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

[Bobthebuilder]

1 minute ago, Lightscribe said:

What tomatoes were they? I was thinking of  doing this this year (knew about the tissue dry off bit to remove the membrane) but thought I’d choose an English variety for the most chance of success.

San Marzano. Supposed to be the best for making Italian style tomato sauce, perfect for a pizza topping.

[Lightscribe]

3 minutes ago, Bobthebuilder said:

San Marzano. Supposed to be the best for making Italian style tomato sauce, perfect for a pizza topping.

Like it. I’ll give it a go too.

Pizza sauce tie in with the G3 Ferrari talk too, very apt. Shall we all start a Dosbods pizza club together and buy the remaining G3 pizza oven stock before shipping/manufacturing costs go astronomical? We can then hold the world to ransom through Pizza (before the Italy economic collapse) by naming our price. Disaster capitalism.

Bit like the Hunt brothers with silver, but where they failed the Dosbods hive mind will succeed!

[belfastchild]

12 minutes ago, Bobthebuilder said:

San Marzano. Supposed to be the best for making Italian style tomato sauce, perfect for a pizza topping.

I bought a load of 400g odd tins pre brexit for that very purpose. Still have one full tray of them. Like hens teeth now, just cant get them. Although you can get the big massive catering tins from the wholesalers. A bit pricey to risk dividing up and freezing, I use normal tins now with a bit of tomato paste in it, garlic, olive oil, fresh basil and only slightly blend with a stick blender.

Built a wood fired pizza oven last summer, done a lot of stuff in it other than pizzas. Gym ball type.  Still use the ferrari during winter though, standing outside in the cold and wet wasnt in any of the italian or californian videos ;-)

[janch]

2 hours ago, Juniper said:

While I have some time to post, a quick update from work. Chinese supply chains seem to be getting worse again, there was some small relief at the back end of last year but now it feels as bad as it ever has been. Electrical components in particular are hard to find and more expensive. I heard this week of one semiconductor device that we used to buy for under £10 now costing over £300. We’re not going to absorb that - more price rises incoming.

Gaps in the shelves in Wilko/Poundland etc which probably have more Chinese stock than most are really noticeable now. 

[janch]

3 hours ago, wherebee said:

Someone once said that the politicians who do PPE or any Uni course, do just the minimum to pass/get a 2:1, their real focus is on the political parties at Uni and afterwards.  So they don't really 'do' PPE, they 'study' local politics via the student bodies, then local councils, then NGOs or regional bodies, then national parties, etc.

That's a really good insight.  She's not actually a PPE drone (or else she'd be able to see the flaws in her own arguments).  She's a POLITICAL PARTY STUDENT.

The President of the Guild of Students at Exeter just before I was there was one Jack Straw which proves your point.

I agree with comments regarding Liz Truss especially when she was more or less advocating people go and fight in Ukraine.  Back to the 30s when people went to fight in Spain because they believed in the cause on one side or the other.  I was hoping we might have moved on a bit from then.

[janch]

3 hours ago, Plan-b said:

Mansion cost of gas and electric was not an off the cuff comment it comes from direct experience. In a previous life I lived in such a place

I'm intrigued..........are you a lord?  Expensive divorce??  Butler for a toff/royalty???

I'm nosey and would like to hear more if you feel able/willing to divulge.  Sorry......

[King Penda]

2 hours ago, Lightscribe said:

https://www.bloomberg.com/news/articles/2022-03-09/warren-targets-oil-companies-with-plan-to-tax-windfall-profits
 

This is why I’m entirely in miners, metals and cash currently. I really don’t trust that the western governments (Led by democrats in the US) will do this.

You will pay for the bennie brigade out of your dividends and be happy.

Most of the country had at least 6 months off doing fuck all many had way over 12 months and billions was handed out to any form of business including those with holiday homes stood idle I bet there’s over a million still not back in the office

[Shamone]

5 minutes ago, King Penda said:

Most of the country had at least 6 months off doing fuck all many had way over 12 months and billions was handed out to any form of business including those with holiday homes stood idle I bet there’s over a million still not back in the office

I don’t know of a single case of furlough that was on the level, including mine.

[King Penda]

3 minutes ago, Shamone said:

I don’t know of a single case of furlough that was on the level, including mine.

I do and one actually worked for the nhs but was auto immune compromised in her defence ie crons disease I suspect took them months to find her something to do from home how long were the pubs shut for in total or basicly that restricted they did not open 

[Majorpain]

3 hours ago, Juniper said:

His theory that the US also wants to break the dollar system so that they can re-shore manufacturing as a security measure fits in my mind alongside @DurhamBorn’s excellent explanation of raising rates to force repo money into the market. No point in releasing dollars if they disappear into another country’s FX reserves, they want companies to invest at home.

