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

[Nomad]

 

This response really gets to me, seems like she is earning a decent wage, with an excellent pension, but still not happy, https://www.bbc.co.uk/news/uk-wales-61487858

 

[RJT1979]

3 minutes ago, Nomad said:

This response really gets to me, seems like she is earning a decent wage, with an excellent pension, but still not happy, https://www.bbc.co.uk/news/uk-wales-61487858

 

Good money for some thick lass from wales

[Boon]

Must be near £40k gross I would guess.

As usual there is some major detail to the story omitted, clearly people can get buy on £2.3k a month.

Would guess either husband don't work or not there, or over-leveraged on mortgage.

[RJT1979]

1 minute ago, Boon said:

Must be near £40k gross I would guess.

As usual there is some major detail to the story omitted, clearly people can get buy on £2.3k a month.

Would guess either husband don't work or not there, or over-leveraged on mortgage.

Police woman must be up there with teachers in the avoid category for dating.

[snaga]

13 minutes ago, Nomad said:

 

This response really gets to me, seems like she is earning a decent wage, with an excellent pension, but still not happy, https://www.bbc.co.uk/news/uk-wales-61487858

 

a single decent wage and pension isn't enough when the economy now requires two incomes per family. What annoys me is that the media pick these individual stories chosen by identity politics and ignore the big picture.

[Harley]

1 hour ago, DurhamBorn said:

Early selling has cost me huge amounts over the years,im better now,but it still happens too regular.I find it happens when one of my biggest holdings runs hard.Suddenly they move into double figures of wealth and others hit ladders so you sell.I tend to slice now instead and iv found that works better for me.

Early selling is not my problem and I'm good at staying with an uptrend (I get it, these days overbought can become more overbought).  The problem is not exiting early enough (and buying back well) or selling too soon (on just a dip).

The hard part is assessing whether a down trend is material enough to warrant a partial sell (and possible buy back) given the costs, timing risks, and subjectivity.  Relevant as this is primarily a yield then total return portfolio.

TBC, my performance is not bad.  I may be only say 2.5% down across everything (so including PMs and crypto) atm.  Those 20% lossess I see on some holdings may only be on the small rump holding I did not sell down earlier.  Still, they add up.

So my objectives are to (as ever) improve AUM performance while protecting some capital, reduce trading (specifically fees and timing losses), and reduce the time effort to run.

I'm likely to refine things to:

.  Hold an annuity like portfolio of good yielders with tough but still subjective buy and sell rules.  So more a buy and hold type portfolio with a focus on the monthly data and technically based sell criteria.

. The rest as a harder core trend following portfolio using mechanical stops.  A straight single buy and sell.  I need to reassess the non-tech criteria such as yield.

In essence, polarisation and segregation as I think I've been mixing the two up.

I just wish IB would get ISA transfers working as that's the perfect platform for the latter with it's market access, stop types, and fees.

PS:  Stops will be placed according to P&L rather than charts.  So trailing is key with %'s to match the stocks.

[Chewing Grass]

54 minutes ago, Sasquatch said:

Currently assessing a tender for a construction project for a client. General rates (and therefore the overall cost) are about 10% up on tenders from around 6 months ago. I always carefully check back like for like items such as concrete per m3, steel per tonne etc etc. For this particular tender we had 5 prices in from builders and a spread from bottom to top of 53% .

I've got stacks of cost data and would need to do some more number crunching but I'm reasonably confident that in our small part of the construction world, we have seen at least a 20% increase in the last 2 years. 

Builders are still very busy and worried about future price increases so that might be slightly distorting current figures. Even so, it's eye watering stuff.

We are currently working on a £1.2Bn construction job for HMG and they have just upped the overall cost by 14% to cover for steel. In six months they will have to do it again or work will stop.

[Axeman123]

35 minutes ago, RJT1979 said:

Good money for some thick lass from wales

2300/month takehome in wales is good money. (She is clearly a single mother)

"where is your husband dearie?", as my late mother would have put it.

[Harley]

1 hour ago, baffledbyzirp said:

Has anybody else spotted that 'transitory' is an anagram of 'start irony'?

Inflation in its simplest form is a ratio of goods : money. If you massively increase the denominator, prices reflect the relative size adjustments. In the first round we saw inflation in financial assets because the helicopter dumped its payload on Wall Street. In recent years cash was distributed at the base through policies including stimulus cheques and bounce back loans. The Cantillon Effect was demonstrated perfectly. If you give hand outs to the wealthy it isn't spent on milk and heating bills. We are seriously behind the curve and the feedback loops, in the form of increased wages, will become self-perpetuating.

