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

[dnb24]

https://moneyweek.com/economy/global-economy/602552/will-2021-hold-one-last-deflation-scare

some cross over into this thread

[Harley]

1 hour ago, Errol said:

Tesla reported $2.9B in operating cash flow through the first 3 quarters of 2020, market cap is $668B; Barrick Gold reported $3.7B in operating cash flow during this same period, market cap is $40B. Producing Gold Miners are ridiculously undervalued vs. all other companies.

Plus they often have excellent other metrics like current ratios, PTBV, DTE, etc.  Just the lack of div in many but not all cases.  I'm doing a review now as I think I'll do better getting into these than GDX, etc.

18 minutes ago, dnb24 said:

https://moneyweek.com/economy/global-economy/602552/will-2021-hold-one-last-deflation-scare

some cross over into this thread

They must hang out here, not that they would admit it given we're all apparently cursed, bitterly playing our xylophones!

 

[JMD]

10 hours ago, Harley said:

This is a tough one for me as I'm torn between my desire to reciprocate, share and discuss and any liability, despite all the caveats.  Plus a lot of my work, good or bad, has required a considerable personal investment. 

Everything I ever say is for discussion purposes only - I desire to hear the maximum numbers of opinions, extensions, alternatives, re-phrasing, etc.  That is, they are more like strawmen.  I cannot help anyone do their own legwork (aka DYOR) but would like to have a discussion to get a better all round result for a common purpose (whoops!).  That is the power of this thread - not as a stock pickers forum but as a place to thrash out ideas and concepts to help such individual picking.  I appreciate you were not asking for individual stocks but my (excessive?) concerns even go to the next level of abstraction!

So walking the fine line I have set myself:

Of my 58 identified "value" stocks (from a week or so back)...

...These are the industries ranked in descending order of the number of international stocks passing my harsh value criteria:

...which maybe shows (inter alia) my focus on low price to tangible book values and other such financial and macro fundamentals.

...and their exchange composition, again in descending order:

...which maybe shows:

. how a UK only universe may be really cramping your success (especially if you want to invest in stocks' primary markets and not via CDIs, etc), except maybe via collective investments such as ETFs, trusts and funds;

. and/or that value is currently dead and we're looking at the bottom of the barrel (apologies to my Russian friends, not necessarily my belief).  MOEX and HKEX are both way ahead but both are probably held down by geo-political concerns;

. and/or that in percentage (of the total available stocks on each exchange) terms, places like the NYSE perform poorly despite their rankings above. 

Based on a lot of work on my part but IMO worth every day of it.

Interesting Harley. And to underline what you probably already know... Russian divi payers should remain reliable payers as I understand this is the preferred tax raising route by the Russian government (ie gov likes to get divis from their companies rather than overly tax company profits/capitol). No dought there is hard nosed reasoning by Russia for doing this, but I mention it because I think this means far less risk of Russian company divis being cut as opposed to their Western counterparts.

[JMD]

5 hours ago, Harley said:

Plus they often have excellent other metrics like current ratios, PTBV, DTE, etc.  Just the lack of div in many but not all cases.  I'm doing a review now as I think I'll do better getting into these than GDX, etc.

They must hang out here, not that they would admit it given we're all apparently cursed, bitterly playing our xylophones!

 

Yes I also saw that recent post and found it mighty obscure. Perhaps the 'xylophone' reference was in regard to, in my opinion, the late great Patrick Moore - himself a mean xylophone player... you see tragically his fiance was killed during the blitz and Moore to his dying day never forgave the Germans. Does that make Moore a xenophobe or merely human? (Apologies for rambling/being guilty of off-piste post?, but just remembering Moore, that great English eccentric, always makes me smile, hope it did the same for others)

[Sugarlips]

11 hours ago, MrXxxx said:

I think this is what people (myself included) find the most difficult, wanting to buy something when there really isn't anything worth buying at the moment r.e value stock wise.

Yes this definitely, recent recommendations are from 1 month to 6 months late, like Whitehaven Coal has already moved 60% from its low a couple of months back, will go for it when there is a decent pullback though.

