Credit deflation and the reflation cycle to come (part 7)

[belfastchild]

9 hours ago, DurhamBorn said:

They are tricky.They could be the cheapest of them all,but they keep making value destroying errors.The debt load being the big one.Its likely they will sell the Spanish business and if they do they will cut the divi,likely by a third.Im down £7k on VOD £3.5k after divis,but inflation in that time has been around 18% as well,so a terrible performance.Im up across my telco holdings though, mostly due to TEF being such a big holding and well up,Telenor,Turkcell double and sell and  BT 78% up and sell and bought back -2% before a div,up 2% with div.Im still hopefull the sector has a structural undervaluation,but companies really need to lower CAPEX,increase ROCE then pay down leverage.Shareholders seem to of been at the back of the line for their boards,i hope that was just until they got deals from regulators.It should also be noted,if net neutrality is watered down,that might put 25% on the sector and put it in play.

Im down over 25% in Vod, over 5.5k. I invested in them despite hearing from insiders that they are woke as fuck for the similar reasons you did. In the long run the dividends should pay out. They are, now, one of my longer term holdings. A punt on net neutrality ever getting sorted out. I was going to say it amazes me how many times this can has been kicked down the road but it shouldnt, its a sop to the new dot.com equivalents at the expense of the network providers. I didnt expect them to be as badly run as they are, as you say, making error after error.

Ive sold down most of my TEF and are a trade cost below profits (up with divis).
I sold out a lot of my BT near peak.
Im down about 15% on Telia but not far off with dividends, only a 5k holding though.

Had a chat at the weekend to an employee of a company I used to have shares in (telco equip related) and they said that they had recently started hiring again after an almost 20 year hiatus of only hiring in as needed. Turns out the policy was short sighted as theres a 20 year skills gap and a lot of people are saying sod that and retiring early. Company trying to tie them down to long notice periods and paying for the priviledge (6 months to a year) but most just sticking to the 3 months which is less with leave etc.

It goes back to another thread where companies have been letting experienced staff go in the hope of hiring new grads to fill the gap. That will work for a few years until it doesnt.

On the other hand Ive heard from very experienced people in the likes of BT who are close to early retirement age who think their role wont be there in 2 years time as rollouts etc will be completed by then.
As a side note to that and dont take this as gospel but Ive heard a lot of the fibre rollouts are more completed than the stats would show. End to end connections may still be lower than forecast but its the expensive middle bit that has mostly been completed. The end connections are ongoing and again my understanding is limited and old info but thats mostly down to paying customers and they get completed.

Of course all of that is in an ideal world, get a muppet government who decide that everything is too expensive and all of that is out the window.

[jamtomorrow]

Thermodynamically, what matters is the total amount of energy and how that energy is organised - the energy-information, if you like.

Thermodynamically speaking, a diesel engine is as much a processor of energy-information as a computer.

And, (coincidentally? or maybe not - the "hidden hand" of the thread?) I see Bitcoin is bubbling up again as a discussion topic, which is interesting because Bitcoin still uses proof-of-work to secure the blockchain, and is therefore subject quite directly to such thermodynamic considerations.

Here's a thought experiment (and I don't know the answer - yet). At today's difficulty and typical ASIC perf-per-watt, how much energy would it take to recompute all the mining hashes in the Bitcoin blockchain? In other words, how much energy is - effectively - now tied up in the Bitcoin blockchain?

Edit to add: found some useful recent numbers here https://ezblockchain.net/article/self-mining-vs-bitcoin-mining-hosting-service/

266Mwh per block

Times 813352 (current block height)

Gives ~ 216TWh, which is about 8 months of UK electricity generation.

Edited October 25, 2023 by jamtomorrow

[BurntBread]

9 hours ago, DurhamBorn said:

Because my mentor told me they would all go to zero in the end.He had been told this by an old friend very very high up in the US treasury,i have no idea who.I didn't question it,he didn't say it as a conversation starter but as a fact.I can only guess given the contact the government intend to make sure only themselves have digital currency in the end.He could be wrong of course,but its good enough or me.

I know it's one data point, but if you look at the history of public key encryption (the RSA algorithm, for example), then it is reasonable to suppose that government cryptography/cryptanalysis is one or two decades ahead of what has been discovered in the public domain. Maybe not much more than that, because there are lots of clever people outside government; but also don't underestimate government research in this area: it has been a hot topic for "them" at least since the court of Elizabeth I.

I would therefore still hold it as possible that HMGov or the CIA have a way to crack the blockchain ... but if no research of that kind appears in the public domain over the next decade, I'd think it unlikely that Bitcoin was launched with a known-to-government flaw.

As for whether governments could destroy it with regulation, I don't know. It seems unlikely when Bitcoin is legal tender in at least one country. Western governments could probably push down the value with restrictions, and if BRICS also don't want a free and unregulated currency, then I think the BTC price could be pushed down a long way.

