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

[leonardratso]

7 minutes ago, King Penda said:

I might bypass mine for 1 week a month after summer it will still cost me more ,saying that once the kids go mums my costs will plummet and I’m going to try a piggy back off next doors Wi-Fi it’s a good signal it won’t be noticeable with just me in the house.obviously if I get another lodger I won’t give a toss 

your neighbour tells me that his wifi goes thru the roof sometimes and he gets a load of speculative invoices from porno producers for 'stuff' he's apparently watched for free.

[King Penda]

4 minutes ago, leonardratso said:

your neighbour tells me that his wifi goes thru the roof sometimes and he gets a load of speculative invoices from porno producers for 'stuff' he's apparently watched for free.

A lodger got me a telling off for downloading films twat

[Ma2]

1 hour ago, Bobthebuilder said:

know the area well, sounds like Templecombe or Gillingham. I keep an eye on the area just South of this for a potential retirement home. Good luck with it, I wish you all the best.

You can also add Crewkerne, Sherborne and Warminster (Westbury station) to that list.

All the best to you too with your search, really lovely area to retire to. My parents and my aunt and uncle have all loved it since retiring down here many years ago now. 

[CVG]

1 hour ago, Bobthebuilder said:

I know the area well, sounds like Templecombe or Gillingham. I keep an eye on the area just South of this for a potential retirement home. Good luck with it, I wish you all the best.

Quite like Sherborne too. Waitrose, indepdendent shops, railway to London 

[MrXxxx]

5 hours ago, working woman said:

Employers need to be more open minded and creative in allocating shifts and employees need to say how they would like to work.

Someone I knew worked for EasyJet . The company listened when staff said they wanted a better work life balance. She had a regular 10 month contract., worked 10 months of the year and had 2 months off when the airline was quieter. She loved her 2 month unpaid holiday and picked up part-time work elsewhere if she wanted it.  Win Win all round. 

In contrast, where I work, whilst I have temporarily reduced my hours, the Manager wasn't allowed to. The Area Manager said not to do it in case the company reduced her hours permanently. All fear based and a Lose/Lose all round. 

It would be great if companies went the EasyJet route, but I suspect the easiest option for companies is to import more people who will be happy to be at the beck and call of employers.

Maybe there will be a bit of both. 

Never happen for the majority as a) they are indebted, and so b) are fearful/can be intimidated by their employer or line manager

[Chewing Grass]

10% Payrises are needed all round just to deal with inflation as a minimum this year and its only January and I haven't included tax rises, stagnant thresholds and or energy costs.

[Animal Spirits]

1 year performance comparison:

6.5% for the Vanguard 60/40, below Dec RPI of 7.1%.

[DurhamBorn]

30 minutes ago, Animal Spirits said:

1 year performance comparison:

6.5% for the Vanguard 60/40, below Dec RPI of 7.1%.

Im tracking this compared to my portfolio over the cycle.Need to remember as well most have this through an IFA so there are between 1.2% and 2% fees to come off each year as well.Those in drawdown tend to use this fund,or very similar,so with a 4% drawdown they need at least 5.2% a year to stand still nominal.Most with platform fees etc and Vanguards own fees will need 1.5% before they start.My roadmap is saying someone using an IFA and those 1.5% fees and a 5% drawdown might see the pension empty over 12 years,if they increase drawdown amounts with inflation even quicker.Worst affected will be those just retiring,but those say 10 to 15 years away will also suffer,mainly from a big undershoot to inflation.Most of the population from 45 to 80 has their assets in the wrong investments for a distribution.Houses,bonds and growth,ouch.

 

[Harley]

6 hours ago, DurhamBorn said:

My portfolio is showing the most relative strength today its shown since the goldies ran a couple of years ago.Telcos,energy,baccie all outperforming among others.Might be looking good for us if capital is coming out of growth and bonds into our areas.

