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

[Pip321]

1 hour ago, DurhamBorn said:

I noticed my portfolio was well up today,2.2% outperformance.It will be interesting to see if the rotation keeps going or if growth/bubble sucks people back in David Hunter style.A few month out i expect active asset managers will see inflows turn positive next as money heads to emerging markets and value.

Good day in a falling market. 👍

I mentioned yesterday 12:35, that I got into Unilever during the dip last week. Nothing like an educated guess and a bit of luck….it now offers a bit of protection against a downturn which I expect this year. 

So my intention is to build a small selection of big company shares and Vodafone, Unilever, imperial, BT and BAT are all on that list because cash just won’t cut it anymore. No rush though, I like buying in dips where possible. Then hold for income and whilst I will watch the price I won’t worry about it. 

Oil and mining also on the watch list….one or two getting close to my buy prices. 

[Axeman123]

On the subject of Microstrategy, here is an interesting news story from Friday relating to how it accounts for losses and gains in the value of it's BTC holdings:

https://uk.finance.yahoo.com/news/microstrategy-bitcoin-accounting-adjustment-rejected-213411449.html

My understanding of the above is that going forward paper losses on their BTC holdings will be reflected by an impairment against their profit, and that Saylor got told off for trying to avoid doing so. This bit from the link has interesting implications:

"Under standard accounting rules, the value of digital assets such as cryptocurrencies must be recorded at their cost and then only adjusted if their value is impaired, or goes down. But if the price rises, that does not get reflected until an asset is sold."

So, BTC in treasury can hurt you if it falls but you get no benefit from it rising unless you sell. That sounds like a kill shot from the SEC for BTC as treasury asset!

Looking at a chart, if BTC falls below ~30k USD the next support would be ~20K USD. In that scenario MSTR would have to record an impairment of ~1.24 billion dollars, against typical annual gross profits of ~0.5 billion resulting in a reported net annual loss of ~0.75 billion! 

1 hour ago, Bricormortis said:

They will likely always have a bit of value because of their utility in the 3rd world. For instance El Salvador derives a large part of its national income from money sent from the US. But to recieve it has meant relatives going on a 6 hour bus journer to the western union office, and getting taxed by gangs hanging outside, now with bitcoin, gamechanger. Similar story in Nigeria I am led to understand, if you want to buy an item from abroad its prohibitive, bitcoin no problem.

I can see that as a genuine use case, however would that support the immense hashing power currently used to secure the network? If not surely it would the be vulnerable to attack? There is the argument that stealing a large percentage of any crypto would instantly make it worthless though. The third world use also depends on people at both ends being willing to swap back and forth with fiat.

 

[Libspero]

Holy crap..  it's a blood bath out there.

I was already fairly defensive..  but the tweaks I made based on comments here have definitely helped.

Phew..   

[Lightscribe]

2 hours ago, Yellow_Reduced_Sticker said:

Fookinhell...VOD ROCKETING today AND thats in a DOWN market!

 

I was hoping to buy my last ladder at around a quid, sometimes it just does NOT pay to be a... TIGHTWAD!

 

Yup sold my VOD this morning (sorry guys no commitment from me, first BAT last week now this) higher risk approach but I need to do what I need to do, I’ll use that to add to the POLY holding to average down. 

I’ve got no faith in Hunters last melt up call so sorry for that also, this is the start of the BK IMO as I’ve been saying for a while. Half way in cash now for whatever comes in the next few weeks to months.

[Bobthebuilder]

2 hours ago, Yellow_Reduced_Sticker said:

Fookinhell...VOD ROCKETING today AND thats in a DOWN market!

 

I was hoping to buy my last ladder at around a quid, sometimes it just does NOT pay to be a... TIGHTWAD!

Same as me. I have a quid for my final ladder, happy to sit and wait for it to come back nearer to me.

[Libspero]

5 minutes ago, Lightscribe said:

Yup sold my VOD this morning (sorry guys no commitment from me, first BAT last week now this) higher risk approach but I need to do what I need to do, I’ll use that to add to the POLY holding to average down. 

