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

[Hancock]

1 minute ago, Harley said:

So pleased I have no idea what that's all about!  The nearest I get to broadcast TV is owning ITV shares!  And I'll dump them as soon as they peak (I have principles after all!). 

I had to get a medical to show i'm fit to do an offshore survival yesterday (it involved filling out a form thus aking to burning £50). Got talking to him for ages and then got onto the subject of shares. In April he coincidentally poured money into shares suggested on here.

Anyway as i was leaving he mentioned ITV and that he'd made a load of profit, i said i sold mine last month as surely people won't watch the crap they offer. But i'm probably wrong!

[Harley]

4 minutes ago, feed said:

Risk taking.

Nothing quite like locking down an entire generation of youth for a year for a virus that has almost no averse effect on them to stimulate risk taking once let out again.  I imagine the roads will be carnage for a while.  

Another relevant historical insight - the Empire used to send it's troublesome youth off to fight in foreign lands and thereby maintain stability at home.  What's the new escape valve?  Eastern Germany missed that one did they not?

[working woman]

9 hours ago, DurhamBorn said:

People might want to read this and also send in their thoughts to the consultation.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/960034/NMPA_consultation_2021.02.10.pdf

 

It seems to confirm that the increase will be a cliff edge one from 55 to 57 on the 6th April 28.That seems the only sensible way to do it,and its what happend last time it went from 50 to 55.

It will be interesting to see how it works in practice,for instance what if you take an uncrystalised withdrawel,does that count as pension accessed or do you actually have to be in full drawdown? Im 55 in 26 so if not i could be able to access then not access in 28 until 6 months into the year.

I'm  55 this year, my husband two years later.  When he started his pension in his early 20's he thought he could retire at 50 and he thinks that should be legally binding.  He isn't happy and sees it in the same light as the  PPI mis-selling scandal.

For me, what is a game changer, is you no longer have to buy an annuity, which involves building up a huge lump sum. You can now take cash out as and when you need it, eg to pay bills. 

[Yadda yadda yadda]

8 minutes ago, feed said:

Risk taking.

Nothing quite like locking down an entire generation of youth for a year for a virus that has almost no averse effect on them to stimulate risk taking once let out again.  I imagine the roads will be carnage for a while.  

You should have seen the driving round here with some ice on the road on Tuesday. Someone pulled a manoeuvre that looked like a handbrake turn and then started sliding down the slight hill at a ninety degree angle to anything they could have intended. I was only watching because a truck was noisily reversing down and round the corner as it didn't have the traction to go up hill.

Go long scrapyards and mechanics.

[Yadda yadda yadda]

5 minutes ago, working woman said:

I'm  55 this year, my husband two years later.  When he started his pension in his early 20's he thought he could retire at 50 and he thinks that should be legally binding.  He isn't happy and sees it in the same light as the  PPI mis-selling scandal.

For me, what is a game changer, is you no longer have to buy an annuity, which involves building up a huge lump sum. You can now take cash out as and when you need it, eg to pay bills. 

Who told him he could retire at 50? I'm not aware of that ever being an expectation.

[Yadda yadda yadda]

29 minutes ago, Hancock said:

Once the shops, pubs and restaurants open, the only thing that will stop Brits spending is job losses or a tightening of credit.

This is a nation who on a Saturday night watches a dancing sausage to guess who is inside.

I don't watch that but isn't it an import from somewhere else that is popular globally? It isn't just this nation that watches awful TV.

[SpectrumFX]

2 minutes ago, Yadda yadda yadda said:

Who told him he could retire at 50? I'm not aware of that ever being an expectation.

You used to be able to access pension funds from 50.

 

[Hancock]

2 minutes ago, Yadda yadda yadda said:

I don't watch that but isn't it an import from somewhere else that is popular globally? It isn't just this nation that watches awful TV.

I couldn't tell you, i saw it for a few seconds and wondered whether i'd taken an acid tab.

[working woman]

4 hours ago, ThoughtCriminal said:

I'm going to channel the spirit of David Hunter and be a contrarian. Anecdotally I've seen a lot of changes in people's behaviour: taking up long forgotten hobbies, losing weight and getting fit, unbridled joy at how much money they've saved not going to the pub. 

Yes people's habits have changed.

