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

[Harley]

8 hours ago, sancho panza said:

I'd also add SingTel,Telstra and Japan Tobacco.

Japan Tobacco compares favourably on some key financial metrics (such as debt) to the usual suspects, not that I have a clue what they actually make or anything!

[Harley]

8 hours ago, sancho panza said:

I'd also add SingTel,Telstra and Japan Tobacco.

Singtel is a wicked temptress with her lovely industry and low debt ratio but has a somewhat lacking Current Ratio when you get to know her, and I am a Current Ratio kind of guy.

[Harley]

8 hours ago, sancho panza said:

I'd also add SingTel,Telstra and Japan Tobacco.

Telstra seems to like its debt as much as Billy likes his buns, and Australia has a hefty WHT on divs which eats into their yield, but such tech is undeniably sexy.

[Harley]

Sorry, not very macro, but we all end up having to put rubber to the road and the point stands though at the macro level - look far and wide as many macro commentators are saying (these companies stack up well against their western cohort) -  another dimension to the shifts that are underway?

[Harley]

1 hour ago, Erewhon888 said:

Fred Hickey informs Williams and Fleckenstein the details of his gold mining companies.

Starts at around the 56 minutes mark.

Which of these are also favourites of the Dosbods gold miner investors?

https://ttmygh.podbean.com/

It's a long time since I've been a fan of anything but defo a fan of W&F on the basis they would be good for a pint and a chat, with top delivery and humility, and regarding Fred, as I mentioned up-thread (), I really liked his macro stuff, approach (core versus trade), caveats about locationx3, etc too.  

[Harley]

6 hours ago, AWW said:

One on technicals, the other on interest rate expectations starting to shift.

With the post play MSM BS rationale to follow!

[Harley]

3 hours ago, UnconventionalWisdom said:

Shiller CAPE ratio above great depression peak

Interesting chart, although the rate of change is IMO key so all we need is a DH melt up and it's 2000 all over again (looking similar so far).

[sancho panza]

8 hours ago, Errol said:

I'm 231% up on my Freeport (FCX) position, purchased for $6.65.

Tempted to sell as the price is now ludicrous.

I abiled on my call options  from April a week or two back.They only had 6 weeks to run.Wish I'd bought the stock back,I wouldn't sell yet if I had some(but then I could have excercide the calls).

Nice profit though.Either way.

Noone ever goes bust taking profits.

[sancho panza]

7 hours ago, Castlevania said:

It’s one of the areas which has come under a huge amount of regulatory focus, due to many of the issues seen in 2008. I just think the market and regulators are looking the wrong way. It’s the lending books that I’m concerned about.

I know some of the CB's have been taking MBS's as collateral.It does beg the question doesn't it?Especially now.

[DurhamBorn]

Roll up roll up,another bullseye prediction from the thread hits home.When everyone predicted telcos would be in the clutch of regulators forever we said an inflation cycle would see regulators side stepped and back off.

Well seems OFCOM is happy to allow telcos to set fibre prices with no regulation for the WHOLE cycle,until "at least until 2031"

Nice as well  @sancho panza coma scores put BT top.Doing the road map work and knowing exactly where we were in the 40 year dis-inflation/inflation cycle meant we were filling our boots down to 95p while everyone and his dog was saying sell.

"We recognise there must be a compelling investment case. Shareholders and fund managers have plenty of choices over where to put their money,” she said. “We don’t expect to introduce cost-based prices for fibre services until at least 2031,” she said, adding that the regulator would not intervene in a way that would discourage investment."

“This is probably about as good as it can get . . . for BT.”

Tristia Harrison, chief executive of the company Talktalk, said that BT has been handed “almost total pricing freedom for a decade or more” at a time when affordable broadband access was more important than ever. “This is an unnecessary multibillion-pound giveaway to BT,” she said.

How many LOLs eh.

https://www.ft.com/content/0a9bb3c9-4923-4ef6-8b3b-63c8f2abc06b

 

[MrXxxx]

8 hours ago, planit said:

 

A word of warning for us all. We are not stock-picking geniuses because we made money in the last month *.

We are definitely NOT going to remortgage the house to buy shares because we have doubled our money on £1000 worth of shares bought in October.