In the early noughties Greenspan was shocked that wage rates were resistant to change but people were anxious due to the dotcom bust, 911 and the subsequent wars. There was also sufficient slack in the system to favour employers. Now there are supply side constraints that strengthen the hand of workers and no more cheap labour from Europe; our working class has gone home. We could see a sustained period when wages play catch up with prices and vice versa until someone has the balls to employ a circuit breaker. In the meantime I like oil, commodities, utilities, insurers, telecoms and fags i.e. the things you can't live without regardless of price.

 

You can, indeed should, print as much as real growth allows.  Simples.

[invalid]

28 minutes ago, Nomad said:

 

This response really gets to me, seems like she is earning a decent wage, with an excellent pension, but still not happy, https://www.bbc.co.uk/news/uk-wales-61487858

 

 

 

Below is the 3rd para, so right at the start of the article to plant a thought in the mind of a reader. She gives the wage of a probationary officer, well of course that's going to be the lowest wage example. Somewhat misleading in my opinion.

"Giving an example of a probationary officer's pay, she said Priti Patel was shocked when she asked her if she could live on £1,200 a month."

 

 

She is a "Det Con" with 23 years service, she will be on a good wage (I'll guess at £45k due to years of service and £50k tops)  and will have a fair chunk in the old police pension scheme (note the pension scheme for new starters is not as good as the old one).

And yet we have this:

"Det Con Knight - who has 23 years of service - described how she had to borrow from her mother to pay for school dinners and fuel for her car as she had no money left at the end of the month."

 

The only bit that has some credibility is this:

""I went to see an accountant and the advice was 'leave the police, work for 22 hours a week and claim benefits and you will be better off'. How can that be right?"

 

I'm guessing she is a single mum with 3 kids. 

 

 

 

 

[Harley]

58 minutes ago, Sasquatch said:

Currently assessing a tender for a construction project for a client. General rates (and therefore the overall cost) are about 10% up on tenders from around 6 months ago. I always carefully check back like for like items such as concrete per m3, steel per tonne etc etc. For this particular tender we had 5 prices in from builders and a spread from bottom to top of 53% .

I've got stacks of cost data and would need to do some more number crunching but I'm reasonably confident that in our small part of the construction world, we have seen at least a 20% increase in the last 2 years. 

Builders are still very busy and worried about future price increases so that might be slightly distorting current figures. Even so, it's eye watering stuff.

I've also calculated 20% too (pretty much across the board but materials in particular), but in a shorter timeframe (say one year).

[MrXxxx]

1 hour ago, Harley said:

I've been doing my occasional "blank sheet" review of what I'm doing.  The number one take away is I have not fully addressed the above as it's my losses that are dragging me down.  Poor risk management because I was trying to be too clever.  Better I mechanise it as much as possible as too much "cleverness" mucks it up.

I pick well but sell badly.  How often do we hear that!

Alongside you @Harley, I have been reviewing my approach/es; I know you have several portfolios based on financial outcomes. After much 'research'; I started investing [read buying!] in 2020, and since then have done more research to formulate my own approach to a personal portfolio; no disrespects to others on here i.e. @DurhamBorn, but rather than following their 'tips' blindly I have wanted to a) understand what I have bought and why, and b) how it fits my goals, this way I would have a 'toolbox' to make my own investment decisions. Coming to the point, I have done much 'navel gazing'/formulation of ideas and have come to the conclusion that the maximum gains from ones investments are reliant on the following generalizations, rather than individual specifics:

1. Portfolio diversification and not risking 5% of capital in any one area.

2. Buying at the right price for a specific stock/sector rather than the right time, and selling at the wrong time.

3. Keeping costs to a minimum i.e. TER, trading fees, broker fees.

4. Controlling [and benefiting from] human behavious i.e. FOMO

5. Reducing complexity to enable as little time required for their management.

I know, pretty obvious, but the 'obvious' that I think people often forget by trying to find an over complicated solution to a simple problem and/or squeeze out that little extra alpha, and as a result a) spending far too much time for any smaller gain i.e. not time/cost effective, and b) sometimes ending up with sub-par results than if they had taken a simple approach.

[Lightscribe]

1 hour ago, Boon said:

Must be near £40k gross I would guess.

As usual there is some major detail to the story omitted, clearly people can get buy on £2.3k a month.

Would guess either husband don't work or not there, or over-leveraged on mortgage.

£40-45k gross but she’s actually right, the accountant advised her to leave and go on benefits as she’ll be better off and she would be. So the question remains why not? Why not for all the younger generation just say fuck it.