I’ve got no faith in Hunters last melt up call so sorry for that also, this is the start of the BK IMO as I’ve been saying for a while. Half way in cash now for whatever comes in the next few weeks to months.

That's contrarian.

VOD and BAT are pretty much the only climbers I'm looking at today.

I can see that POLY could/should do well,  but all the gold miners seem to be getting hammered too.  Even if gold miners do start to track the uptrend in gold, are you not worried that a company in Russia might be targeted with sanctions or delisted completely as a result of the Ukraine fall out ?

Just seems a pretty high risk gamble when other options look safer.    For the record,  I did buy a bit of FRES so I'm feeling some of your pain   

 

[CannonFodder]

Microstrategy opening at minus 16 percent on my screen

[HousePriceMania]

 

[Democorruptcy]

2 hours ago, DurhamBorn said:

I noticed my portfolio was well up today,2.2% outperformance.It will be interesting to see if the rotation keeps going or if growth/bubble sucks people back in David Hunter style.A few month out i expect active asset managers will see inflows turn positive next as money heads to emerging markets and value.

Unilever?

I thought you were dissing Uncle Terry for holding that one!

[DurhamBorn]

4 minutes ago, Democorruptcy said:

Unilever?

I thought you were dissing Uncle Terry for holding that one!

I dont hold it and wouldnt that was the FTSE 100 leaders ,Terry will be getting smashed this week.

Lots of fear yet most on here should be just up today or level in a brutal market.Fags up loads,Telcos shooting up (including TEF and Orange),a healthy shakeout in oil stocks so they can ramp up buybacks and mostly bought on companies that trebled.It couldnt be better where some liquidity flowing out of bubble areas is going into ours as there was risk it wouldnt.

We will suffer pain along the way of course on rotation and there is risk our sectors turn down as everything else is smashed,but very very happy.Lets see how it develops.

Tobacco telcos and oil hated and finished was the narrative,lazy, like sheep and zero macro and sentiment understanding.

I expect we are about to see the profit warnings coming thick and fast now.

[Democorruptcy]

2 minutes ago, DurhamBorn said:

I dont hold it and wouldnt that was the FTSE 100 leaders ,Terry will be getting smashed this week.

Lots of fear yet most on here should be just up today or level in a brutal market.Fags up loads,Telcos shooting up (including TEF and Orange),a healthy shakeout in oil stocks so they can ramp up buybacks and mostly bought on companies that trebled.It couldnt be better where some liquidity flowing out of bubble areas is going into ours as there was risk it wouldnt.

We will suffer pain along the way of course on rotation and there is risk our sectors turn down as everything else is smashed,but very very happy.Lets see how it develops.

Tobacco telcos and oil hated and finished was the narrative,lazy, like sheep and zero macro and sentiment understanding.

I expect we are about to see the profit warnings coming thick and fast now.

Sorry, when you said your portfolio was +2.2% and gave us a list of shares, I thought you meant those were your performers! Funny day today market not down anywhere near as much as some individual shares. I've had to top slice some BAT, I feel embarrassed about it, buying a boring divi play not looking for growth and it's appreciated 3 years divis in less than 2 months.

[Lightscribe]

53 minutes ago, Libspero said:

That's contrarian.

VOD and BAT are pretty much the only climbers I'm looking at today.

I can see that POLY could/should do well,  but all the gold miners seem to be getting hammered too.  Even if gold miners do start to track the uptrend in gold, are you not worried that a company in Russia might be targeted with sanctions or delisted completely as a result of the Ukraine fall out ?

Just seems a pretty high risk gamble when other options look safer.    For the record,  I did buy a bit of FRES so I'm feeling some of your pain   

 

My average now of FRES is below 800, so not in any red there yet. 

I’m freeing up money in profit in my ISA, to put in the downturn of everything else. As stated before I think there’s all the signs there now that it’s imminent.

If the Fed do have a last hurrah so be it, but my betting is that gold and silver will then run regardless. If the stock market crashes into the BK then gold and silver will run in the rebound anyway. It most likely would take months to get to any kind of bottom anyway with dead cat bounces and circuit breakers. So as always ladders down will be key for me.