 

 

*past performance is no predictor of returns in the future yadda, yadda, yadda

I hope you are not including @YRS in that statement.....he's the 'Buffet of Dosbods'! :-)))

[leonardratso]

1 hour ago, MrXxxx said:

I hope you are not including @YRS in that statement.....he's the 'Buffet of Dosbods'! :-)))

more like a stool than a buffet

[JMD]

On 03/12/2020 at 22:46, Loki said:

I sold AFC yesterday at a profit (at last!) but I consider things like BP, RDSB, Repsol, SSE, NG, K & S and Anglo American for example as core positions in a reflation portfolio so will only add to them on drops.

Loki, did you buy AFC with intention of a short term speculation buy? Or is it because it has run up fast so maybe best to exit with decent profit? I ask because I missed out getting any of the small cap hydrogen plays, and really regretted not buying - but am now thinking that If I had of bought I would probably have wanted to hold for the long term - and so now am thinking that might have been a naive strategy. Not asking for trading advice of course, but there has been some general discussion here recently on the topic of when to sell, and was wondering what the view is for small cap tech stocks, even if they are next cycle type companies?

[Loki]

14 minutes ago, JMD said:

Loki, did you buy AFC with intention of a short term speculation buy? Or is it because it has run up fast so maybe best to exit with decent profit? I ask because I missed out getting any of the small cap hydrogen plays, and really regretted not buying - but am now thinking that If I had of bought I would probably have wanted to hold for the long term - and so now am thinking that might have been a naive strategy. Not asking for trading advice of course, but there has been some general discussion here recently on the topic of when to sell, and was wondering what the view is for small cap tech stocks, even if they are next cycle type companies?

It was a punt i traded in and out of and ended up waiting months and months for it to do anything else so i bailed.  No one ever went bust pulling a profit as they say. It's AIM listed too which isn't ideal. Saying that i put it into HOC which dropped the next day so what do i know

 

[Harley]

13 hours ago, planit said:

 

A word of warning for us all. We are not stock-picking geniuses because we made money in the last month *.

We are definitely NOT going to remortgage the house to buy shares because we have doubled our money on £1000 worth of shares bought in October.

 

 

*past performance is no predictor of returns in the future yadda, yadda, yadda

I'm just pleased to see my losses shrink, a bit, so no remortgage for me!

[MrXxxx]

For those holding regional transports I.e GOG went in/out of London in the rush hour yesterday. Found the train about 50% pre-Covid; same train was about 10-20% about 4 months ago, and the Underground about 60%.

[Harley]

45 minutes ago, MrXxxx said:

For those holding regional transports I.e GOG went in/out of London in the rush hour yesterday. Found the train about 50% pre-Covid; same train was about 10-20% about 4 months ago, and the Underground about 60%.

Light at the end of the tunnel, as it were, so should I buy more, as it were?

[UnconventionalWisdom]

 

 

[MrXxxx]

3 hours ago, Harley said:

Light at the end of the tunnel, as it were, so should I buy more, as it were?

If I compare this with my other transport (NEX), NEX was a more sensible buy given the circumstances...and who knows what is going to happen lockdown wise in the UK in the New Year?...Caveat emptor!

[DurhamBorn]

Remember everyone,its not just hard assets,its companies that gain from the inflation as well.Those who can push the inflation and run ahead of it.That OFCOM and BT is a prime example.

End of a long disinflation,telcos invest billions but get very little return for it.The profits stand still while debt increase.Shares get sold and sold.

Regulators go to said companies saying we need this/that.Company exec says oh we might build a bit but for now we need to protect from being bought out and asset stripped our shares are so low.Shareholders are leaving,we need to hand them the cash not invest.

OFCOM goes back to cushy office,and think crap,government on our case and we have stuffed the telcos too hard.

So just before a reflation begins they say to the telco,oh built it and we wont regulate prices for at least a decade.Government who need the investment nod it through,after all inflation is dead right,who cares.

BT then build a network with debt coupons of 3% max while putting prices up on it by inflation +3%.A service everyone nearly will use.Free cash exlodes.

Other telcos then have a much higher floor for their pricing and all the boats float higher.

100% classic macro contrarian cross market work.Everyone looking the wrong way at a key inflection point.

De-complex hard assets for the base of the portfolio,then sectors who can push the inflation around them,not have it land on their heads.

 

[Harley]

31 minutes ago, DurhamBorn said:

Remember everyone,its not just hard assets,its companies that gain from the inflation as well.Those who can push the inflation and run ahead of it.That OFCOM and BT is a prime example.

