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

[DurhamBorn]

2 hours ago, MrXxxx said:

True, most DB pensions yet to pay out have now moved the goalposts so that a) they cover the first 5% in full, and are then a % up to 10% where the uplift stops, and b) some use CPI rather than RPI.

Regarding your transfer (and to make it clear to all), £2.6k is not what it could be paying out on maturity, this will be much higher, and so doesn't look as dramatic to the payoff you got...still not a `investment` though! 

Mine pays out £3160 a year inflation linked and the transfer value is £149,700.To be fair the inflation link is up to 12% and you can take at 60 with zero loss its about as good a final salary pension as you would get.However i think i can easily beat that and also take at 55 instead,plus if/when i die the capital will be in my estate for my kids/grandkids,plus inside a pension its free from inheritance tax (or any tax up to 75),thats crucial for me as im not married so only have the £320k allowance and the primary residence allowance so £500k.We have a trust set up if needed as well.It means i can run down other assets first and leave the pension until later if needed,more flexible,my aim is to be £1 under inheritance tax at all times minimum.I also dont need a spouse pension.My partner has a final salary council pension.She will leave me half that is she dies first so that gives us protection.

However i also live very frugal,i can live easily on about £800 a month (my parter similar amount).My comfort level though is about £1000.That leaves me lots spare.Il have full state pension at 68,so i need about £5000 income from investments then on top,the pension transfer above should easily make that.

Its highly likely il retire at 48 whenever i get laid off from my present job as my own investment outside pension/SIPP bring me well over what i need in income.However there are so many chances to increase capital for my family coming up that i feel its my duty really to carry on for now so i can re-invest all income.For instance i used all my wages for PM stocks and they doubled when i sold.Im at the stage where my wage + compounding the income from investments is reaching silly levels.I also want to spend as much time as possible with my dad etc and thats more important to me than compounding to infinity.

The FSA have made moving a DB pension a nightmare though.They have added massive costs onto people because of this.In affect the few people who know what they are doing are being hit to try to save the rest who transfer then buy a motor home,a range rover etc and run the fund down too quickly.

 

[DurhamBorn]

More and more of this,and more areas,transport,telcos etc.What they will miss is the affect on commods though.The push for green is real and will be sustained,however  it will be around 2050 i expect before oil and gas really tip down.The next cycle they will see a boom as the energy needed to grow the green economy will come from good old fashioned oil and gas.I still think $40 is possible and even maybe a spike down below $20 in a bust.Then all systems go.

https://www.telegraph.co.uk/business/2019/10/25/solution-great-stagnation-times-staring-us-face/?li_source=LI&li_medium=li-recommendation-widget

[Democorruptcy]

11 hours ago, MrXxxx said:

True, most DB pensions yet to pay out have now moved the goalposts so that a) they cover the first 5% in full, and are then a % up to 10% where the uplift stops, and b) some use CPI rather than RPI.

Regarding your transfer (and to make it clear to all), £2.6k is not what it could be paying out on maturity, this will be much higher, and so doesn't look as dramatic to the payoff you got...still not a `investment` though! 

If I had died before drawing the pension my contributions i.e. the £2.6k is all that would have been passed to my estate. I have no dependents and it was up to the trustees whether they passed it on to who I nominated to get it. Now it's in my SIPP I can will it to whoever I like. 

[MrXxxx]

5 minutes ago, Democorruptcy said:

If I had died before drawing the pension my contributions i.e. the £2.6k is all that would have been passed to my estate. I have no dependents and it was up to the trustees whether they passed it on to who I nominated to get it. Now it's in my SIPP I can will it to whoever I like. 

Good point, not one that I had considered.

[sleepwello'nights]

8 hours ago, DurhamBorn said:

Mine pays out £3160 a year inflation linked and the transfer value is £149,700.

 

Which is fucking stupid. £150k to get am income of £3k a year. So you need to draw it for 50 years before you get the transfer value back.