Her pension won’t really be a factor for staying since they moved the age goalposts and raised the contributions.

Chances are at her age (40+) she’s striped up with £200k+ mortgage. £2.3k a month may just not be enough per month for a single salary house hold. Same story with the whole of the younger (actual working) generation of today. 

It’s easy to say avocado toast and iPhones etc, but they are more highly indebted than any generation before them. If the working PAYE backbone of the system folds over the whole system collapses. 
 

[HousePriceMania]

BK anyone ?

[Lightscribe]

30 minutes ago, Axeman123 said:

2300/month takehome in wales is good money. (She is clearly a single mother)

"where is your husband dearie?", as my late mother would have put it.

Police officers have a high divorce rate, late shifts, nights, high stress situations etc (it’s why their pension gets divided up - usually affairs with other police officers). My guess is she married in the job and he’s done a runner. 

[M S E Refugee]

1 hour ago, baffledbyzirp said:

Has anybody else spotted that 'transitory' is an anagram of 'start irony'?

Inflation in its simplest form is a ratio of goods : money. If you massively increase the denominator, prices reflect the relative size adjustments. In the first round we saw inflation in financial assets because the helicopter dumped its payload on Wall Street. In recent years cash was distributed at the base through policies including stimulus cheques and bounce back loans. The Cantillon Effect was demonstrated perfectly. If you give hand outs to the wealthy it isn't spent on milk and heating bills. We are seriously behind the curve and the feedback loops, in the form of increased wages, will become self-perpetuating.

In the early noughties Greenspan was shocked that wage rates were resistant to change but people were anxious due to the dotcom bust, 911 and the subsequent wars. There was also sufficient slack in the system to favour employers. Now there are supply side constraints that strengthen the hand of workers and no more cheap labour from Europe; our working class has gone home. We could see a sustained period when wages play catch up with prices and vice versa until someone has the balls to employ a circuit breaker. In the meantime I like oil, commodities, utilities, insurers, telecoms and fags i.e. the things you can't live without regardless of price.

 

I work for Royal Mail and the management are doing their usual thing of dragging out the pay talks for as long as possible.

This tactic may backfire if inflation keeps rising as they would be better going for a quick reasonable offer over 2 years.

I think they have offered us 3% over 2 years with loads of strings.

[Sidd]

13 hours ago, Yadda yadda yadda said:

Not enough dinghies.

Is that mainstream TV in India? Way more detail than UK TV.

The world is fucked.

No it is not. Most of Indian mainstream TV is just government forced propoganda and fear like many countries. Remember they are governed by a fair right hindu extremist government with strong religious ideology based on a superior race complex and it is still a country where minorities and women suffer. If not that, then it is dramas centred around family feuds and relations. The remaining small bit in the middle, is where you find informative programmes such as this.

[Axeman123]

6 minutes ago, HousePriceMania said:

BK anyone ?

I find this concept of a ~2.5% US neutral rate interesting. With inflation over there of at least 8% (or credibly even double that) this implies that the economy cannot grow without negative real rates of at least 5.5%. That would have to mean a truly sick economy dependent on stimulus to even manage nominal growth in a high inflation environment. How negative a real interest rate would positive real growth require, and is that even possible? The alternative is that the neutral rate is actually far higher, and 2.5% then pause is the cop-out "mission accomplished" pivot point.

[M S E Refugee]

US poised to block Russia’s debt payments – media https://www.rt.com/business/555672-us-block-russia-debt-payments/

[afly]

4 minutes ago, M S E Refugee said:

US poised to block Russia’s debt payments – media

https://www.rt.com/business/555672-us-block-russia-debt-payments/

 

I don't get this. Refusing someone's debt payment doesn't mean they've defaulted. It means you're a cunt

[Chewing Grass]

10 minutes ago, M S E Refugee said:

US poised to block Russia’s debt payments – media https://www.rt.com/business/555672-us-block-russia-debt-payments/

That would be a declaration of war in all but name.

[M S E Refugee]

1 minute ago, afly said:

I don't get this. Refusing someone's debt payment doesn't mean they've defaulted. It means you're a cunt

Clown World!

I wonder if the Nationwide can refuse my mortgage payment and repossess my house because they claim I have defaulted.

[Chewing Grass]

3 minutes ago, M S E Refugee said:

Clown World!

I wonder if the Nationwide can refuse my mortgage payment and repossess my house because they claim I have defaulted.

Actually they can as it is written into standard mortgage agreements that they can reclaim the debt at any time for any reason.