My pension is split (of the limited options I have) between a cylindrical fund (from the dip in 2020) and a cash fund.

The political disruption adds to the discount! 

[AWW]

2 hours ago, Bricormortis said:

They will likely always have a bit of value because of their utility in the 3rd world. For instance El Salvador derives a large part of its national income from money sent from the US. But to recieve it has meant relatives going on a 6 hour bus journer to the western union office, and getting taxed by gangs hanging outside, now with bitcoin, gamechanger. Similar story in Nigeria I am led to understand, if you want to buy an item from abroad its prohibitive, bitcoin no problem.

But this use case of poorer nations using e.g. Bitcoin to work around the limitations of their local banking system is entirely reliant on richer people providing the computing power required to secure the network. It's not difficult to imagine a situation where the value of Bitcoin falls enough to cause nodes to leave the network, it then being feasible for nefarious actors to gain control of more than half the network's computing power. I know the difficulty can be changed, but that would seem to be a positive feedback loop - value goes up, difficulty goes up, therefore scarcity increases, therefore value goes up... be interesting to see how that works in reverse.

[HousePriceMania]

Anyone remember when newly listed Rivian truck makers was worth more than FORD...seems like along time ago now....2 weeks.

 

 

[AWW]

Anyone lumping on QQQS?

[DoINeedOne]

[Loki]

9 minutes ago, AWW said:

Anyone lumping on QQQS?

Nope I tried shorting once and got my arse handed to me 

[Harley]

3 hours ago, DurhamBorn said:

I noticed my portfolio was well up today,2.2% outperformance.It will be interesting to see if the rotation keeps going or if growth/bubble sucks people back in David Hunter style.A few month out i expect active asset managers will see inflows turn positive next as money heads to emerging markets and value.

These are (were) just your winners, or have you previously dumped ABDN, etc?  Been a fascinating day watching the (hourly moves) and individual weaknesses and strengths.  I'll probably be selling down some more today as some falls look to have legs.  Russia down big which is delusional but Japan did OK overnight (need to see if it leads or follows).  Overall nice as many dumpers had already shown weakness so I parred back already (but never enough!) and bonds (and gold) have softened the blow, maybe for the last time this round for bonds (but I still doubt serious rate rises atm).  Yes, nice if we have a fake NASDAQ rally so I can catch more value.  But only the first day of the week so I'll give things time before drawing a line. 

[DurhamBorn]

36 minutes ago, Democorruptcy said:

Sorry, when you said your portfolio was +2.2% and gave us a list of shares, I thought you meant those were your performers! Funny day today market not down anywhere near as much as some individual shares. I've had to top slice some BAT, I feel embarrassed about it, buying a boring divi play not looking for growth and it's appreciated 3 years divis in less than 2 months.

Looking now my portfolio is down 0.6% against down 2.7% for the FTSE 100,down 4% for the FTSE 250.The outright numbers dont matter,but i would want to see outperformance here after we already have a lot already and its as good as could be hoped for.I think as well the sectors doing the portfolio protection are the areas hardly anyone owns,just as i expected and hoped.Days dont matter of course,but it will be interesting to see how inflation areas react on any growth bounce backs.

Really glad BAT did well for you,its showing its beauty at the moment,though id rather it hadnt seeing as buybacks will be starting soon.

[belfastchild]

26 minutes ago, AWW said:

But this use case of poorer nations using e.g. Bitcoin to work around the limitations of their local banking system is entirely reliant on richer people providing the computing power required to secure the network. It's not difficult to imagine a situation where the value of Bitcoin falls enough to cause nodes to leave the network, it then being feasible for nefarious actors to gain control of more than half the network's computing power. I know the difficulty can be changed, but that would seem to be a positive feedback loop - value goes up, difficulty goes up, therefore scarcity increases, therefore value goes up... be interesting to see how that works in reverse.

Costs of electricity going up, isnt there a congressional hearing at the mo/last week into environmental costs of bitcoin.
In a lot of places it will be deemed non-essential if the lights are going out. Try getting it to work then.