 

[DurhamBorn]

3 minutes ago, sleepwello'nights said:

Which is fucking stupid. £150k to get am income of £3k a year. So you need to draw it for 50 years before you get the transfer value back.

 

Dont forget about inflation.If it runs at 8% a year that would soon compound it up a lot.I agree the transfer values are superb at the minute though.The schemes have to give a CETV, a cash equivalent transfer value and they are mostly based on annuity rates that use the 15 year gilt yield.In affect they have no choice but to offer the amounts they do unless the schemes trustees change the rules etc.Most people cant transfer though until they leave the scheme so it really only helps people with deferred pensions,or who retire but dont kick it in.I think funds or the government will block people leaving at some point though,maybe in a year or two.Once gilts get back to 4%+ transfer values will likely be cut in half.

I have friends who could transfer half a mill and who are skint,but i havent told them about it.Reason is they are all shit with money.One of them would gamble the lot away.Hes better with a £300 a week pension at 60.

[DurhamBorn]

35 minutes ago, Democorruptcy said:

If I had died before drawing the pension my contributions i.e. the £2.6k is all that would have been passed to my estate. I have no dependents and it was up to the trustees whether they passed it on to who I nominated to get it. Now it's in my SIPP I can will it to whoever I like. 

Exactly,as we know the pension isnt an asset,its a promise,the asset is actually the CETV and to turn it into an asset you need to transfer it out where its simple a promise to  where its an asset.Most people dont understand that.Die and the promise that could be an asset is lost to your estate.

[sleepwello'nights]

11 minutes ago, DurhamBorn said:

Dont forget about inflation.If it runs at 8% a year that would soon compound it up a lot.I agree the transfer values are superb at the minute though.The schemes have to give a CETV, a cash equivalent transfer value and they are mostly based on annuity rates that use the 15 year gilt yield.In affect they have no choice but to offer the amounts they do unless the schemes trustees change the rules etc.Most people cant transfer though until they leave the scheme so it really only helps people with deferred pensions,or who retire but dont kick it in.I think funds or the government will block people leaving at some point though,maybe in a year or two.Once gilts get back to 4%+ transfer values will likely be cut in half.

 

My wife has an occupational pension that she has started drawing. I've been asking her to speak to the provider to see if they will pay her a lump sum rather than keep the small pension running. I doubt the values will be anywhere near the multiples you could get. Its worth asking the question I suppose. 

I keep banging on about the UK Gilt trackers I have with Vanguard, both the UK Gilt and the Inflation linked are showing growth of over 10% this year. Its not that straightforward as Vanguard use an IRR calculation. 

[DurhamBorn]

1 hour ago, sleepwello'nights said:

My wife has an occupational pension that she has started drawing. I've been asking her to speak to the provider to see if they will pay her a lump sum rather than keep the small pension running. I doubt the values will be anywhere near the multiples you could get. Its worth asking the question I suppose. 

I keep banging on about the UK Gilt trackers I have with Vanguard, both the UK Gilt and the Inflation linked are showing growth of over 10% this year. Its not that straightforward as Vanguard use an IRR calculation. 

If started drawing no chance of a transfer if its a DB.If its an annuity possible you can push to cash.Inflation adjusted im expecting gilts to lose between 70% and 90% over the next cycle,but probably have some time in the sun yet.

[sancho panza]

On 24/10/2019 at 22:08, DurhamBorn said:

Dollar going to 88 i expect or maybe a bit lower.Fed has started to QE now and although the repo market isnt full on QE is hows the Fed has woke up to the problems.The markets are now expecting QE and they should get it.Industrials are seeing fast falling demand,yet the prospect of QE is holding them up.Fed is too late though for me.I simply cant see an 18 month lag at worst,or 12 month at best in time to stop the debt deflation growing.

Amazing to think on this thread we pinned the bottom on sterling and its seen a strong rise since,yet pretty much all the media including the financial press were saying much lower.