I still have a lot to figure out but it’s making more sense. He also points out how the war gives good cover for the plan because there would be uproar if they just broke the dollar system and made people poorer without an excuse.

Just to add to those excellent points, in 70's Saudi's and co agreed to sell oil in $'s in exchange for US protection.  Now that Potato and Heel's up are in nominal charge they are not nearly as confident in US leadership as previous, events in Ukraine have done nothing to calm their fears.

https://www.businessinsider.com/saudi-mbs-rejected-biden-request-discuss-russia-oil-crisis-wsj-2022-3?r=US&IR=T

[JMD]

5 hours ago, Pip321 said:

Couldn’t agree more.

I was fortunate enough to be able to give up work at 50. A frugal 30 years and saving, some developing for 20 years and some good fortune.
Since leaving work I have refitted our bathroom, decorated the house, redone the kitchen, built a summer house, redone the driveways and lawns (I won’t go on) but these jobs have been a decade in the waiting. I genuinely have saved £15k a year doing projects on my home and some rentals…I am slower than a pro but my time is free and jobs keep me fit.

The second point re bigger houses.
In 1969 my parents moved from Newcastle with very little money and 5 kids to North Yorkshire.  My dad was asked ‘how big a house can you manage because big houses are cheap’. 

They bought a massive 6 double bed Victorian Semi (it’s lovely) in 1969 for £2200. Now worth £600k. 

At the same time smaller 3 bed semis (new builds at the time or typical 1950’s ones) were £3,000 and now worth £275k.

This wasn’t a clever investment decision rather it was because with 5 kids it seemed sensible….and in the even harsher 70’s the youngest 2 kids shared with a paying lodger in the spare. 

Not sure if the late 60’s directly correlates with you cycle timings but it seems interesting that these times were hard for many (in terms of cash wealth) so people avoided big old houses because of running and maintenance bills.

 

Pip321, am being nosy(?) but as you have mentioned it, do you have a rental portfolio then, just wondering given the thread macro wether you intend holding long term?                                                                                                                             As for the 1960s, I think they were a sweet spot for buying property, was still cheap plus UK had created a mature mortgage/building society market to aid those wanting to buy - funny to think that back then many didn't see the point in buying, and some even thought working class house buyers were 'getting above their station'.                                                                                                                                                                                After the 60s, prices just went up and up (general inflation yes)... But also to begin with, some of that increase was the increasing availability of mortgages, but by the 90s artificially low rates and silly mortgage products caused bubble territory. All of these economic effects could have been predicted - bit like the old adage that 'capitalism doesn't work with low interest rates' (risk/reward, price discovery breaks down) - however TPTB went ahead and did it anyway. 

[Chewing Grass]

1 minute ago, JMD said:

I think the 60s were a sweet spot for buying, property was still cheap plus had a mature mortgage/building society market to aid those wanting to buy (many didn't see the point in buying and some even thought house buyers were 'getting above their station'). Each decade after the 60s, prices just went up and up... to begin with, some of that increase was the increasing availability of mortgages, but by the 90s artificially low rates and silly mortgage products caused bubble territory. All of these economic effects could have been predicted - bit like the old adage that 'capitalism doesn't work with low interest rates' (risk/reward, price discovery breaks down) - however TPTB went ahead and did it anyway. 

Mrs Chewys mothers house was built in 1960, a builder would get 4 houses on the plot now.

[DurhamBorn]

On pizza sauce Morrisons has the Pizza Express passata on for 50p a tin,bargain,however it seems to be online only as no prices on the shelves in store.Dont worry though,if you look along the top shelf on the passata isle you will see them,they keep them there to pick for online orders,simply look for one of those stools they use for the shelves,take it to the isle and take them down,they go through the self service tills at the online price of 50p,iv got 25 tins ,id have more but the dates arent long enough,but i top up,dont buy anything else in there its expensive usually.

https://groceries.morrisons.com/products/pizza-express-passata-566315011

For the very frugal you can actually use 35p tomato puree ,simply squeeze a bit out,then mix with some water so it runs off a spoon ok,but not too runny, then add a bit of basil and oregano and a touch of sugar to take away the bitterness and its very decent tasting,you can get 4 or 5 pizzas from one tube.Id advise this method for those who bought Poly and Evraz.

 

[JMD]

6 hours ago, Pip321 said:

Thanks and Appreciated. Genuinely  

Not defending my actual discussion about trading and just had a look at the trading forum. It’s a true trading forum is about trading speculatively, ideas and useful thoughts.