Take my husband as an example, he works part time and has definately enjoyed being told by the Govt. to stay home and do nothing. He has certainly done that.

He has also always been a tight bugger and has enjoyed seeing his wages build up due to reduced spending.

There has been a  consequence to his change in lifestyle.  Of all things, he now has a sore on his coccyx.  I laughed when he showed me it yesterday, but I shouldn't really as it can be serious. Trust him.

It is either from sitting too long in his chair, watching wierd YouTube videos on his laptop of a man travelling through Russia,  the back seams of his jeans are rubbing when he sits down, or due to taking up weight lifting and doing sit-ups. Or maybe all 3.  He now can't sit in his normal chair, it is too painful

All I know is he has become really lazy the last few months.  I asked him weeks ago to put up a large mirror for me and clear the car out.  I don't like to keep asking as he will think I am nagging.

Looks like I will have to go and get the hammer out and put the mirror up myself.

Serves him right - ha! ha!

 

[Yadda yadda yadda]

2 minutes ago, SpectrumFX said:

You used to be able to access pension funds from 50.

 

Ok, that is true but how many saved up enough in 30 years or less to retire at 50 with no state funding expected until 65? Semi-retirement maybe.

I started paying in at 22 but there was no expectation of retiring that early. None of my friends' dads did.

I know this place is exceptional as there are people who have retired very early. I also have a friend who 'sort of retired' at 40ish when made redundant. He had had a stress related illness and never wanted a proper job again. He has small sidelines that provide some income. It wasn't an intention from early 20s to retire early.

Only a very, very small percentage have ever retired at 50. Even fewer would have expected to do so.

[reformed nice guy]

1 hour ago, Yadda yadda yadda said:

There have also been people who have taken less healthy life choices because of lockdown. I've seen it reported that smoking is up. Some people have become even more sedentary. Others are drinking more out of boredom.

The lockdown will affect behaviour, in at least a proportion of the population. There will be a spending boom as the money accumulating in bank accounts won't stay there. I expect holidays will be very expensive, although that might not really take effect until next year.

Lockdown led to demand and price surges in home exercise equipment. Dogs. A massive expansion of home food delivery. What will benefit from unlocking?

I know a bunch of people that sell dogs and cats, and there are more people buying them with the intention to breed them. Even unworked horses are getting bought up. Male spaniels sold for £2000, females for £4000. If anyone wants a dog I would wait a few years. If they bother them during their first show then the first pups will be born this summer.

Theres a town near me thats mostly wealthy retired people. Apparently price of a coffee and piece of cake in the tiny independent cafe went from about £3 to £4 last summer,so I guess it will be £5+ this summer.

I think a lot of that pent up demand will be in retirees rather than working folk - working people bought office furniture, stuff to distract the kids, subscriptions to streaming sites and got a scare which made them save. Retired folk with a paid off mortgage will be the big spenders I think.

[arrow]

1 hour ago, Cattle Prod said:

I don't think we've discussed interest rates not going up, and the financial repression needed to do that. Theres a 14 page transcript on the macrovoices website, let me me know what you think.

That was intriguing. Common theory is as inflation rises, interest rates rise, quickly to control inflation or slowly lagging to let it run a while.

Napier talking about the French government controlling credit and so controlling inflation is like a command economy. He talked about how in effect this creates winners and losers. The closer you are to government and its credit creation the more you benefit. The government can choose who wins and who loses, as the French government has done in the past. I believe this has been talked about in the financial community, as there are a few stories appearing about how a command economy is a terrible idea. With covid economic distruction, it is idea the establishment are probably considering.

Interest rate rises may take a back seat to credit control. The UK has had a command economy in the past nduring Ww2. It would be a massive wrench to go to this, but it is possible.

And it could be spun as beneficial for the country. There would be no " harmful" effects of rising interest rates on people's finances

I'm not sure if it will have much effect on a commodity supercycle. The increasing demand for resources won't stop. The rest of the world will continue increasing their demand. There maybe an effect on domestic equities, as the state chooses who wins and who loses. Which is an argument for international and domestic equities.

[AWW]

Ironically, the biggest risk I see to me retiring at 50 is if I buy a house (SE) and then end up with a few hundred grand of negative equity. I think this is a larger risk now than at anytime in my life.

I do wonder how many people completely disregard this risk and see property ownership solely as a path to riches.

