Credit deflation and the reflation cycle to come (part 3)

[MrXxxx]

3 hours ago, sancho panza said:

Enjoying the DM articles.Most widely read news site in the world.

This p[rety much sums up my view of why I need to do less hours.

How the hell can he call himself a conservative and then tax the working instead of restraining spending?The political elite lost me 15+ years ago.He's one of them.

Anecdotally,already hearing that some of my Mum's old pals have been on the phone to her about enrgy price rises.This is going to be a brutal winter.

https://www.dailymail.co.uk/news/article-10139635/Rishi-Sunak-warned-Budget-not-going-feel-great-tax-burden-highest-70-years.html

Rishi squeezes the middle earners: Experts say families earning around £30,000 will bear the brunt of tax rises in Sunak's 'Boris Budget' - as Tories warn about Chancellor 'showing off' and ending up like Gordon Brown

 

They warned millions of people will be left worse off under plans unveiled by the Chancellor yesterday, with no realistic prospect of taxes falling in future, experts warned today.

The Chancellor faced a backlash over his big-spending economic plan as it was revealed all strata of society will end up paying more in the middle of a cost of living crisis.

Experts said the scale of the spending he announced yesterday would see the state expand to its biggest size since the late 1970s, before Margaret Thatcher conducted a decade of reform to bring it under control. 

He also faced criticism from within Tory ranks from MPs who accused him of being too interested in 'Brand Rishi' and warned he could end up like Gordon Brown - a chancellor who took the top job and lost power. 

The Institute for Fiscal Studies said middle-earners would lose an average of £180 per year, while inflation and a freeze in personal tax allowances meant that one in nine workers was now a higher-rate taxpayer. The rate was one in 30 in 1991.

I would have thought it is ideal for anyone that isn't a homeowner and is considering FIRE in the next few years....interest payments will go up, bills [energy, food council tax etc] will go up, and mini BTL landlords will struggle if overstretched = property having to be sold under duress..your FIRE individual will both a) catch themselves a cheaper property, and b) if they have picked the right investments keep up with inflation.

[Harley]

13 hours ago, Festival said:

. I don't know how to model this effect in the calculator given the inflation is still there but annual expenditure is declining at the same time.

That's why I often go into the black arts of DCF to do my own custom modeling.  Some calculators though do support events, but none I've seen support a reducing withdrawal figure. But then I can also imagine you'll spend more on other items Iike healthcare.  Or maybe use the calculator to model alternatives for several variables and take an average?  

PS: I'm trying to do similar with the Harry Browne portfolio, plus using hard assets rather than just gold.

[DurhamBorn]

https://www.telegraph.co.uk/technology/2021/10/28/amazon-engulfed-supply-chain-chaos/

Happening now as we expected.However big makes no difference with cost push inflation.Amazon can cut margins to nothing or lose sales.The 17% they charge merchants isnt sustainable.

Given how much web services makes retail is probably burning cash.

[Harley]

9 minutes ago, DurhamBorn said:

https://www.telegraph.co.uk/technology/2021/10/28/amazon-engulfed-supply-chain-chaos/

Happening now as we expected.However big makes no difference with cost push inflation.Amazon can cut margins to nothing or lose sales.The 17% they charge merchants isnt sustainable.

Given how much web services makes retail is probably burning cash.

I've bought so much stuff.  But haven't finished, even if I've no room left!  I'd buy more stocks too but they're expensive!  

PS: People used to look on the High Street and then buy on Amazon.  Now the smart ones look on Amazon and buy elsewhere!

[Harley]

YouTube tried to take down George Gammon's Rebel Capitalist channel.  Had a load of support from Joe Rogan, etc and got reinstated.

[Barnsey]

It's happening folks!

 

[jamtomorrow]

8 hours ago, DurhamBorn said:

https://www.telegraph.co.uk/technology/2021/10/28/amazon-engulfed-supply-chain-chaos/

Happening now as we expected.However big makes no difference with cost push inflation.Amazon can cut margins to nothing or lose sales.The 17% they charge merchants isnt sustainable.

Given how much web services makes retail is probably burning cash.

ZH posted this last night, trend looks stunningly bad. They made the point that if AWS wobbles (and it could, if competitors finally get their act together and make their offerings properly AWS-fungible), the whole thing will sink like a rock.

 

[MrXxxx]

6 hours ago, Harley said:

YouTube tried to take down George Gammon's Rebel Capitalist channel.  Had a load of support from Joe Rogan, etc and got reinstated.

Why did they try to take it down, do `they` not want people to become financially literate then?

[Festival]

8 hours ago, Harley said:

That's why I often go into the black arts of DCF to do my own custom modeling.  Some calculators though do support events, but none I've seen support a reducing withdrawal figure. But then I can also imagine you'll spend more on other items Iike healthcare.  Or maybe use the calculator to model alternatives for several variables and take an average?  

PS: I'm trying to do similar with the Harry Browne portfolio, plus using hard assets rather than just gold.

Thanks - probably take an average having modelled a few alternatives seems the best approach.