I've looked through the market and bar the top 5 NASDAQ a huge number of fellow stocks are in the oversold area with falls around the 40-50%.  Zoom, Spotify, Paypal, etc.  Bonds also on the way down to join them although oddly some strength in EM govt bonds and the odd corporate bond etf.  Nothing convincing though.  So yes, where is all the money going?  Some say it's simply being taken out the market.  I'll be keeping at watch on the oversold NASDAQ's.

[Harley]

8 hours ago, JMD said:

Harley, sorry to ask a follow up, but when you say 'hollowed out' are you talking here only about debt? I think you are, but so for example I try to find ones that have very little/no debt, like ASX, and this one goes onto my BK wish list.

Yes, debt and some intangibles.

[DurhamBorn]

Just now, Harley said:

I've looked through the market and bar the top 5 NASDAQ a huge number of fellow stocks are in the oversold area with falls around the 40-50%.  Zoom, Spotify, Paypal, etc.  Bonds also on the way down to join them although oddly some strength in EM govt bonds and the odd corporate bond etf.  Nothing convincing though.  So yes, where is all the money going?  Some say it's simply being taken out the market.  I'll be keeping at watch on the oversold NASDAQ's.

The youngsters are getting a big lesson as well,the likes of Dogecoin getting slammed.Im still seeing hundreds of to the moon tweets,fill up,they just want our coins cheap,buy the dip etc and most telling seeing tweets creep in about how price isnt everything and they still have such a great community and friendships,group hug etc.

[CannonFodder]

48 minutes ago, Chewing Grass said:

10% Payrises are needed all round just to deal with inflation as a minimum this year and its only January and I haven't included tax rises, stagnant thresholds and or energy costs.

Or if token rise, then outgoings need to be reduced by 10%. I havent noticed much distress to be honest.

Media had huge stories when £20 UC withdrawn, this must be a lot worse for low income households, espec energy and food.

Is there a media blackout? Or they just not interested.

 

[Napoleon Dynamite]

31 minutes ago, Animal Spirits said:

1 year performance comparison:

6.5% for the Vanguard 60/40, below Dec RPI of 7.1%.

Just for balance, say you compare that TB Guinness Global to the Life Strategy 100 over the last 5 years.

From my (possibly incorrect) calculations with an initial £10K, I get the Vanguard way ahead with £16K vs a loss for the Energy Fund.

	£	%		£	%
2017	10000	13.27		10000	-5.12
2018	11327	-5.04		9488	-4.27
2019	10756	21.03		9083	9.72
2020	13018	7.22		9966	-32.98
2021	13958	19.15		6679	44.48
2022	16631			9650

Still, I suppose it shows that even though it's rocketed 40% in the last year, there's still plenty of room for more.

[Harley]

55 minutes ago, Animal Spirits said:

1 year performance comparison:

6.5% for the Vanguard 60/40, below Dec RPI of 7.1%.

I struggle to see it doing that this year.  Got to be a nimble stock pickers market this year and that bonds allocation could be a real drag on what could be a difficult tracker based equity performance.

[leonardratso]

3 minutes ago, Napoleon Dynamite said:

Just for balance, say you compare that TB Guinness Global to the Life Strategy 100 over the last 5 years.

From my (possibly incorrect) calculations with an initial £10K, I get the Vanguard way ahead with £16K vs a loss for the Energy Fund.

	£	%		£	%
2017	10000	13.27		10000	-5.12
2018	11327	-5.04		9488	-4.27
2019	10756	21.03		9083	9.72
2020	13018	7.22		9966	-32.98
2021	13958	19.15		6679	44.48
2022	16631			9650

Still, I suppose it shows that even though it's rocketed 40% in the last year, there's still plenty of room for more.

i thought this was the ongoing mantra? its a big switcheroo happening isnt it?

[Harley]

20 minutes ago, DurhamBorn said:

The youngsters are getting a big lesson as well,the likes of Dogecoin getting slammed.Im still seeing hundreds of to the moon tweets,fill up,they just want our coins cheap,buy the dip etc and most telling seeing tweets creep in about how price isnt everything and they still have such a great community and friendships,group hug etc.

