weekly strength is just short term.  I now wait for the comfort the monthlies give me, happy to pay the price for getting in a bit late.  But each to their own.  Laddering of course is a way to hedge bets.

Regarding a BK, a good point.  You ask if that's priced in.  I would say no.  The sector risk however does seem to be priced in.  Everything may get smashed in a BK but yes, some less than others.  I doubt much O&G stock is currently being bought on margin or people are sitting on massive profits to cover a margin call!  And then there's the collateral damage of a BK.  I would personally like to hedge say a bank collapse with a bit of equity rather than cash, even if it did fall! 

PS:  That move in the FTSE to 6,000 is really lame, indeed has rolled over.  The bounced peaked 5 June 20 and has pulled back then.  An even worse picture if you compare to other indicies.  I ignore the overall FTSE number other than as a contrarian play!  I look international and don't care about the exchange in that one respect.

[Harley]

3 hours ago, BurntBread said:

This is the pub!

But it's bugged.  Full of lurkers!  We need a snug!

[BurntBread]

1 hour ago, Harley said:

But it's bugged.  Full of lurkers!  We need a snug!

The speakeasy is upstairs.