It should be noted UK is still running a big deficit even with sterling down 20%+.That says to me we have a 3% to 4% structural deficit still.

I'm getting more and more $ obsessed at the moe.It's really riving my thesis at the minute.I think DXY has broken down but it's going to take a couple more months before it shows in my weekly charts at least,possibly slightly longer.I'm ruinning ahead of that curve buying oil/Gas and goldies.

On 25/10/2019 at 02:43, Viceroy said:

a while ago I briefly looked at the tax implications of investing in MLPs as a non-resident alien and thought it might be a hassle? I might be wrong tho.  It involves a K-1, but I think a non-US res would have to file a 1040 with the IRS instead?  Dividends (known as distributions) would be taxed at full withholding as well as you are seen to be a partner in the company and doing business in the USA.  Have i got that right??

https://www.financialwisdomforum.org/forum/viewtopic.php?t=111305

https://www.quora.com/What-are-my-tax-duties-as-a-Non-Resident-Alien-owning-an-LLC-Partnership

I didnt know any of this Viceroy.I'm mainly in these shrares for capital gain and will flog off as dollar firms.Always wondered what the point of the partnerships was.

Virtually all of these are in my mums account(she's buying the XOP/XES/OIH trades,she won't have a clue and I'm not gonna tell her.Her accountant can dealmwith it at year end.

Does put me of buying them back when I rebuy late 2020 early 2021 if all goes to plan

On 25/10/2019 at 07:33, MrXxxx said:

So basically housebuilders have no emotional attachment to their properties and need money coming into the till/coffers, and the buyer (or the bank supplying the funds) has now `seen` the long game and realised that its not just the mortgage rate that is important but the combined result of this AND the property price OVER the term...so, the sooner buyers in the UK make the same connection, the sooner the market will return to sensible values/prices!

UK homeowners are in for a shock... and then another ....I suspect average hosue prices will at least get below 3.5 times single earnings.Looking at the hot money markets in the US and Canda they apear to be selling off but too early to confirm if it's a dip or the start of a new downtrend

On 25/10/2019 at 16:49, JMD said:

thank you SP.

Can I inquire if you did buy the lithium minors - CXO, SQM?  or are you still working through these as part of your rare-earths?

Reason I ask is I have bought them, but appreciate they are highly speculative, hence their low price. Apparently if battery technology takes off, and if demand for lithium rises suddenly (not certain apparently as lithium reserves are sort of unknown!), then prices will fly.   

 

CXO-Concho were purchased as part of XOP tranche iirc and SQM as part of SOIL(potash).Obviously they'll be cross overs

REMX trades (havent bought any yet),SCS top scorers are(of the top of my head)

Iluka

Livent

Lynas

LArgo

Orocobre

[sancho panza]

On 25/10/2019 at 19:51, Cattle Prod said:

This is correct. Alberta could theoretically do another 2m bpd outside of the tar sands, and the world needs its grades. I'm just back from a couple of week way north of there, they're gearing up for a busy winter season. Unlike the shale basins which continue to steadily drop rigs. I've heard directly from people going to New York to raise money for shale drilling, and the doors are shut, calls being ignored. Wall St has had enough, finally, the plays will now move to companies that can make money because of first mover advantage and low lease fees, and majors like exxon which seem to be using it as swing production - they'll only produce it when prices are high, and they have no debt forcing them to sell low.

Crazy US production gowth is over, once the uncompleted wells are done, only question of how long that takes. I think I said Q4, might stretch to Q1 as I didn't allow enough for the DUC stock. Still might sell off in a bust, but it'll be supercharged by tight supply in the recovery. @DurhamBorn road map numbers do not seem crazy to me: the lack of investment in supply will bite hard

Thanks for the insights CP

We've been buying oil majors since mid august on a mechanical weekly basis-XOM/EQNR/OXY/RDSB/REP/ENI.Already stopped with REP as it seems high and have been buying more BP isntead.The sector looks super cheap to my inexperienced eye.