That's a good cue for my going in hypothesis in which I do not write off crypto.  If (as I believe) its taken the shine off gold (and other PMs, as PMs) on the up then maybe it'll act as a buffer on the way down.  Maybe you can't have it both ways.  The crypto money seems more hot inexperienced money so maybe a big dump on a serious fall with all the usual margin calls, etc.  Gold may tick along nicely thanks to that firebreak.  So I see a nice play to replace the old gold to silver ratio one, as it were.

[DurhamBorn]

11 minutes ago, Napoleon Dynamite said:

Just for balance, say you compare that TB Guinness Global to the Life Strategy 100 over the last 5 years.

From my (possibly incorrect) calculations with an initial £10K, I get the Vanguard way ahead with £16K vs a loss for the Energy Fund.

	£	%		£	%
2017	10000	13.27		10000	-5.12
2018	11327	-5.04		9488	-4.27
2019	10756	21.03		9083	9.72
2020	13018	7.22		9966	-32.98
2021	13958	19.15		6679	44.48
2022	16631			9650

Still, I suppose it shows that even though it's rocketed 40% in the last year, there's still plenty of room for more.

Yes,a great dis-inflation investment.The worry is most people are crowded into those areas and simply dont understand that with fees,if it even flatlines for a good many years thats a disaster for anyone near or in drawdown.Of course i could be wrong,but having almost all wealth in a house and a 60/40 pension at this stage looks terrible inflation adjusted.

[Chewing Grass]

1 hour ago, Animal Spirits said:

1 year performance comparison:

6.5% for the Vanguard 60/40, below Dec RPI of 7.1%.

You prompted me to look at two of the Pensions I have with the same Pension company over the last 12 months.

This is the SIPP from when I worked for myself.

This is the one provided by the employer now I'm PAYE.

I have way more money in the first one, the second one only has 12 months contribs in it with 3 or 4 years to go.

Not much incentive to being staff is there...

[Axeman123]

29 minutes ago, DurhamBorn said:

The youngsters are getting a big lesson as well,the likes of Dogecoin getting slammed.Im still seeing hundreds of to the moon tweets,fill up,they just want our coins cheap,buy the dip etc and most telling seeing tweets creep in about how price isnt everything and they still have such a great community and friendships,group hug etc.

The tweets about contributing to important projects and networks being more important than price represent the bargaining stage of grief, I think. If BTC doesn't rally soon I think we will see real selling start.

A fascinating question is what happens in that scenario with all the listed companies that have huge ammounts of BTC in their treasury. Microstrategy (NASDAQ: MSTR) for example holds 124,391 BTC, with an average purchase price of ~$30k. Their CEO Michael Saylor is a full on Bitcoin maximalist, with a laser eyes profile picture on social media etc. Where it gets really interesting though is that he doesn't have a majority shareholding. Clearly, on the way up his large shareholders have tolerated this lunacy so far.

If BTC ever drops much below $40k the next obvious level of support would be ~$32k, which would bring eye watering potential losses of the 3.7 billion actual dollars spent into play. Will Saylor be allowed to continue holding BTC under those circumstances, and for that matter could they even liquidate that much if they wanted to? Legally speaking officers of a listed company have responsibilities to shareholders, and can be held liable for not discharging them. Even if the shareholders go mad, will they even have a board of directors willing to take the risks?

Interesting times.

