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

[JMD]

6 hours ago, MrXxxx said:

Remind me, has this company `turned` a profit yet?...like the 2000s tech bubble over again.

Yes, it sold some of its BTC!!

[sancho panza]

5 hours ago, spygirl said:

Cathie Woods comes across as a loon who got v v lucky.

 

I'm a veteran of the tech bubble in 2000.We were buying small techies from about 1996 on via newsletter techinvest.I could see the bubble signs around me-total lack of wood for the trees/valuations on steroids/momo buyers buying cos theyd gone up and then more momo buyers buying cos theyd gone up/people plucking earnings figures from their from the time on their watch etc etc.This was pre internet.HSBC had a share screen in town and all the wannabee Buffets(incl yours truly) gathered there through the day.

I'll never forget loads of those guys laughing at me,telling me I was a loser etc etc when I was selling our tech stocks .We sold too early as is my form and bought super cheap miners/banks etc some of which I again sold too early lol.Over teh years tho, I'd see those guys around Leicester and some of them admitted they'd lsot their shirts in that crash even tho they could see the madness around them.

Point I'm making is that I watch Wood's video above,she jsut doesn't seem that well informed on fuel issues-our own @Cattle Prod @Transistor Man @Bobthebuilder& others,seem far more well informed to my untrained eye on the infrstructure needed to run the worlds fleet of 1.5 billion cars.

And that's a key issue,no point having leccy cars if you can juice them.No point financing people having leccy cars if they can't use them.

I'm not dismmisng Wood,she's made more than I ever have but I am saying she doesn't seem as well informed as say Jeremy Grantham.

[HousePriceMania]

9 minutes ago, sancho panza said:

This was pre internet.HSBC had a share screen in town and all the wannabee Buffets(incl yours truly) gathered there through the day.

 

Is that you on the left ?

 

[HousePriceMania]

10 minutes ago, sancho panza said:

I'm a veteran of the tech bubble in 2000.We were buying small techies from about 1996 on via newsletter techinvest.I could see the bubble signs around me-total lack of wood for the trees/valuations on steroids/momo buyers buying cos theyd gone up and then more momo buyers buying cos theyd gone up/people plucking earnings figures from their from the time on their watch etc etc.This was pre internet.HSBC had a share screen in town and all the wannabee Buffets(incl yours truly) gathered there through the day.

I'll never forget loads of those guys laughing at me,telling me I was a loser etc etc when I was selling our tech stocks .We sold too early as is my form and bought super cheap miners/banks etc some of which I again sold too early lol.Over teh years tho, I'd see those guys around Leicester and some of them admitted they'd lsot their shirts in that crash even tho they could see the madness around them.

Point I'm making is that I watch Wood's video above,she jsut doesn't seem that well informed on fuel issues-our own @Cattle Prod @Transistor Man @Bobthebuilder& others,seem far more well informed to my untrained eye on the infrstructure needed to run the worlds fleet of 1.5 billion cars.

And that's a key issue,no point having leccy cars if you can juice them.No point financing people having leccy cars if they can't use them.

I'm not dismmisng Wood,she's made more than I ever have but I am saying she doesn't seem as well informed as say Jeremy Grantham.

I worked with some people who became multi-millionaires over night in the dotcom bubble, including the receptionist !!!

They weren't allowed to sell their shares for 12 months after listing ( not sure why ) and by the time they were allowed to sell their was little point as they were pretty much worthless. All the porsches and Ferraris had to go back.

 

[sancho panza]

3 hours ago, DurhamBorn said:

Iv said it before,but Tesla etc make no difference to oil and gas demand.Indians getting a fridge is about 100 times more important.

Tesla etc have done amazing from loose money.They can issue shares at ludicrous prices instead of debt and get a huge advantage over the competition and attract great workers with share options.Others will copy the tech though.They had a cash outflow again this quarter.

 

 

and herein lies the genius of this thread seeing the wood for the trees.

add in diesel vans/lorries

https://hedgescompany.com/blog/2021/06/how-many-cars-are-there-in-the-world/

 

[sancho panza]

1 hour ago, Cattle Prod said:

Steve Kaplan has been wrong on Tesla and some of his other shorts. Tesla is going to have to fall 50% for him to cover his short (7% of his net worth!). But Tesla will of course fall over 50% at some point, and because Steve has the patience of a saint, he'll no doubt still make a profit. I'd love to know how he is shorting with no time decay. Can you remember, @sancho panza? I bet Tesla has all sorts of interesting things in their accounting.