[JMD]

3 hours ago, MrXxxx said:

OK bear with me on this ramble, but this got me thinking on a number of levels..."Why is property so important?" and "Why property is important?"....everyone has a) a basic, short-term primary need for shelter i.e 'protection from the elements'/survivability, and b) a practical, secondary long-term need for shelter i.e storage of our physical assets/a 'castle' to keep our valuables in.

The primary need can be met in a fairly flexible fashion through either buying or renting, even with the weaker rental/tenant laws in the UK i.e. if you are given a months notice on your rental you can find an alternative fairly easy or worse case scenario spend a period of time in a hotel/B&B...you are mobile/flexible.

The crux of the matter is the secondary need, where we are reliant on a storage area for our physical assets/possessions that we have 'collected' over a period of time. With notice given you have to consider storage, and if you find yourself without shelter at very short notice this can be an issue. OK, you can use a storage facility but this still a) incurs expense, b) incurs a  certain amount of time commitment to organize, and so becomes an irritation/issue.

Most/the majority of these 'assets'/possession are fairly ephemeral but bulky consumerist items...we have been 'encouraged' to buy these on a whim/a desire/a spurious justification that our life will be incomplete/'less better' without them. Even furniture a most basic household item has fallen into this category, where we are encouraged to express ourselves through a design 'look', a secondary aspect, rather than its primary function. Further, being consumerist items their value over time reduces, as they are being continually replaced with 'better'/more 'up to date' versions of the same item to encourage us to replace them....so we continue to add to our 'store of assets', need more space to 'store our assets', and so incur lower levels of mobility. Consider the most unique/emotional/irreplaceable possessions that you have, are they bulky or could you fill a single box with them?

As a result of this, we have created a 'need to buy a property, to store our property', the secondary factor has become more important than the primary, and the importance of property has changed. So let's think about this rationally, what do we do with these possessions, what happens when we die, and how could this be changed?

Well we have to 'house' them, for the most part they have little value, and/or do not justify the high cost incurred via property ownership for their storage. When we die most are given away and/or dumped, with only the most valuable items being passed on/kept, and these are once again are usually the smallest...so we have spent a lifetime of storing ephemeral, consumerist, easily replaceable items at great cost, and for what?....because overtime we have become conditioned to do this through consumerism and/or societal norms of 'property ownership'; look at truly nomadic people where they seasonally have to move, do they do such a thing?

So how do we change this mindset?...a) become less consumerist, and b) rationalize our assets. The former is predicated on a reward complex, where we 'buy to feel better', so try to replace this desire by spending on experiences/memories, rather than 'Things', as the former are far easier to transport. To resolve the latter ask yourself "How often do I use it [i.e. how many times in the last year], how irreplaceable is this item, and can it be replaced with a more compact version?"...if the answer is "Never" or "Its replaceable" then dump it/give it away, if the answer is "Often" or "Irreplaceable" then put it into a single cardboard box...when the box becomes full then there will be some items that no longer fit into the "Often" [or maybe even "Irreplaceable"] category.

Finally, there is an argument of 'needing to buy a property' for a sense of stability/community in ones life. This is usually achieved through social/personal connections with others, not with owning a property. If you are able to develop strong, meaningful bonds with a few people based around emotional 'possessions' more than just physical 'possessions', then these can be enjoyed regardless of whether you own or rent.

Mr Xxxx, lots of ideas you raise there, mostly off thread I fear, but allow me to respond...  My starting point would be that owning property is primeval, are we not just (journeyman) territorial apes? I'm not attempting to dismiss the human race, who knows, one day we might even journey out to the stars. But in the meantime we (even the phychiatrists) struggle to understand 'ourselves'. One of Jordan Peterson's early (reductive) missives - to help reset our floundering society - was '...clean your room!' Is he implying 'taking ownership' of surroundings, ones own personal problems or said room? I think all of the above. Because for me, none of this world or planet of ours works without us having a personal stake, both physically and emotionally.                                                                                                                                                            I'm reminded of something said a long while back by an esteemed entomologist: 'socialism - great idea, wrong species'!             ...Not saying you were calling for socialism but just attempting to bring things back on topic. I think those fantastical Chinese Xanadu city scapes are the epitome of human hubris. To paraphrase Rod Riddle, I think the Chinese state is now at 'peak wa*k!!'. The world really is entering interesting times, but the Chinese themselves have shown themselves to be rather less than inscrutable.

[M S E Refugee]

4 minutes ago, Chewing Grass said:

Actually they can as it is written into standard mortgage agreements that they can reclaim the debt at any time for any reason.

Can they refuse payment?