We've bought some tranches of US tier two producers and oil services providers,but looking to broaden our horizons and possibly out more wieght on some of the bigger second tier companies.

Do you know much about companies the size of Parlsey Energy/Enerplus?

[sancho panza]

On 25/10/2019 at 19:56, Cattle Prod said:

Thanks @kibuc it's exactly the same in oil and gas and will cause a big supply squeeze in the early to mid 2020s

There's a theme here @kibuc and @JMD

Over the last few months I've run the numbers on a load of oil,gas and PM miner stocks.One thing that has surprised me is the low levels of debts in those sectors compared to the wider market.Just saying

[sancho panza]

https://wolfstreet.com/2019/10/25/subprime-auto-loans-blow-up-60-day-delinquencies-shoot-past-financial-crisis-peak/

Subprime Auto Loans Blow Up, 60-Day Delinquencies Shoot Past Financial Crisis Peak

by Wolf Richter • Oct 25, 2019 • 115 Comments • Email to a friend

Santander Consumer USA is on the forefront of souring subprime-auto-loan backed securities.

Santander Consumer USA, one of the largest subprime auto lenders and the largest securitizer of subprime auto loans, is not alone. But it’s on the forefront. It had $26.3 billion of subprime auto loans as of June 30 that it either owned and carried on its books or that it had packaged into subprime-auto-loan backed securities and sold to investors; in terms of the loans that it collects payments on, 14.5% of the borrowers were delinquent, according to S&P Global Ratings, cited by Bloomberg.

In the industry overall, subprime auto loans that have been packaged into asset-backed securities (ABS) are experiencing the highest delinquency rates in two decades, according to Fitch, which rates these securities. The 60-day delinquency rate surged to 5.93% in August, substantially higher than during the peak of the Financial Crisis at 5.04% in January 2009 (orange line, chart via Fitch):

But “prime” auto loans are holding up very well (blue line in the chart above): Their 60-day delinquency rate is hovering around a historically low 0.28%.

Santander’s loans include a surprising number that defaulted within the first few months, according to Moody’s Investors Service.  These early-payment defaults (EPDs) are a hallmark of loosey-goosey underwriting standards that accomplish three things:

• Initially, they boost revenues from fees and high interest rates, and thus paper profits.
• They get weaker borrowers into loans with punitively high interest rates and payments so high that many borrowers will have to default.
• They enable or even encourage fraudulent loan applications.

Concerning the link between fraud and early-payment defaults, Frank McKenna, chief fraud strategist at PointPredictive, told Bloomberg: “We found that depending on the company, between 30% to 70% of auto loans that default in the first six months have some misrepresentation in the original loan file or application.”

OK. But Santander is not trying very hard to prevent fraud. In September, Moody’s pointed out that Santander had verified income on less than 3% of the subprime loans it packaged into over $1 billion of ABS that it was marketing to investors at the time. Income verification is not the only measure, but it’s an important measure of good underwriting practices. In these structured securities, where the highest-rated tranches carried a credit rating of Aaa, the lowest-rated tranches take the first losses, and the top-rated tranches could come out unscathed.

Moody’s said that it expected losses of 24% on this deal, far higher than 17% in losses that Moody’s expected on all of Santander’s ABS.

By comparison, Moody’s cited GM Financial, which also packages subprime auto loans into ABS: In a subprime-loan deal issued in June, it had verified income on 68% of the loans; and Moody’s expected losses of about 10%.

Even though Santander has sold these subprime-auto-loan-backed securities to investors, it is not entirely off the hook, especially when borrowers fail to make the first few payments – the infamous EPDs. It is then obligated to buy back those loans and eat the potential losses itself. According to a Bloomberg analysis, Santander was obligated to buy back 3% of the loans, which according to Moody’s, is a higher rate than Santander’s faced in its earlier securitizations.