I don't know how Kapaln's shropts per se whether it's conventional shorting(posting margin) or via puts(my preferred choice if avaialable).He's not had the best of runs in terms of timings and he's has some huge portfolio per centages at risk.He most definitely isn't shorting without time decay as you either have to borrow stock or buy puts.

I recently had some calls on oilies that were down 50% and then the october run bailed them out and we made 50% on the upside.That was with a small %age at risk.Looking at his QQQ shorts etc,he's got a huge position that is the sort that'll get closed at parity for the relief.I don't care how cool you are,noone sits on those sorts of losses without closing them early.

I was shoritng Tesla a couple of years back wehn me and Jim Chanos got it wrong big time.Market irrational etc.Been there.I thought he was wrong to short so early.I wouldn't even short now and I've got a few quid saved for the punt.

[Don Coglione]

3 minutes ago, sancho panza said:

I don't know how Kapaln's shropts per se whether it's conventional shorting(posting margin) or via puts(my preferred choice if avaialable).He's not had the best of runs in terms of timings and he's has some huge portfolio per centages at risk.He most definitely isn't shorting without time decay as you either have to borrow stock or buy puts.

I recently had some calls on oilies that were down 50% and then the october run bailed them out and we made 50% on the upside.That was with a small %age at risk.Looking at his QQQ shorts etc,he's got a huge position that is the sort that'll get closed at parity for the relief.I don't care how cool you are,noone sits on those sorts of losses without closing them early.

I was shoritng Tesla a couple of years back wehn me and Jim Chanos got it wrong big time.Market irrational etc.Been there.I thought he was wrong to short so early.I wouldn't even short now and I've got a few quid saved for the punt.

I am still short Tesla (although I closed a few positions at a hefty loss at the end of last year); clearly, I am getting creamed. I didn't participate in the tech boom, but know many who did and lost huge sums - Tesla feels even bigger.

[sleepwello'nights]

20 hours ago, Hancock said:

Most heavy industry companies i see in England seem to have a dozen office workers for each person doing the manual work.

Do you think a reason for that might reflect the level of automation that has been deployed?

I once worked for a subsidiary of an electronics manufacturer that was based in Wales. Most of the products they produced were surface mounted boards. I guess in the 90s it became cheaper to manufacture them in the far east. The machines would cost the same but the maintenance engineers and all the costs associated with the premises would be much less expensive abroad. 

Once those imbalances reverse then transportation and speed to market make on shore production more competitive. Then the design and administration will make a return.

 

[MrXxxx]

1 hour ago, sancho panza said:

and herein lies the genius of this thread seeing the wood for the trees.

add in diesel vans/lorries

https://hedgescompany.com/blog/2021/06/how-many-cars-are-there-in-the-world/

 

Well, its about time the Developed nations started offering the Developing nations EV as part of their foreign aid packages....and we can worry about the infrastructure at a later date!

[sleepwello'nights]

18 hours ago, spygirl said:

Yes we have.

Dundee timex factory made zx spectrums.

http://womenshistoryscotland.org/2019/10/29/the-rise-and-fall-of-timex-dundee-bbc-scotland-15-october-2019/l

Spango valley made loads of IBM stuff,Inc PCs, fir Europe.

http://catchingphotons.co.uk/blog/industrial/ibm-greenock/

In terms of heavy industry -

Tractors up around Lincoln.

Again where I was assigned once took on a newly qualified MBA. A few years after I left, (well he had me fired actually ,) and the operation had been closed down I heard he moved to Timex in Dundee, they shut it down shortly after. I then heard he worked for Reliant in car production, they then shut it down.

I always wonder whether that was on his advice or he was just a Jonah. 

[sleepwello'nights]

17 hours ago, JMD said:

Its worse than that, my fault perhaps for using 'plot' when in fact what happens is the big house builders buy large tracts of land that don't really have a chance of planning at time of purchase, however holding say 20 similar tracts of land for up to 20 years means eventually one or more of these speculations pay off handsomely. 

They don't buy the land. They buy options to purchase. Farmers love it.

[sleepwello'nights]

5 hours ago, HousePriceMania said:

Fun Fact 

 

 

That is the type of logic applied to crypto currency, especially BitCoin. It just doesn't make any sense to me. 

 

And that is why I'm still poor.

[MrXxxx]

5 hours ago, HousePriceMania said:

Seems there is going to be some option given to share holders

Anyone any thoughts on wether to take it up ?