[working woman]

16 minutes ago, SpectrumFX said:

You used to be able to access pension funds from 50.

 

Yes, that is correct. He started his private pensions in his early 20's in the early 1990's with the aim of building up a large lump sum and at the time you could buy an annuity at 50.  Then a few years ago, the Govt. changed the age to 55. I believe they are looking at extending it again to 57 from 2028?  I'm 55 in October this year so won't be affected.

I would say to anyone, pay into your pensions by all means, but also build up some savings / Investments in something like an ISA that you can access earlier if you like. The Govt. is in charge of your Pension Pot and can change the goal posts. Don't let them dictate to you when you can retire.

[Barnsey]

10 minutes ago, reformed nice guy said:

I know a bunch of people that sell dogs and cats, and there are more people buying them with the intention to breed them. Even unworked horses are getting bought up. Male spaniels sold for £2000, females for £4000. If anyone wants a dog I would wait a few years. If they bother them during their first show then the first pups will be born this summer.

Theres a town near me thats mostly wealthy retired people. Apparently price of a coffee and piece of cake in the tiny independent cafe went from about £3 to £4 last summer,so I guess it will be £5+ this summer.

I think a lot of that pent up demand will be in retirees rather than working folk - working people bought office furniture, stuff to distract the kids, subscriptions to streaming sites and got a scare which made them save. Retired folk with a paid off mortgage will be the big spenders I think.

Or adopt when they all get abandoned later this year as everything opens up...

In other news, the new paradigm grows and solidifies..

 

[Noallegiance]

I'm reading a book about macro investing right now.

I'm going to be posting snippets that nudge my interest. Here's a few out of the first chapter:

 

[Castlevania]

23 minutes ago, AWW said:

Ironically, the biggest risk I see to me retiring at 50 is if I buy a house (SE) and then end up with a few hundred grand of negative equity. I think this is a larger risk now than at anytime in my life.

I do wonder how many people completely disregard this risk and see property ownership solely as a path to riches.

It’s only an issue if you planned on moving or if you lose your job.

What constantly surprises me, is the lack of worry about losing one’s job when highly leveraged. I guess a lot of people are too young to remember the early 90’s recession. The exception amongst my peers are those who’s parents were repossessed during that period - they tend to be very debt averse.

 

[Yadda yadda yadda]

What was the symbolic top of the 2000 tech bubble? I remember lastminute.com making the news with an IPO and vaguely recollect it all collapsing soon after. I think this is when the general public bought in. Is my memory correct?

Trying to identify a similar moment would involve watching the BBC. I really don't want to do that! So alternative ways of forecasting the BK welcome. Although it will hopefully be confined to tech.

[Hancock]

1 hour ago, Harley said:

So pleased I have no idea what that's all about!  The nearest I get to broadcast TV is owning ITV shares!  And I'll dump them as soon as they peak (I have principles after all!).  I'm with DB - decomplex and enjoy those downstream stocks benefit during the party and (importantly) later (without having to guess the sectors to benefit from the state largess).  But also trade any melt up of the upstream (e.g. consumer facing) stocks, until the party's over.  I'm thinking one part of such a pullback may be that while the upstream stocks fall, and the tide runs out, there may remain a new plateau of higher commodity prices.  Surely any party won't last long enough for any additional supply via new producer investments, should they be that brave, to take effect.  And with currently busted supply chains....Trade v long term value.

I'm following this path, as my mind can't do complex anything these days so need to keep things simple.

Sold RM for kids Junior ISA this week; and ITV from SIPP, along with a few goldies before the crash (at a profit) which in hindsight was a schoolboy error. So from here on in i'm just buy and leave kind of kid.

I can see consumer shares going if/when lockdown ends, but fucked if i know which ones so i'll keep away.

Anyway below is my holding plus got£3300 in cash with an additional £20,000 once invoices get paid/ and all work is complete.

I was 100% certain of there being an epic crash on the horizon this time last year, but anything can happen from here in IMHO. I don't really think anyone on here is sure either way. So don't know whether to just dump the £22330 in soon or wait for a year or so. 

Pissed i only put a grand in HZM, will let it run until the end though, could be my 50 bagger.

 

 

 

[SpectrumFX]

1 hour ago, Yadda yadda yadda said:

Ok, that is true but how many saved up enough in 30 years or less to retire at 50 with no state funding expected until 65? Semi-retirement maybe.