I have a few hard assets alongside gold (eg silver and some whisky!). Never sure how to treat real estate is it best to treat like a proxy for bonds or as a hard asset. At least there is country specific data on property returns going back a long time.

[MrXxxx]

1 hour ago, Barnsey said:

It's happening folks!

 

In a similar vein I posted a video about two months ago on JCBs development of hydrogen JCBs. I think in the future we will have hydrogen haulage/transportation and electric (or dual fuel electroc hydrogen) personal vehicles...once of course when we have the infrastructure built, so I won't be selling my oil producers quite yet!

[Harley]

8 minutes ago, MrXxxx said:

Why did they try to take it down, do `they` not want people to become financially literate then?

They never said.  Just that it did not comply.  No warnings, nothing.  Just took it down.  I'm sure it'll still be down if he did not have the support. 

PS:  I've watched George for a while now.  He really has grown into quite a talent from a zero start.  One of life's doers.  Shows what can be done with some application.

[HousePriceMania]

10 out of 10 to whomever said the Scottish share was too good to miss at 40p a share

 

[Harley]

23 minutes ago, Festival said:

Thanks - probably take an average having modelled a few alternatives seems the best approach.

I have a few hard assets alongside gold (eg silver and some whisky!). Never sure how to treat real estate is it best to treat like a proxy for bonds or as a hard asset. At least there is country specific data on property returns going back a long time.

Yep  I wonder about property too, although I have not rebought as overpriced atm.  I agree about considering bond proxies rather than just bonds.  Have to get back to the fundamentals of the approach to work that out.  After much dilly dallying I'm putting my indexed linked NS&I in there.  I appreciate the loss of normal bonds but that's partly portfolio insurance for me, although I'll hold less than 25% total.  The portfolio is after all about long term preservation first and foremost.

Hard assets is a key area for me and like all the four asset classes, I'm sub-dividing it into areas beyond the suggested make up.  So more than gold in PMs - crypto, other PMs, commodities, etc.

They way I approach all this stuff (Browne portfolio, DCF, etc) is to use it all as a sound starting point and then cautiously move where I think I need to.  At least I better know where I'm starting.  The biggest moment in my investing life was getting grounded - having a playbook from which to play rather than being blown around by single events, media, emotion, available time, commentators, etc.  

[CVG]

2 minutes ago, Harley said:

They way I approach all this stuff (Browne portfolio, DCF, etc) is to use it all as a sound starting point and then cautiously move where I think I need to.  At least I better know where I'm starting.  The biggest moment in my investing life was getting grounded - having a playbook from which to play rather than being blown around by single events, media, emotion, available time, commentators, etc.  

Me too. I have about 2% in bonds - really just to keep track of where they are at the moment. I see big buying opportunities as yield rise more in line with inflation in a few years, so that I can lock in perpetual high returns (here's hoping).

MY home? I don't include that at all. It's my home - not an investment.

I treat my PB's as cash - so currently 1% on those.

Hard assets. Any split on varied precious metals based on relative value to each other, e.g. GSR. I include physical at home, physical in vault, miners and metal ETF's in this class.

[DurhamBorn]

1 hour ago, Barnsey said:

It's happening folks!

 

I worked for Cummins,they build the best engines in the world.We were doing lots of work with Hyundai on hydrogen.100% they will have it sorted,they already have really.

[DurhamBorn]

1 hour ago, jamtomorrow said:

ZH posted this last night, trend looks stunningly bad. They made the point that if AWS wobbles (and it could, if competitors finally get their act together and make their offerings properly AWS-fungible), the whole thing will sink like a rock.

 

I think to be fair they are adding huge capacity everywhere funded from cashflow so likely they will increase free cash in the medium term.However they have a massive cost base,and every part of it facing headlong into inflation.

 

[Harley]

11 minutes ago, CVG said:

Me too. I have about 2% in bonds - really just to keep track of where they are at the moment. I see big buying opportunities as yield rise more in line with inflation in a few years, so that I can lock in perpetual high returns (here's hoping).

MY home? I don't include that at all. It's my home - not an investment.

I treat my PB's as cash - so currently 1% on those.

Hard assets. Any split on varied precious metals based on relative value to each other, e.g. GSR. I include physical at home, physical in vault, miners and metal ETF's in this class.

Sounds good, although I put my growing PM miner holding in equity.  Most of my equity is 3%+ yielders with decent fundamentals bought when technically cheap.  I also sliced a bit off the equity bucket for trading (equities and options) but am too busy to dabble atm.  Defo agree about the home (a chattle, not an investment) but put PBs in bonds to fake the overall bond % (a very little)!  I'm currently about 30% equity, 20% hard, 20% bonds, 30% cash.  Hard will go up when commodities pull back.  Bonds will move to property, etc when they are a better buy, some cash is in st bonds but needs to be worked harder.  Maybe at least other currencies.  

[Harley]

7 minutes ago, DurhamBorn said:

I think to be fair they are adding huge capacity everywhere funded from cashflow so likely they will increase free cash in the medium term.However they have a massive cost base,and every part of it facing headlong into inflation.