But in a deal that it sold to investors last year, Santander has been obligated so far to buy back 6.7% of the loans mostly due to due EPDs, according to a Bloomberg analysis.

 

In terms of the overall auto-lending industry and the banking system, how much of a problem are we talking about?

Total auto loans and leases outstanding have soared to $1.3 trillion at the end of the second quarter. Typically, between 20% and 25% of the new loans and leases being originated each quarter are subprime rated. In the first half of this year, about 21% were subprime.

At the end of the second quarter, according to Federal Reserve data, 4.6% of those $1.3 trillion in auto loans and leases – subprime and prime combined – were 90+ days delinquent. This is where delinquencies were in Q3 2009 but below the Financial Crisis peak of 5.3%. In dollar terms, the 90+ delinquencies – most of them by subprime rated customers – amounted to $60 billion:

While delinquencies have skyrocketed, losses are just a small fraction of what subprime mortgages had generated during the Financial Crisis. Subprime auto loans, being about one-tenth the magnitude of subprime mortgages, are not going to take down the big banks. But smaller specialized non-bank lenders could collapse, and some of them have already collapsed.

[sancho panza]

[sancho panza]

It's all sooo 2008

https://www.bloomberg.com//news/articles/2019-10-27/dubai-faces-a-disaster-from-overbuilding-top-developer-says?srnd=markets-vp

Dubai needs to halt all new home construction for one or two years to avert an economic disaster brought on by continued oversupply, according to one of its biggest builders.

Bank Risks

Sajwani warned that ignoring the oversupply could spell trouble for the city’s banks. The declining value of homes would inevitably lead to growing bad loans and higher provisions against default, hitting profitability. Dubai has recently created a committee to limit supply and ensure that private developers operate in fair environment.

 

 

“The domino effect is ridiculous because Dubai’s economy relies on property heavily,” he said.

 

https://www.bloomberg.com//news/articles/2019-10-27/china-s-industrial-profit-widens-drop-on-economy-deflation?srnd=markets-vp

Profits at Chinese industrial enterprises continued to contract as the economy slows and factory deflation deepens.

 

 

Industrial profits dropped 5.3% in September, according to the National Bureau of Statistics on Sunday.

 

 

While industrial production picked up in September, growing deflationary pressure continued to weigh on corporate profits and their debt servicing ability. Companies’ earning power will likely remain depressed in the coming month amid weak demand.

 

 

“The larger slide in September was due to a faster decline in industrial product prices and a slower growth in sales,” the bureau said in a statement released with the data.

[Noallegiance]

6 hours ago, sancho panza said:

It's all sooo 2008

https://www.bloomberg.com//news/articles/2019-10-27/dubai-faces-a-disaster-from-overbuilding-top-developer-says?srnd=markets-vp

Dubai needs to halt all new home construction for one or two years to avert an economic disaster brought on by continued oversupply, according to one of its biggest builders.

Bank Risks

Sajwani warned that ignoring the oversupply could spell trouble for the city’s banks. The declining value of homes would inevitably lead to growing bad loans and higher provisions against default, hitting profitability. Dubai has recently created a committee to limit supply and ensure that private developers operate in fair environment.

 

 

“The domino effect is ridiculous because Dubai’s economy relies on property heavily,” he said.

 

https://www.bloomberg.com//news/articles/2019-10-27/china-s-industrial-profit-widens-drop-on-economy-deflation?srnd=markets-vp

Profits at Chinese industrial enterprises continued to contract as the economy slows and factory deflation deepens.

 

 

Industrial profits dropped 5.3% in September, according to the National Bureau of Statistics on Sunday.

 

 

While industrial production picked up in September, growing deflationary pressure continued to weigh on corporate profits and their debt servicing ability. Companies’ earning power will likely remain depressed in the coming month amid weak demand.

 

 

“The larger slide in September was due to a faster decline in industrial product prices and a slower growth in sales,” the bureau said in a statement released with the data.

Yeah but apart from that, everything's fine.