More details below.....seems a bit worrying that they are having to fund this via a rights issue, and not from having made a provision from previous years funds/profits....its not as if this has been 'sprung' upon them, as my understanding is that it been dragging on for the last 6-7 years!

 

Petrofac raises cash for Serious Fraud Office fine

11:52 , Oscar Williams-Grut

Oil services company Petrofac has this morning announced a heavily discounted fundraising to help pay for a Series Fraud Office (SFO) bribery fine and pay down debts.

Petrofac said this morning it was launching a fully underwritten $275 million placing and open offer. Shares are on offer at 115p, which is a 27.2% discount to Monday’s closing price.

Funds from the share sale will be used to pay off debts and to pay a $106 million fine levied by the SFO. Petrofac settled an investigation with the SFO in September, pleading guilty to seven counts of failing to prevent bribery by agents it used in between 2012 and 2015 in Iraq, Kingdom of Saudi Arabia and the UAE. Chairman René Medori called it a “deeply regrettable period of Petrofac’s history” at the time and said the company had “fundamentally overhauled our compliance regime, as well as the people, and the culture that supports it.”

Today’s open offer is part of a broader refinancing. Medori said today: “Support from all our shareholders and debt providers in the refinancing plan will provide the company with a stable platform from which to grow and look to the future with confidence. I welcome the continuing support of our largest shareholder and fellow Board member Ayman Asfari, as Petrofac moves on to the next chapter of its history.”

Shares in Petrofac sunk 30.6p or 19% to 127p.

[HousePriceMania]

6 minutes ago, sleepwello'nights said:

That is the type of logic applied to crypto currency, especially BitCoin. It just doesn't make any sense to me. 

 

And that is why I'm still poor.

But at least you wont be walking around for the rest of your life saying, I coulda been rich if only I'd sold at the right time.

4 minutes ago, MrXxxx said:

More details below.....seems a bit worrying that they are having to fund this via a rights issue, and not from having made a provision from previous years funds/profits....its not as if this has been 'sprung' upon them, as my understanding is that it been dragging on for the last 6-7 years!

 

Petrofac raises cash for Serious Fraud Office fine

11:52 , Oscar Williams-Grut

Oil services company Petrofac has this morning announced a heavily discounted fundraising to help pay for a Series Fraud Office (SFO) bribery fine and pay down debts.

Petrofac said this morning it was launching a fully underwritten $275 million placing and open offer. Shares are on offer at 115p, which is a 27.2% discount to Monday’s closing price.

Funds from the share sale will be used to pay off debts and to pay a $106 million fine levied by the SFO. Petrofac settled an investigation with the SFO in September, pleading guilty to seven counts of failing to prevent bribery by agents it used in between 2012 and 2015 in Iraq, Kingdom of Saudi Arabia and the UAE. Chairman René Medori called it a “deeply regrettable period of Petrofac’s history” at the time and said the company had “fundamentally overhauled our compliance regime, as well as the people, and the culture that supports it.”

Today’s open offer is part of a broader refinancing. Medori said today: “Support from all our shareholders and debt providers in the refinancing plan will provide the company with a stable platform from which to grow and look to the future with confidence. I welcome the continuing support of our largest shareholder and fellow Board member Ayman Asfari, as Petrofac moves on to the next chapter of its history.”

Shares in Petrofac sunk 30.6p or 19% to 127p.

I meant to buy some at 10am and thought better of it...

 

I should get a job at the motely fool

 

[sleepwello'nights]

3 minutes ago, HousePriceMania said:

But at least you wont be walking around for the rest of your life saying, I coulda been rich if only I'd sold at the right time.

 

 

I walk around now saying I meant to buy some in 2009 and thought better of it...   

[DurhamBorn]

Lots of rumours swirling BT again.Highly likely the sector is in play.I suspect Drahi isnt wanting to buy BT,but more encourage them to split and then do merges of the seperate bits.

I really hope it doesnt come off.The sector will be a divi machine from mid cycle onwards and i want those divs.Im not interested in quick 30% capital profits because we will end up with all the assets to protect from inflation and dis-location going private and being stuck with Sunaks wank green bonds etc.

The equity value on this sector is crazy,as a whole i think double would be low range of the value and late cycle treble.

Capital flooding into bubble areas is creating openings in the value areas for the private sharks.

Deutsche telekom would likely crash the party or be king maker with its stake.