[Harley]

Potentially more regulation incomming - August consultation to end soon? 

"The FCA is proposing rules which would require investors to give notice, potentially up 180 days, before their investment is redeemed".

https://www.ftadviser.com/investments/2020/08/03/fca-s-180-day-rule-spells-the-end-for-property-funds/?page=1

And banning them from ISAs (October consultation):

https://www.ftadviser.com/investments/2020/10/29/govt-mulls-banning-property-funds-from-isas/

[Harley]

3 hours ago, Sugarlips said:

Yes this definitely, recent recommendations are from 1 month to 6 months late, like Whitehaven Coal has already moved 60% from its low a couple of months back, will go for it when there is a decent pullback though.

Yes, IMO important to have list like @DurhamBorn did in March! 

[Harley]

7 hours ago, JMD said:

I think this means far less risk of Russian company divis being cut as opposed to their Western counterparts.

Indeed (and elsewhere), and hopefully less general wokedom, etc.  Presumably the Uk will have to regulate us out at some point, to save our souls of course.

[MrXxxx]

36 minutes ago, Harley said:

Indeed (and elsewhere), and hopefully less general wokedom, etc.  Presumably the Uk will have to regulate us out at some point, to save our souls of course.

Yes I find it reassuring that the government knows my mind and personal morality better than I do!

[MrXxxx]

On 24/12/2020 at 20:17, MrXxxx said:

For those that are clueless like me about how worldwide  currency fluctuations/central banks work and how they affect the macro picture etc, I am currently reading `The Death of Money` by James Rickards and it seems to be helping me understand it, and gives a historical context. Will post full details and a review in `The Library` thread once I have finished it, but mentioned it just in case Father Christmas brings you book tokens! :-) :-) :-)

Details now in `The Library` thread, well worth a read if (like me) half of what @DB et al discusses seems like a foreign language...and only £10.

[DurhamBorn]

7 hours ago, Sugarlips said:

Yes this definitely, recent recommendations are from 1 month to 6 months late, like Whitehaven Coal has already moved 60% from its low a couple of months back, will go for it when there is a decent pullback though.

For myself im very light in what im buying now.Im actually top slicing a few things,mostly stocks that have trebled and im buying the odd thing that isnt even part of my reflation roadmap,like some GSK.The reason iv been doing this is because my portfolio has had a fantastic year with only a couple of laggards,and odd nasty reds and i want to broaden it out a bit.Plus GSK made me and i wanted to make sure i took some into dotage with me.

We are entering a very difficult period,most companies go bust in the recovery,not the initial collapse,as credit lines run out and capital gets harder to get hold of.

[Yadda yadda yadda]

4 hours ago, Harley said:

Indeed (and elsewhere), and hopefully less general wokedom, etc.  Presumably the Uk will have to regulate us out at some point, to save our souls of course.

Hopefully this isn't wishful thinking but I don't think wokedom can survive an economic downturn. It is very much the sort of thing people worry about when there isn't anything else to worry about or campaign for. Probably needs to be a big enough downturn to impact the public sector and silicon valley.

[Noallegiance]

2 hours ago, Yadda yadda yadda said:

Hopefully this isn't wishful thinking but I don't think wokedom can survive an economic downturn. It is very much the sort of thing people worry about when there isn't anything else to worry about or campaign for. Probably needs to be a big enough downturn to impact the public sector and silicon valley.

Interest comment that reminds me of a conversation I had a few years back with a colleague.

I mentioned to him that I felt like things had been the same for too long and that aspects of society had become overly indulgent in other non-materialistic ways.

Your quote is exactly what I meant.

Employment dynamics and an escalating food and energy bill will knock wokey subjects well down the pecking order.

[Loki]

11 minutes ago, Noallegiance said:

Interest comment that reminds me of a conversation I had a few years back with a colleague.

I mentioned to him that I felt like things had been the same for too long and that aspects of society had become overly indulgent in other non-materialistic ways.

Your quote is exactly what I meant.

Employment dynamics and an escalating food and energy bill will knock wokey subjects well down the pecking order.

In a sane situation I think you'd be right but I can't help but feel the "Great Reset" will keep these subjects alive and well while we all suffer.