 

@Stuey, as several people have said, we don't really value energy. We value concentrated energy, or energy-out-of-equilibrium, which can be used to do things we want, such as work or creating temperature differences where we need them. I'm guessing your comment was trolling though, otherwise you'd struggle to get employment anywhere near the energy industry.

[Lightscribe]

39 minutes ago, wherebee said:

This is one of the double traps for the corrupt leaders in the west now.  If they ban crypto 100%, all of the excess money and the panic money heads where?  Well, a lot into gold and silver.  Which will blow the lid off the corruption in the paper market.  Which will collapse their books.

I see the machinations in the west (not really the west, more like the globalists) turning in on themselves more and more.  Like a serial liar who had to invent more and more complex lies and then it all collapses as complexity becomes too much, the financial shell game, politicial lies, media cover ups, etc etc, are all coming to a head.

Problem is, in their desperation they might do something REALLY fucking stupid which results in nuclear war.

https://www.telegraph.co.uk/business/2023/10/24/world-tipping-point-government-debt-binges-hsbc-boss/

https://archive.ph/ESpdG
 

Yes.

But in particular with BTC they don’t even have to ban/confiscate etc. If US ETF is approved it can just manipulate the paper price (and in turn the rest of regulated crypto) just like they do with gold and silver. It has been/will be allowed (and possibly created in the first place) for controllability otherwise they would have stamped it out years ago. 

As you say (and as I’ve said in the past) the trillions of QE liquidity at this point would have flowed into PMs busting the paper markets. No good if the majority of those resources going forward are not in western control.

[crashmonitor]

1 hour ago, belfastchild said:

Im down over 25% in Vod, over 5.5k. I invested in them despite hearing from insiders that they are woke as fuck for the similar reasons you did. In the long run the dividends should pay out. 

Looking at the smaller caps, the FTSE 250, you  would think that dividends would have at least covered the slide in the  index but the total return is down since the autumn of 2017 from 14,800 to 14,500. Six years of losing money with dividends.

The irony is that I remember the "experts" lauding the FTSE 250 back then as it powered through the 20,000 mark, in a similar vein to them lauding the Hang Seng in 2019 and advising to invest in both  indicies.   Both have since performed dreadfully. 

Meanwhile at least the FTSE 100 has given a modest return once you factor in dividends.

 

 

Edited October 25, 2023 by crashmonitor

[ThoughtCriminal]

16 hours ago, Harley said:

Or it itself is running inside something bigger!  I'm very tempted to largely pull out of the whole s-show.  It all just feels high risk atm.  Draconian war economy inbound?  Cyber shutdowns followed by "computer says no" and so on?  Am I losing the central ground or am I being a realist?  A coin toss atm.

I just keep thinking of that Big Short moment where he says it's time to call bullshit and he's asks him on what: "Everything".

Now I'm not say that NOW is that moment, I'm not omniscient, but everything just feels artificial, like it's one rug-pull away from crashing down.

[ThoughtCriminal]

10 hours ago, DurhamBorn said:

Its incredible how they think wages are driving inflation when a one year student of macro would spot given the size and scope its bennie and pension increases.Wages lag both and cannot increase enough to compete because the backbone of the economy is not big enough.Our consumption needed to fall by around 25% inflation adjusted or production increase (a mix of both really) but polos have only made working people suffer the loss so its around 50% consumption loss to everyone working or with savings,no loss at all to bennies and public sector pensions.The present policies ensure hyperinflation and nobody working at all in the private sector.Of course its very likely something will change before that,but so far there is nothing.

I know you keeping caveating it by saying the Titanic (UK) will eventually change course and avoid the iceberg, but I keep wondering, there's has to be a point of no return surely? We can't just keep heading towards the metaphorical iceberg forever.

[DurhamBorn]

7 hours ago, Eventually Right said:

Presumably he said this several years ago?  
 

I’m sure he’s right on 99% of cryptos, I’d question Bitcoin itself though. The longer it survives, has ETFs launched for it etc, the harder I think it becomes to ban too many ‘regular’ people holding it in retirement accounts etc-becomes politically toxic.

of course, always a chance the PTB declares Hamas was funded by Bitcoin, and there’s an international ban on it in the west…but I think they’re running out of time if there’s a plan to ban it.

A ban would be nice though-send those degenerate speculators back to where they belong…precious metals 

Around two years ago.He said they would all go to nothing,they were a mania simply to promise the young easy riches,but would take everything they invest as bag holders.Me mentioned his friends comments and without saying it was pretty much saying governments would destroy any with potential,most would collapse themselves.Each to their own,but il never sink 1p into any of them.

[wherebee]

Another canary in the coalmine: ETF collapse in Australia.  Reported in the mainstream press

 

Quote

 

The two companies behind the XTB range of corporate bond ETFs have collapsed, after an urgent sale process failed to find a buyer.

The Australian Corporate Bond Company and Global Bond Exchange are in liquidation, with Alan Walker and Glenn Livingstone of WLP Restructuring appointed.