Sources:

https://coincodex.com/article/13311/microstrategy-finished-2021-with-another-bitcoin-investment/

https://www.msn.com/en-us/money/stockdetails/ownership/nas-mstr/fi-a1y1qh?ownershipType=institutional

[King Penda]

2 hours ago, MrXxxx said:

Never happen for the majority as a) they are indebted, and so b) are fearful/can be intimidated by their employer or line manager

Best set up I’ve ever seen was a couple who worked at Amazon from august till the end of December every year then went on benifits and repeated this every year.bear in mind both could earn 12k without paying tax in theory and amazons overtime rate was either 50% or double time .he said we stash thousands and then sighn back on and social don’t realy bother us has we do work half the year .no one questions seasonal work ending basicly

[CannonFodder]

4 minutes ago, Axeman123 said:

 

If BTC ever drops much below $40k the next obvious level of support would be ~$32k, which would bring eye watering potential losses of the 3.7 billion actual dollars spent into play. Will Saylor be allowed to continue holding BTC under those circumstances, and for that matter could they even liquidate that much if they wanted to? Legally speaking officers of a listed company have responsibilities to shareholders, and can be held liable for not discharging them. Even if the shareholders go mad, will they even have a board of directors willing to take the risks?

 

Safest for him to sell in high 30s, declare a profit and a huge bonus for his vision. Most C suite are survivors that will sacrifice anything to be perceived as competent. 

i think they would sell the lot quickly while profit remains than have a BTC trading loss on their career record for managing companies. Thats a lot of coins, could be quite a stampede to the exit if this is replicated across many companies. Firesale.

More worrying is companies are messing about with putting capital into cryto than investing in their businesses or M&A such as buying out competitors. You pay a Ceo a lot of money to implement his strategy for growth and profitability, spunking capital on Btc could be the strategy of a 18 yo dropout from college on minimum wage that is considerably cheaper than ceo package 

This is the second WTF moment I.ve had today, the first was people flying round empty planes to keep landing slots, that rule should have been recinded in lockdown.

Someone on here used the term Clownworld, its totally apt for what this has become

[ThoughtCriminal]

"Grand Theft Auto-maker Take-Two Interactive has agreed to buy mobile gaming company Zynga for $12.7 billion."

Yeah, we're in a bubble.

[Harley]

54 minutes ago, Chewing Grass said:

You prompted me to look at two of the Pensions I have with the same Pension company over the last 12 months.

This is the SIPP from when I worked for myself.

This is the one provided by the employer now I'm PAYE.

I have way more money in the first one, the second one only has 12 months contribs in it with 3 or 4 years to go.

Not much incentive to being staff is there...

Mine used to be worse as the reported "gains" included my contributions!

[Axeman123]

5 minutes ago, CannonFodder said:

Safest for him to sell in high 30s, declare a profit and a huge bonus for his vision. Most C suite are survivors that will sacrifice anything to be perceived as competent. 

i think they would sell the lot quickly while profit remains than have a BTC trading loss on their career record for managing companies. Thats a lot of coins, could be quite a stampede to the exit if this is replicated across many companies. Firesale.

I don't have a clue who could or would buy that quantity, let alone on the way down. Even the news of the intent to sell, or of Saylor's departure as CEO would surely open a trapdoor underneath the BTC market.

5 minutes ago, CannonFodder said:

More worrying is companies are messing about with putting capital into cryto than investing in their businesses or M&A such as buying out competitors.

This speculative mania makes any actual business look like a sucker's bet. @67k USD Microstrategy was ~4billion up on their BTC holding. No productive use of capital can match that paper return!

6 minutes ago, CannonFodder said:

This is the second WTF moment I.ve had today, the first was people flying round empty planes to keep landing slots, that rule should have been recinded in lockdown.

Someone on here used the term Clownworld, its totally apt for what this has become

Clown world indeed.

[Harley]

14 minutes ago, Axeman123 said:

Clown world indeed.

I feel like the last Japanese soldier in the jungle thinking there's still a war going on against financial imprudence where those with low debt ratios and the like will prevail.  I'm fed up going on long patrols each week looking for fairly priced value only to come back with little.  I'll keep my rifle ready in case the Emperor calls me to action but for now I'll just hold me nose, snatch the gains, and see how the returns compare to my established div portfolio.  It'll be liberating (and probably best if we do indeed have a soft H122).