[Talking Monkey]

3 hours ago, DurhamBorn said:

For myself im very light in what im buying now.Im actually top slicing a few things,mostly stocks that have trebled and im buying the odd thing that isnt even part of my reflation roadmap,like some GSK.The reason iv been doing this is because my portfolio has had a fantastic year with only a couple of laggards,and odd nasty reds and i want to broaden it out a bit.Plus GSK made me and i wanted to make sure i took some into dotage with me.

We are entering a very difficult period,most companies go bust in the recovery,not the initial collapse,as credit lines run out and capital gets harder to get hold of.

DB with how things are playing out do you think the possibility of a BK event are increasing, especially with a rising euro, the carnage to commercial real estate, etc. 

[DurhamBorn]

40 minutes ago, Talking Monkey said:

DB with how things are playing out do you think the possibility of a BK event are increasing, especially with a rising euro, the carnage to commercial real estate, etc. 

Risk is the same i think,very large.There is plenty of liquidity now and the dollar is getting close to my 88 target from 100,85 outlier on the roadmap.Europe is in a huge mess,France could be the surprise trigger.Government here is trying its best to destroy the economy and they are so useless you start to think it must be deliberate.To think a Tory government would destroy millions of small companies/sole traders while filling the bank accounts of state workers and benefit claims is incredible.

Its going to be a distribution cycle as expected,most people will need to sell down assets etc to pay the increased tax/inflation.

 

[DurhamBorn]

3 hours ago, Yadda yadda yadda said:

Hopefully this isn't wishful thinking but I don't think wokedom can survive an economic downturn. It is very much the sort of thing people worry about when there isn't anything else to worry about or campaign for. Probably needs to be a big enough downturn to impact the public sector and silicon valley.

Agree,wokedom sleeps with dis-inflation ,but a huge phallus called inflation is about to boot them both out of bed.

[Talking Monkey]

32 minutes ago, DurhamBorn said:

Risk is the same i think,very large.There is plenty of liquidity now and the dollar is getting close to my 88 target from 100,85 outlier on the roadmap.Europe is in a huge mess,France could be the surprise trigger.Government here is trying its best to destroy the economy and they are so useless you start to think it must be deliberate.To think a Tory government would destroy millions of small companies/sole traders while filling the bank accounts of state workers and benefit claims is incredible.

Its going to be a distribution cycle as expected,most people will need to sell down assets etc to pay the increased tax/inflation.

 

Listening to that money week interview with that Napier bloke he mentioned France's debt to Gdp ratio hitting 400% whilst Germany is at 200%, that differential must lead to done serious dislocation if they are sharing the same currency.

On what the Torus have done to small businesses I have to say it looks to be deliberate, in the early days of Covid it looked like playing it safe, then a little later it looked like incompetence, over 9 months on it looks to me like the deliberate destruction of small to medium sized entrepreneurs

[leonardratso]

1 hour ago, Talking Monkey said:

Listening to that money week interview with that Napier bloke he mentioned France's debt to Gdp ratio hitting 400% whilst Germany is at 200%, that differential must lead to done serious dislocation if they are sharing the same currency.

On what the Torus have done to small businesses I have to say it looks to be deliberate, in the early days of Covid it looked like playing it safe, then a little later it looked like incompetence, over 9 months on it looks to me like the deliberate destruction of small to medium sized entrepreneurs

but to what end?

[Talking Monkey]

8 minutes ago, leonardratso said:

but to what end?

I'm not sure, I would guess its to destroy the alternatives to big global corporations. 

[Barnsey]

BK all but guaranteed IMO when you see the price action today alone, straight up.

 

[Loki]

Wonder if gold and silver will have budged at all when the markets open 

[Loki]

33 minutes ago, leonardratso said:

but to what end?

Slow down the economy, print loads of money, buy assets and as there is little velocity, no inflation registering (Yet)? 

[Barnsey]

Yeah definitely not a bubble 

[Noallegiance]

34 minutes ago, Barnsey said:

BK all but guaranteed IMO when you see the price action today alone, straight up.

 

Is it mid 1929?