[MrXxxx]

21 hours ago, DurhamBorn said:

However there are so many chances to increase capital for my family coming up that i feel its my duty really to carry on for now so i can re-invest all income.For instance i used all my wages for PM stocks and they doubled when i sold.Im at the stage where my wage + compounding the income from investments is reaching silly levels.I also want to spend as much time as possible with my dad etc

I think its you `duty` (your words, not mine) to pass on your financial skills, some of the `soft` skills my dad passed onto me have been far more useful than anything I learnt at university...I also agreed with your latter statement, make the most of loved ones whilst they are still around, as there will always be the opportunity to make more money.

Interesting about your transfer values, without accounting for inflation you would have to live past 100, simplistic I know; I am sure there is someone here more clever than me that who could work out the compounded values to give a better answer/observation...anyone?

[MrXxxx]

13 hours ago, DurhamBorn said:

Exactly,as we know the pension isnt an asset,its a promise,the asset is actually the CETV and to turn it into an asset you need to transfer it out where its simple a promise to  where its an asset.Most people dont understand that.Die and the promise that could be an asset is lost to your estate.

You see this is the quandary/choice though, do you

1. keep the DB as a safety net (guaranteed minimum income) whilst allowing you to take greater equity risks in shares etc OR

2. take the transfer, have no safety net (apart from state pension) but hopefully manage risk through a diversified portfolio of investments.

I suppose it depends on a) the amount you have to play with in the first place, and b) personal confidence in your financial ability to do 2 above well!

I can see pros and cons with both approaches, and you could even do a hybrid I.e do 2 until things slide/you get too old to play the market full-time, and then spend part of your funds on an annuity, which is not so dissimilar to a DB pension...not sure if it is still the case, but this hybrid was compulsory at 75 if you were using drawdown of a pension I.e you had to buy an annuity with remaining pension OR you drawdown GAD rates were severely reduced from 120% to between 60-90%, anyone know if this is still the case since the 2015 pension reforms? (sorry bit off topic).

[DurhamBorn]

25 minutes ago, MrXxxx said:

I think its you `duty` (your words, not mine) to pass on your financial skills, some of the `soft` skills my dad passed onto me have been far more useful than anything I learnt at university...I also agreed with your latter statement, make the most of loved ones whilst they are still around, as there will always be the opportunity to make more money.

Interesting about your transfer values, without accounting for inflation you would have to live past 100, simplistic I know; I am sure there is someone here more clever than me that who could work out the compounded values to give a better answer/observation...anyone?

Year	Inflation at 4%	Total inflation	Pension amount
1	£129.93	£129.93	£3,329.93
2	£135.21	£265.14	£3,465.14
3	£140.70	£405.84	£3,605.84
4	£146.41	£552.25	£3,752.25
5	£152.36	£704.61	£3,904.61
6	£158.54	£863.15	£4,063.15
7	£164.98	£1,028.13	£4,228.13
8	£171.68	£1,199.81	£4,399.81
9	£178.65	£1,378.46	£4,578.46
10	£185.90	£1,564.36	£4,764.36
11	£193.45	£1,757.82	£4,957.82
12	£201.31	£1,959.12	£5,159.12
13	£209.48	£2,168.60	£5,368.60
14	£217.99	£2,386.59	£5,586.59
15	£226.84	£2,613.43	£5,813.43
16	£236.05	£2,849.48	£6,049.48
17	£245.63	£3,095.11	£6,295.11
18	£255.61	£3,350.72	£6,550.72
19	£265.99	£3,616.70	£6,816.70
20	£276.79	£3,893.49	£7,093.49
21	£288.02	£4,181.51	£7,381.51
22	£299.72	£4,481.23	£7,681.23
23	£311.89	£4,793.12	£7,993.12
24	£324.55	£5,117.67	£8,317.67
25	£337.73	£5,455.40	£8,655.40
26	£351.44	£5,806.85	£9,006.85
27	£365.71	£6,172.56	£9,372.56
28	£380.56	£6,553.13	£9,753.13
29	£396.02	£6,949.14	£10,149.14
30	£412.10	£7,361.24	£10,561.24

 

You would get the capital back after 25 years if inflation ran at 4%.So if you took at 55 if you lived to 80 you would break even with a zero return on your funds.Of course if you can get a 3% return on your funds it makes it much better.Of course the next 5 years see another £50k above the transfer amount,.You are taking a gamble on not living much past 80,or that you can make a return within 2% of inflation.