I started paying in at 22 but there was no expectation of retiring that early. None of my friends' dads did.

I know this place is exceptional as there are people who have retired very early. I also have a friend who 'sort of retired' at 40ish when made redundant. He had had a stress related illness and never wanted a proper job again. He has small sidelines that provide some income. It wasn't an intention from early 20s to retire early.

Only a very, very small percentage have ever retired at 50. Even fewer would have expected to do so.

It wasn't the norm, but didn't used to be out of the ordinary in the public sector. When I started work in the civil service late 90's it was a standard part of any redundancy exercise to top up pensions for people (those who were either very well liked, or utterly hated by management) so that they paid out immediately and in full at 50 or thereabouts.

I understand that it was also standard practice back in the days of big local government pension surpluses to give a load of people early retirement in order to shift the cost of the restructuring onto the pension funds. In fact local government pensions still have rules that force the employer to pay out the pension if they make somebody redundant within some arbitrary timescale before pension age.

[Hardhat]

31 minutes ago, Hancock said:

I'm following this path, as my mind can't do complex anything these days so need to keep things simple.

Sold RM for kids Junior ISA this week; and ITV from SIPP, along with a few goldies before the crash (at a profit) which in hindsight was a schoolboy error. So from here on in i'm just buy and leave kind of kid.

I can see consumer shares going if/when lockdown ends, but fucked if i know which ones so i'll keep away.

Anyway below is my holding plus got£3300 in cash with an additional £20,000 once invoices get paid/ and all work is complete.

I was 100% certain of there being an epic crash on the horizon this time last year, but anything can happen from here in IMHO. I don't really think anyone on here is sure either way. So don't know whether to just dump the £22330 in soon or wait for a year or so. 

Pissed i only put a grand in HZM, will let it run until the end though, could be my 50 bagger.

 

 

 

Looks like you got great entry points on a lot of those shares! Especially Siemens. It was a toss up for me between buying that and oilies in March. I didn't know we'd get another opportunity at that point! Siemens is still very much a target for any pullbacks.

I'm up a similar amount on my holding, around 25-28% generally, but that amount has been very stable across the last few months, which I actually prefer to wild up and downs. I guess most people following the investment advice on this thread would be in that range at the moment unless they got some amazing entry points?

[Noallegiance]

2 hours ago, Cattle Prod said:

I don't think we've discussed interest rates not going up, and the financial repression needed to do that. Theres a 14 page transcript on the macrovoices website, let me me know what you think.

I found that a really difficult read. Conversational style doesn't communicate to me well in written form.

It didn't seem to say anything different to what this thread has already covered, though.

[Noallegiance]

52 minutes ago, Yadda yadda yadda said:

What was the symbolic top of the 2000 tech bubble? I remember lastminute.com making the news with an IPO and vaguely recollect it all collapsing soon after. I think this is when the general public bought in. Is my memory correct?

Trying to identify a similar moment would involve watching the BBC. I really don't want to do that! So alternative ways of forecasting the BK welcome. Although it will hopefully be confined to tech.

I seem to remember Pets.com being a poster-child.

[Loki]

1 hour ago, Noallegiance said:

I'm reading a book about macro investing right now.

David Dreman?

[dnb24]

6 hours ago, sancho panza said:

Genuinely interested in whetehr you think housing costs play a part or not in the demogrpahic changes

 

I am sure they do @sancho panza.  Even immigrant population demographics have changed- I’ve been in a few awkward conversations between elders and young ones regarding why they don’t have kids, or why they are still living at home.
Probably the best contrarian indicator  happened to me last December- we took my mother in law and father in law out for a Christmas meal for Christmas in Islington. These guys are boomers. They bought a house at 25, mortgage paid at 40, £1mill pension. The MIL looked around the restaurant and in an envious manner said how life is so good for the gen z youngsters who can come here and enjoy a great meal, and how back in their day they couldn’t afford this. What I wanted to say was that these guys can’t afford a place around here, and therefore they go out like this to get some feeling that they have control over their life- even though the meal won’t last more than 2 hours and they’ve probably paid with a credit card! In that one moment I could see the 2 ends of the economic spectrum and the 2 ends of the 38 years of the cycle.

 

*I do not mean to be condescending using the word boomer.