 

Is AWS essentially a data centre?  I have a watchlist of data centre stocks, but not them.  Quite hard to invest there atm as several are private, small, not just data centres, or get taken over.

On the subject of watchlists, thanks to @sancho panza for posting his now and then.  They offer a good headstart and/or cross check of my own.

[Ma2]

Mainstream now...

Forget fine art: investors urged to put their money into rewilding

A startup is planning to acquire land to rewild, restore biodiversity, store carbon – and make a healthy return

Forget gold, vintage wines and fine art: investors and landowners are being urged to put their money into Tamworth pigs, Dalmatian pelicans and ponds dug by beavers.

The Real Wild Estates Company says it has tens of millions of pounds already pledged to acquire land to rewild, restore biodiversity, store carbon – and make a healthy return for investors.

The “natural capital” startup, which was launched at the rewilded Somerset farm belonging to the environmentalist and fund manager Ben Goldsmith, aims to create more than 100,000 acres of wild land across Britain by 2030

 

https://www.theguardian.com/environment/2021/oct/29/forget-fine-art-investors-urged-to-put-their-money-into-rewilding

[Ma2]

50 minutes ago, CVG said:

MY home? I don't include that at all. It's my home - not an investment.

 

28 minutes ago, Harley said:

Defo agree about the home (a chattle, not an investment)

I have been struggling with this myself for a number of reasons and maybe a massive outlay like a house should be an opportunity to consider some kind of return where losing the home is not a risk.

 - Choice between

1.  downsizing and going mortgage free or
2. buying a home with same 10 year fix at low rate mortgage. Somewhere that will produce a return somehow

So with 2. for instance we have seen somewhere with an annexe that could be rented for holidays, this alone would cover the mortgage. But at the mercy of the government tax treatments, lock downs etc. And still have the mortgage of course.

We also have seen somewhere with land, this could be providing a return in terms of being able to grow our own food, keep hens etc. It is south facing and so solar comes into play.

1. Mortgage free is a great idea and would protect us to a certain extent. No point having a 10 year fix with inflation doing the work if you lose your job and can't pay the mortgage when your savings have run out.

 

[DurhamBorn]

8 minutes ago, Ma2 said:

Mainstream now...

Forget fine art: investors urged to put their money into rewilding

A startup is planning to acquire land to rewild, restore biodiversity, store carbon – and make a healthy return

Forget gold, vintage wines and fine art: investors and landowners are being urged to put their money into Tamworth pigs, Dalmatian pelicans and ponds dug by beavers.

The Real Wild Estates Company says it has tens of millions of pounds already pledged to acquire land to rewild, restore biodiversity, store carbon – and make a healthy return for investors.

The “natural capital” startup, which was launched at the rewilded Somerset farm belonging to the environmentalist and fund manager Ben Goldsmith, aims to create more than 100,000 acres of wild land across Britain by 2030

 

https://www.theguardian.com/environment/2021/oct/29/forget-fine-art-investors-urged-to-put-their-money-into-rewilding

Yep and much better than attacking oil companies.Far better to re-wild places and accept its a cost.Then renewables will grow due to price signals and big oil wil be a big part.UK countryside is mostly empty fields,look at Google earth,and we are desperate for re-wilding.Id invest in it,even if i lost because i see it as needed.

[CVG]

8 minutes ago, DurhamBorn said:

Yep and much better than attacking oil companies.Far better to re-wild places and accept its a cost.Then renewables will grow due to price signals and big oil wil be a big part.UK countryside is mostly empty fields,look at Google earth,and we are desperate for re-wilding.Id invest in it,even if i lost because i see it as needed.

Fascinating video. One of the earlier projects

 

[Noallegiance]

1 hour ago, Harley said:

I've watched George for a while now.  He really has grown into quite a talent from a zero start.  One of life's doers.  Shows what can be done with some application.

I only have one problem with GG. It literally is only one. 99% of the rest of him is outstanding.

He's made his fortune via property flipping and being a leveraged LL. So he sits there slamming the Fed, low rates and high borrowing but his bread has been copiously buttered by it.

He seems oblivious to it.

[stoobs]

10 hours ago, DurhamBorn said:

https://www.telegraph.co.uk/technology/2021/10/28/amazon-engulfed-supply-chain-chaos/

Happening now as we expected.However big makes no difference with cost push inflation.Amazon can cut margins to nothing or lose sales.The 17% they charge merchants isnt sustainable.

Given how much web services makes retail is probably burning cash.

As the majority of British surnames are old trades, what exactly were James Titcomb’s ancestors up to?

[HousePriceMania]

2 hours ago, DurhamBorn said:

I worked for Cummins,they build the best engines in the world.We were doing lots of work with Hyundai on hydrogen.100% they will have it sorted,they already have really.

Hydrogen fuel cells make a lot more sense for Britain than fully electric cars.  There is not the space/infrastructure/housing to accomodate those cars.  Unless of course they plan for the poor not to have cars.