[DoINeedOne]

22 hours ago, DurhamBorn said:

I also want to spend as much time as possible with my dad etc and thats more important to me than compounding to infinity.

 

26 minutes ago, MrXxxx said:

I think its you `duty` (your words, not mine) to pass on your financial skills, some of the `soft` skills my dad passed onto me have been far more useful than anything I learnt at university...I also agreed with your latter statement, make the most of loved ones whilst they are still around, as there will always be the opportunity to make more money.

 

@DurhamBorn Those simple things are the best 

That's the problem with life today everyone is so busy chasing a pound note mostly to pay bills that life just goes by, I lost my dad at 21 whilst we didn't have the best relationship he taught me more than school ever did and even at that age 21 onwards now at 38 i feel sometimes I struggle not having a older man/mentor etc... to get advice, show progress too
 

As you say @MrXxxx there's always opportunities just a shame that life seems to get more expensive meaning working alot more for most I have said in other posts about friends, family members who are struggling to keep there heads above water with debts and working 7 days a week which means having a few beers with friends at the pub is rare, spending time with kids is when tired and just got in at 6-7pm even that you see something is just not right but at the same time they are a fucking nightmare with money  

 

[Agent ZigZag]

2 hours ago, Cattle Prod said:

Sorry Sancho, no. I know someone at Parsely, and she is happy, company growing fast but I haven't done any DD. And I'd advise looking at SEC reserve filings rather than investor presentations. They can't bullshit the SEC.

I think BP is a great buy, I want to increase my holding. Dudley shifted them toward gas which was sensible, I'm keen to see what Looney does. He's the youngest of the big oil CEOs around and has been kicking BP to interrogate their vast databases for example. There is gold in there. I suspect he will make a significant investment in renewables, but is cute enough to not ignore his bread and butter which will throw off huge cash in the next cycle.

Very informative post thankyou

I have marked BP as a future buy that will form one of my largest holdings in my portfolio. What are your thoughts on its share price now.It appears to be a slight downtrend at the moment. Do you consider it still a buy or a wit and see

[DurhamBorn]

6 hours ago, Cattle Prod said:

Sorry Sancho, no. I know someone at Parsely, and she is happy, company growing fast but I haven't done any DD. And I'd advise looking at SEC reserve filings rather than investor presentations. They can't bullshit the SEC.

I think BP is a great buy, I want to increase my holding. Dudley shifted them toward gas which was sensible, I'm keen to see what Looney does. He's the youngest of the big oil CEOs around and has been kicking BP to interrogate their vast databases for example. There is gold in there. I suspect he will make a significant investment in renewables, but is cute enough to not ignore his bread and butter which will throw off huge cash in the next cycle.

I like the investments BP are making in the chemicals business as well.They are investing some of their free cash in really good assets for the longer term.Gas will also play a long term role in energy whatever happens with green.