This thread mentions laddering, top slicing and some movement of funds…so I am getting my red card out ready 😆 

Joking apart, my thoughts on my old Lloyds (in my example) are evolving a little different. More about ‘how’ to hold ‘investments’ in during these unprecedented times rather than necessarily whether to hold them. Understand in my original question that is a bit blurred but it was really what was driving my thoughts.

So you are right my query is about tactics and timings but kinda sits between trading and investing. Albeit more trading.

I have held these Lloyds untouched for a decade so not a renowned trader. I am questioning whether I start selling at certain points of news, events or even a little rally…knowing that uncertain times could significantly alter values. FOMO has always stopped that sale the that’s the question I am asking myself…is potentially losing 3% next week worth the risk of losing 50% over the next 3 weeks  

It applies to anyone holding large amounts even in any solid blue chip highlighted in this macro thread….ie not whether they should hold them (because we agree they should) but whether there should be more top slicing, laddering, chopping and changing at the moment.  

My big PruFund is completely untradeable and it’s completely useless at times like this with real uncertainty. I ask to withdraw or change funds and they will adjust the value with a penalty and make me wait a month…so it is really too late to react unless I believe a true BK is coming.

I take your point completely. I like to keep things fairly jovial (except serious politics and bad media coverage which genuinely annoys me) and accept the challenge and reminder.

…….and now reading back ‘I protest too much’ 😆

Just my thoughts, but I think laddering, top slicing and arbitraging (between/within held portfolio sectors) are very powerful strategies for risk positioning/rebalancing ones own (long term) portfolio investments, and are not really trading. Of course there is overlap, but in the context of this thread i think that's what most here are discussing when they use those terms.

[Chewing Grass]

Fantastic analogy, short, have a listen.

 https://youtu.be/xnPbZvPDcZQ

[Loki]

3 minutes ago, Chewing Grass said:

Fantastic analogy, short, have a listen. https://youtu.be/xnPbZvPDcZQ

Very good 

[Plan-b]

1 hour ago, janch said:

I'm intrigued..........are you a lord?  Expensive divorce??  Butler for a toff/royalty???

I'm nosey and would like to hear more if you feel able/willing to divulge.  Sorry......

Lol nah just found my myself being a live in tradesman to help do the old place up. Met a few of the rich through the experience the saying that 'money doesn't make you happy' certainly applies to many of them a cynical bunch who trust no one and see the man in the street as pointless mouth breathers who just waste the earths resources that they consider theirs. Not all are that way though.

[JMD]

5 hours ago, wherebee said:

Someone once said that the politicians who do PPE or any Uni course, do just the minimum to pass/get a 2:1, their real focus is on the political parties at Uni and afterwards.  So they don't really 'do' PPE, they 'study' local politics via the student bodies, then local councils, then NGOs or regional bodies, then national parties, etc.

That's a really good insight.  She's not actually a PPE drone (or else she'd be able to see the flaws in her own arguments).  She's a POLITICAL PARTY STUDENT.

I do agree. Plus I'd go back a further step, and suggest that today's politicians are really nothing more than 'A+' school debaters and should have all gone straight into the 'legal trade'. They really should have no place in our political system and only 'succeed' because the current political/economic system rewards those personality types who can make outrageous, kick the can, simplistic, easy free money for all - type promises and policies. 

[CannonFodder]

5 minutes ago, JMD said:

I do agree. Plus I'd go back a further step, and suggest that today's politicians are really nothing more than 'A+' school debaters and should have all gone straight into the 'legal trade'. They really should have no place in our political system and only 'succeed' because the current political/economic system rewards those personality types who can make outrageous, kick the can, simplistic, easy free money for all - type promises and policies. 

All of our schools will be above average?

[JMD]

5 hours ago, marceau said:

It is by design. The system selects for those that are good at playing the game. The power elite sets the rules of the game. Nothing better for those in real power than frontmen who are intelligent & affable, but unprincipled & unquestioning.

As Chomsky said to Marr in that interview 'I'm sure you believe what you are saying, but if you believed something different you wouldn't be here'.

And Justin Trudeau is the star exampler of that 'power front man' you speak of... He should go hang his (black?!) face in shame!!

[Lightly Toasted]

4 hours ago, Bobthebuilder said:

I took some seeds out of a tomato from Lidl, dried them on tissue paper for a week then planted them.

Almost free tomatoes......

... as long as they bear fruit.

I tried saving seeds of some tomatoes I'd really liked one year, very mixed results due to them being F1 hybrids.

https://www.rhs.org.uk/vegetables/f1-hybrids

... Seeds saved from F1 hybrid plants will not produce plants that are true to the parent type ...