Then add in the rumours of chinese quantum computers cracking it in early Jan...
Its a stretch to say thats the reason why china, russia, iran went balls deep into mining to suddenly do an about face in the case of the first two and ban it.

Everything electricity related is getting/going to get a lot more expensive. If governments have to shut down industry due to household demand/heating etc I dont care how many wind farms amazon have funded in Ireland, if theres no wind theres no power and if theres no power...

Heard over the weekend that the alexa outage was exacerbated by the fault reporting system using the same amazon backbone as the stuff that went down. And people refer to these people as geniuses...

[Harley]

I'm going through the daily oversolds which maybe on the turn.  It's been HK REITS in the last few weeks, then the Japanese ones, and now the US ones.  An absolute torrent of them today.  I'll be selectively adding them to my inflation portfolio in due course, maybe not just yet though! 

PS:  Lots of stuff at support, etc.  A lovely time to be looking!

[DurhamBorn]

3 minutes ago, Harley said:

These are (were) just your winners, or have you previously dumped ABDN, etc?  Been a fascinating day watching the (hourly moves) and individual weaknesses and strengths.  I'll probably be selling down some more today as some falls look to have legs.  Russia down big which is delusional but Japan did OK overnight (need to see if it leads or follows).  Overall nice as many dumpers had already shown weakness so I parred back already (but never enough!) and bonds (and gold) have softened the blow, maybe for the last time this round for bonds (but I still doubt serious rate rises atm).  Yes, nice if we have a fake NASDAQ rally so I can catch more value.  But only the first day of the week so I'll give things time before drawing a line. 

Lots down yes,but big holdings up,telcos my biggest sector.Iv been topping up all the asset mangers today,Abrdn,Jupiter and Ashmore,that sector is my main focus now,hope they hold or fall more while i get more in.Main concern,though its a nice one to have is my biggest holdings are becoming big percentages of my portfolio and that means i might have to sell a few for balance reasons.Im loathe to sell any BAT for instance ,but if it went up much more id have to trim,il order a whip from Ebay as id have to perform self flagellation and flog myself.Iv been busy today trimming bushes back and cleaning the pond out ready for the frogs arrival in a month.

[Democorruptcy]

6 minutes ago, DurhamBorn said:

Looking now my portfolio is down 0.6% against down 2.7% for the FTSE 100,down 4% for the FTSE 250.The outright numbers dont matter,but i would want to see outperformance here after we already have a lot already and its as good as could be hoped for.I think as well the sectors doing the portfolio protection are the areas hardly anyone owns,just as i expected and hoped.Days dont matter of course,but it will be interesting to see how inflation areas react on any growth bounce backs.

Really glad BAT did well for you,its showing its beauty at the moment,though id rather it hadnt seeing as buybacks will be starting soon.

There definitely seems to be the expected rotation going on. I've been considering JDW once things started opening up again. I know you've already stepped in. Just looking now and losses for 2 years could be expected but debt's also gone up a lot. Have they been buying distressed assets or covering losses? About -50% from peak should be tempting enough.

[AWW]

9 minutes ago, DurhamBorn said:

Iv been busy today trimming bushes back and cleaning the pond out ready for the frogs arrival in a month.

I wouldn't bother mate, if she's French she won't be trimming her bush and won't mind if yours is a bit unkempt.

[Harley]

26 minutes ago, DurhamBorn said:

Lots down yes,but big holdings up,telcos my biggest sector.Iv been topping up all the asset mangers today,Abrdn,Jupiter and Ashmore,that sector is my main focus now,hope they hold or fall more while i get more in.Main concern,though its a nice one to have is my biggest holdings are becoming big percentages of my portfolio and that means i might have to sell a few for balance reasons.Im loathe to sell any BAT for instance ,but if it went up much more id have to trim,il order a whip from Ebay as id have to perform self flagellation and flog myself.Iv been busy today trimming bushes back and cleaning the pond out ready for the frogs arrival in a month.

Ah Jupiter, yes, I was looking too (he goes off to look at Ashmore....!).

Update:  Oh and it's gone!  Think I'll wait for the weeklies!