 

[HousePriceMania]

6 minutes ago, DurhamBorn said:

Lots of rumours swirling BT again.Highly likely the sector is in play.I suspect Drahi isnt wanting to buy BT,but more encourage them to split and then do merges of the seperate bits.

I really hope it doesnt come off.The sector will be a divi machine from mid cycle onwards and i want those divs.Im not interested in quick 30% capital profits because we will end up with all the assets to protect from inflation and dis-location going private and being stuck with Sunaks wank green bonds etc.

The equity value on this sector is crazy,as a whole i think double would be low range of the value and late cycle treble.

Capital flooding into bubble areas is creating openings in the value areas for the private sharks.

Deutsche telekom would likely crash the party or be king maker with its stake.

 

Is there something we should know ?

[HousePriceMania]

https://news.sky.com/story/bt-bolsters-defence-against-potential-bid-from-tycoon-drahi-12445093

 

BT bolsters defence against potential bid from tycoon Drahi

[Jesus Wept]

On 24/10/2021 at 15:00, Jesus Wept said:

I’m planning on adding in the telecom sector this week. As at start of supply chain, like fags can just up the prices and inflation will eat their fixed debt (is this thesis correct?).

Planning to pick up some more VOD, VZ and also look at buying some BT (as telecoms in general haven’t gone anywhere excepting BT which I missed) - ( so laddering down). Any other favourites? 

 

 

Nice little 6% on BT today.

 

[TNS]

1 minute ago, Jesus Wept said:

Nice little 6% on BT today.

Forget BT, CNA rose an amazing 0.03% woohoo! 

[Loki]

So Hertz bankruptcy was last years news?

[HousePriceMania]

4 minutes ago, Loki said:

So Hertz bankruptcy was last years news?

 

[Don Coglione]

7 hours ago, Sugarlips said:

This is why $TSLA broke the $1000:

https://www.cnn.com/2021/10/25/business/hertz-tesla-purchase/index.html

I worked for one of the other major manufacturers (I know at least one other poster here does too); those rental deals were usually done at a loss, to keep the plants busy. I have no idea of Tesla's build costs, but I doubt that this business was written at a profit.

[Harley]

Just a follow up on planning.  Another to follow with DB's inflation numbers.  I wanted to post this as I've been looking at online pension drawndown calculators.  There are loads, although many are rubbish (even from some large providers) because they ignore inflation, etc!  All just an FYI, DYOR, information purposes only, just what I'm currently assessing, comments welcome, no liability accepted, etc!

Personally, I liked the following one because it seems to use the same maths as I was using in Excel:

https://www.noelwhittaker.com.au/resources/calculators/retirement-drawdown-calculator/

It's for use from when you are about to retire so any accumulation period before that needs to be worked on separately.  I attach a screen shot where I assumed a day 1 pension pot of £400k, 8% inflation, a mere 2.25% investment return, and £10k pre tax drawings per year (so excludes other income such as the state pension).  No, I don't have £400k, I just wanted to keep the maths easy (see later)! 

So that'll last 20 and a bit years, assuming many things like no BK!  I knew that using my prior formulae.  You can play with any variable at a time.  I used a 2.25% rate of return based on the average of the following assumed portfolio mix: Hard Assets (5%), Equity (3%), Bonds (1%), and cash (0%) where each asset class was 25% of the total portfolio (i.e. The Permanent Portfolio).  That's how I derisk the portfolio (e.g. reduce the impact of a BK).  What I like is being able to use those returns to drive my investing goals - that is, not take on more risk than is needed.  I could also adopt a different approach and do separate calculations for a floor v upside portfolio approach where I use a low return for the essential floor and a higher return for the discretionary upside.  The point being I can slice and dice my portfolio and run the calculator on each segment.  I could also use different inflation rates for the 20 year period I'm targeting but then I would need DCF calcs to discount the results back to year one monies.

PS:  Compounded inflation:  Note how £10k pa in year one at 8% annual inflation becomes £50k after 20 years.

 

[Axeman123]

13 minutes ago, Don Coglione said:

I worked for one of the other major manufacturers (I know at least one other poster here does too); those rental deals were usually done at a loss, to keep the plants busy. I have no idea of Tesla's build costs, but I doubt that this business was written at a profit.

https://wolfstreet.com/2021/10/25/tesla-rental-deal-is-propaganda-coup-for-hertzs-selling-shareholders-tesla-but-sales-to-rental-fleets-are-low-quality-sales-automakers-dont-tout/

Wolf says other manufacturers downplay fleet sales for just that reason.