End of a long disinflation,telcos invest billions but get very little return for it.The profits stand still while debt increase.Shares get sold and sold.

Regulators go to said companies saying we need this/that.Company exec says oh we might build a bit but for now we need to protect from being bought out and asset stripped our shares are so low.Shareholders are leaving,we need to hand them the cash not invest.

OFCOM goes back to cushy office,and think crap,government on our case and we have stuffed the telcos too hard.

So just before a reflation begins they say to the telco,oh built it and we wont regulate prices for at least a decade.Government who need the investment nod it through,after all inflation is dead right,who cares.

BT then build a network with debt coupons of 3% max while putting prices up on it by inflation +3%.A service everyone nearly will use.Free cash exlodes.

Other telcos then have a much higher floor for their pricing and all the boats float higher.

100% classic macro contrarian cross market work.Everyone looking the wrong way at a key inflection point.

De-complex hard assets for the base of the portfolio,then sectors who can push the inflation around them,not have it land on their heads.

 

Good point - thinking hat on - alas BT and co (e.g. VOD) are doing my head in regarding (previously reliable) buy signals (i.e. pretty much none these last few years!) - up c.30% on the monthly (over the last two months) but not the usual strong buy signal underpinnings things - maybe we are at extremes and normal things don't behave or maybe a fake (undergoing a bottoming process - maybe that Sept20 low needs retesting?).

[MrXxxx]

On 04/12/2020 at 09:30, Harley said:

Apologies if you have, but IMO it's worth listening to as that stuff was not the main content and apart from VNV, what was discussed was about sectors rather than specifics. 

Fair comment, although having just listened to it I feel its more informative about the whole Covid vaccine issue...worth a listen just for that.

[Harley]

42 minutes ago, MrXxxx said:

Fair comment, although having just listened to it I feel its more informative about the whole Covid vaccine issue...worth a listen just for that.

Agreed.  I nearly posted it on a thread upstairs but try to stay out of trouble these days!

[DurhamBorn]

3 hours ago, Harley said:

Good point - thinking hat on - alas BT and co (e.g. VOD) are doing my head in regarding (previously reliable) buy signals (i.e. pretty much none these last few years!) - up c.30% on the monthly (over the last two months) but not the usual strong buy signal underpinnings things - maybe we are at extremes and normal things don't behave or maybe a fake (undergoing a bottoming process - maybe that Sept20 low needs retesting?).

I think if we get a credit event/BK those lows might be re-tested.Market will want to shake out weak hands and remove as many new buyers as it can before the long grind up.This cycle will see most people getting off at points only for inflation areas to keep going up i think.

[JMD]

3 hours ago, DurhamBorn said:

Remember everyone,its not just hard assets,its companies that gain from the inflation as well.Those who can push the inflation and run ahead of it.That OFCOM and BT is a prime example.

End of a long disinflation,telcos invest billions but get very little return for it.The profits stand still while debt increase.Shares get sold and sold.

Regulators go to said companies saying we need this/that.Company exec says oh we might build a bit but for now we need to protect from being bought out and asset stripped our shares are so low.Shareholders are leaving,we need to hand them the cash not invest.

OFCOM goes back to cushy office,and think crap,government on our case and we have stuffed the telcos too hard.

So just before a reflation begins they say to the telco,oh built it and we wont regulate prices for at least a decade.Government who need the investment nod it through,after all inflation is dead right,who cares.

BT then build a network with debt coupons of 3% max while putting prices up on it by inflation +3%.A service everyone nearly will use.Free cash exlodes.

Other telcos then have a much higher floor for their pricing and all the boats float higher.

100% classic macro contrarian cross market work.Everyone looking the wrong way at a key inflection point.

De-complex hard assets for the base of the portfolio,then sectors who can push the inflation around them,not have it land on their heads.

 

DB, so telcos, ciggies, energy, steel and chemical industries. Have you had any thoughts recently on other (non pm/commodity) inflation front-running sectors? For example cigarette investment was a bit of a revelation to me when you first introduced them, and I note that your other favourite of gambling companies is being further deregulated in the US. Not strictly decomplex sectors, but both are 'addictive pastimes'... so perhaps alcohol/video games also fit same criteria, however I think these ones have many competitors so not easy to pick winners.