[Bobthebuilder]

9 minutes ago, Lightly Toasted said:

... as long as they bear fruit.

I tried saving seeds of some tomatoes I'd really liked one year, very mixed results due to them being F1 hybrids.

https://www.rhs.org.uk/vegetables/f1-hybrids

... Seeds saved from F1 hybrid plants will not produce plants that are true to the parent type ...

I have done this a few times over the years. Never had a plant that didn't fruit, but you do get different types as some sort of genetics goes on.

Last year I took the seeds from a cherry type tom, ended up with 3 plants, 2 grew cherry toms and the 3rd produced small plum types.

Its a bit like Forrest Gump's chocolate box, you never know what you're going to get.

[Lightly Toasted]

2 minutes ago, Bobthebuilder said:

I have done this a few times over the years. Never had a plant that didn't fruit, but you do get different types as some sort of genetics goes on.

Last year I took the seeds from a cherry type tom, ended up with 3 plants, 2 grew cherry toms and the 3rd produced small plum types.

Its a bit like Forrest Gump's chocolate box, you never know what you're going to get.

I've had a few that didn't fruit, more that produced weird misshapen fruit, and one or two that were really nice 

Being a bit short of growing space, I don't take the gamble any more.

[MrXxxx]

6 hours ago, DurhamBorn said:

The problem for passive really is that due to a huge dis--inflation cycle,inflation assets are tiny compared to the indexes,so by default a 60/40 hardly owns any

Can I just confirm that I understand the point that you are making here...so as those 'inflation' stocks that give an above average/good return in high inflation periods are a small percentage of the whole 60%, AND as we only have 60% of a potential 100%, the return only has a slight impact on the 'whole' 100% inflation rate erosion effect that our capital is being subject to?...

....to give an example, say we had a 50/50 stocks/cash portfolio and 10% of the stocks were 'Inflation' stocks returning twice the inflation rate and the others returned zero growth, we would still only be 'covering' 10% of the actual inflation rate 'cost' to our portfolio capital [50% stocks x 10% inflation stocks x twice inflation rate (x2)].

[Pip321]

1 hour ago, JMD said:

Pip321, am being nosy(?) but as you have mentioned it, do you have a rental portfolio then, just wondering given the thread macro wether you intend holding long term?                                                                                                                             As for the 1960s, I think they were a sweet spot for buying property, was still cheap plus UK had created a mature mortgage/building society market to aid those wanting to buy - funny to think that back then many didn't see the point in buying, and some even thought working class house buyers were 'getting above their station'.                                                                                                                                                                                After the 60s, prices just went up and up (general inflation yes)... But also to begin with, some of that increase was the increasing availability of mortgages, but by the 90s artificially low rates and silly mortgage products caused bubble territory. All of these economic effects could have been predicted - bit like the old adage that 'capitalism doesn't work with low interest rates' (risk/reward, price discovery breaks down) - however TPTB went ahead and did it anyway. 

In short my intent is to sell. Property was my way to acquire wealth during a time where I could see an opportunity. It was not the way I intended to store wealth. 

I began developing property over 20 years ago, my skill was knowing how the numbers would stack up. It was advantageous for CGT tax purposes to rent houses prior to sale (so a trading LL rather than developer) and this meant I would stagger sales after they had been let often for several years.

The big difference between myself and a ‘Borrow to Letter’ was I sold as well as bought so kept borrowing at relatively modest levels.  

The other thing was I was very handy and my friends were in the trade. I was happy to pay their going rate but it meant I had dependable support when I needed it. I also carried on working in a full time job in finance so effectively a double income. 

I wasn’t prolific but was very selective ensuring profit after development was fairly substantial. I also never relied on market growth.  The growth market wasn’t like London (I live in Yorkshire) but it was very kind to me and I also bought well in some dips. The market was icing on the cake rather than a requirement.

Therefore I still have some rentals which I will sell but am waiting for tenants to leave of their own accord….several tenants have been in the houses now for 10/15 years and haven’t had the rent increased.   Tenants have done well with low rents..but I am grateful because I know I have done even better from the deal.

So I left work at 50 and have bought ‘time’ which I love. 

My challenge now is to change my overly frugal lifestyle. I have a large SIPP and I may not even touch it. Sounds like a joke but it really isn’t. Being frugal is now a rather bad habit although pre covid we enjoy holidays. However a Luxury hotel isn’t our thing whereas a cute old historic building in Florence etc might be….and I always end up finding a deal for £400 a week.🤦🏻‍♂️

I genuinely don’t want to be the richest man in the graveyard…although inflation may take care of that.