[MrXxxx]

10 hours ago, DurhamBorn said:

Year	Inflation at 4%	Total inflation	Pension amount
1	£129.93	£129.93	£3,329.93
2	£135.21	£265.14	£3,465.14
3	£140.70	£405.84	£3,605.84
4	£146.41	£552.25	£3,752.25
5	£152.36	£704.61	£3,904.61
6	£158.54	£863.15	£4,063.15
7	£164.98	£1,028.13	£4,228.13
8	£171.68	£1,199.81	£4,399.81
9	£178.65	£1,378.46	£4,578.46
10	£185.90	£1,564.36	£4,764.36
11	£193.45	£1,757.82	£4,957.82
12	£201.31	£1,959.12	£5,159.12
13	£209.48	£2,168.60	£5,368.60
14	£217.99	£2,386.59	£5,586.59
15	£226.84	£2,613.43	£5,813.43
16	£236.05	£2,849.48	£6,049.48
17	£245.63	£3,095.11	£6,295.11
18	£255.61	£3,350.72	£6,550.72
19	£265.99	£3,616.70	£6,816.70
20	£276.79	£3,893.49	£7,093.49
21	£288.02	£4,181.51	£7,381.51
22	£299.72	£4,481.23	£7,681.23
23	£311.89	£4,793.12	£7,993.12
24	£324.55	£5,117.67	£8,317.67
25	£337.73	£5,455.40	£8,655.40
26	£351.44	£5,806.85	£9,006.85
27	£365.71	£6,172.56	£9,372.56
28	£380.56	£6,553.13	£9,753.13
29	£396.02	£6,949.14	£10,149.14
30	£412.10	£7,361.24	£10,561.24

 

You would get the capital back after 25 years if inflation ran at 4%.So if you took at 55 if you lived to 80 you would break even with a zero return on your funds.Of course if you can get a 3% return on your funds it makes it much better.Of course the next 5 years see another £50k above the transfer amount,.You are taking a gamble on not living much past 80,or that you can make a return within 2% of inflation.

But as you quite rightly pointed out, the annuity promise cannot be passed onto your offspring, and if you don't reach the golden age they have made a loss....at least with the transfer you have the money in advance of the 25 years (& of course the opportunity to make it grow).

[JMD]

18 hours ago, sancho panza said:

There's a theme here @kibuc and @JMD

Over the last few months I've run the numbers on a load of oil,gas and PM miner stocks.One thing that has surprised me is the low levels of debts in those sectors compared to the wider market.Just saying

SP, perhaps another theme is that these sectors are now very 'unpopular' industries - heck, the energy companies cant even give their money away, well not to the arts council/museums anyway.

Whether these companies and their progeny - carbon - are actually the Great Satan's that their made out to be, I don't know, but the social/political agenda is now set and will be driven by the Greta Thunberg types for the next 25 years (btw, I heard that she is a not the new messiah, she is a very naught 'girl' (actually, she turns 17 next January, but her dress sense (styling?) might make you think she was trying to deceive/under report!).

However, returning the world back to medieval times, as extinction rebellion would have us do wont solve environmental problems. Instead, with our massively rising populations, only technology will save the planet....Que Western technology (probably still unpopular/hated, but never mind; e.g. 'artificial trees' to soak up co2 are currently being developed in the US) where manufactured machines - constructed from materials sourced from those old miners, and powered by the same philistine energy companies, will hopefully ride to the rescue!

Hope this doesn't sound too much like a rant! Anyway, just hope it is Western technology, and not Chinese technology - I suppose time will tell if the Chinese can innovate and invent things. The word is that they have spent the last 30 years ripping off and copying the West.   

  

 

 

[DurhamBorn]

10 minutes ago, MrXxxx said:

But as you quite rightly pointed out, the annuity promise cannot be passed onto your offspring, and if you don't reach the golden age they have made a loss....at least with the transfer you have the money in advance of the 25 years (& of course the opportunity to make it grow).

Yes thats the play off.I agree for a lot of people transfer is the best option,but people do need to be careful and not go on a spending spree.It can easy catch people out if they are drawing down 5%,the fund loses 10% and inflation is 6% etc.People need to be flexible and be able to adjust spending a bit.I think taking the natural yield is the best option and keeping a decent sized cash buffer you can use in big downturns when divis are cut.I think the state pension is now pretty decent at around £170 a week,if you have no debt etc then you dont really need much on top to be fine.