The XTB website was live until Tuesday this week but has now been shut down.

 

Looks like they gave retail investors access to corporate bonds via ETFs.  A reminder of how return OF capital is as important as return ON capital.

[headrow]

1 hour ago, belfastchild said:

Im down over 25% in Vod, over 5.5k.

I lost 7k on mine , easily the worst investment I ever made.

Glad to be out of it. It's the opportunity cost of having a decent chunk of money , in my case it was £20k , tied up underperforming in a buoyant market that hurts the most. Yes I got some decent dividends but let's face it that is bound to get rerated in the future. It certainly isn't going to increase and with inflation where it is what is the point in holding a share for its dividend income if it's never going to increase.

 

My price target is 40p.

 

[Harley]

Listening to State of the Markets with Danielle Di Martin Booth.   Never heard her so clear before.  Very informative.  Nice and fiesty too, belongs in Europe!

https://podcasters.spotify.com/pod/show/stateofthemarkets/episodes/187-Danielle-Di-Martino-Booth---Speculators-will-be-taken-down---the-end-of-the-Fed-Put-e2auf21

[TNS]

Just now, headrow said:

I lost 7k on mine , easily the worst investment I ever made.

Glad to be out of it. It's the opportunity cost of having a decent chunk of money , in my case it was £20k , tied up underperforming in a buoyant market that hurts the most. Yes I got some decent dividends but let's face it that is bound to get rerated in the future. It certainly isn't going to increase and with inflation where it is what is the point in holding a share for its dividend income if it's never going to increase.

 

My price target is 40p.

 

At that price I could see the likes of the UAE buying the lot.

[DurhamBorn]

1 hour ago, belfastchild said:

Im down over 25% in Vod, over 5.5k. I invested in them despite hearing from insiders that they are woke as fuck for the similar reasons you did. In the long run the dividends should pay out. They are, now, one of my longer term holdings. A punt on net neutrality ever getting sorted out. I was going to say it amazes me how many times this can has been kicked down the road but it shouldnt, its a sop to the new dot.com equivalents at the expense of the network providers. I didnt expect them to be as badly run as they are, as you say, making error after error.

Ive sold down most of my TEF and are a trade cost below profits (up with divis).
I sold out a lot of my BT near peak.
Im down about 15% on Telia but not far off with dividends, only a 5k holding though.

Had a chat at the weekend to an employee of a company I used to have shares in (telco equip related) and they said that they had recently started hiring again after an almost 20 year hiatus of only hiring in as needed. Turns out the policy was short sighted as theres a 20 year skills gap and a lot of people are saying sod that and retiring early. Company trying to tie them down to long notice periods and paying for the priviledge (6 months to a year) but most just sticking to the 3 months which is less with leave etc.

It goes back to another thread where companies have been letting experienced staff go in the hope of hiring new grads to fill the gap. That will work for a few years until it doesnt.

On the other hand Ive heard from very experienced people in the likes of BT who are close to early retirement age who think their role wont be there in 2 years time as rollouts etc will be completed by then.
As a side note to that and dont take this as gospel but Ive heard a lot of the fibre rollouts are more completed than the stats would show. End to end connections may still be lower than forecast but its the expensive middle bit that has mostly been completed. The end connections are ongoing and again my understanding is limited and old info but thats mostly down to paying customers and they get completed.

Of course all of that is in an ideal world, get a muppet government who decide that everything is too expensive and all of that is out the window.

On BT i think they will treble or more.I think the div will end up more than doubling and i think they are on a free cash flow yield of 3 here (future) ,the huge worry as you say is governments stealing our money through regulation and tax.However on BT i think they would win a court case,and the government would have a very hard job forcing them to below inflation increases.I see a few mentions of BTs debt,but its small compared to the worth of the network and the cost of anyone building another one.Like you mention,it could be there wont even be the skills to build a new network without massive costs.I think the market is very very wrong on the sector,im prepared to wait as long as needed.I sold Telia for a small profit myself,i like Telenor more.

[DurhamBorn]

13 minutes ago, ThoughtCriminal said:

I know you keeping caveating it by saying the Titanic (UK) will eventually change course and avoid the iceberg, but I keep wondering, there's has to be a point of no return surely? We can't just keep heading towards the metaphorical iceberg forever.

Yes,it could be today,or ten years,life slowly getting worse and worse.Lots of things to change first.Less cars,more multi generational living etc.Retired public sector will also give leg ups to their children to enforce even more divide,using the tax of children not in that situation.The government know it,its why the cowards froze allowances,but that hits everyone.

[wherebee]

5 minutes ago, headrow said:

I lost 7k on mine , easily the worst investment I ever made.

Glad to be out of it. It's the opportunity cost of having a decent chunk of money , in my case it was £20k , tied up underperforming in a buoyant market that hurts the most. Yes I got some decent dividends but let's face it that is bound to get rerated in the future. It certainly isn't going to increase and with inflation where it is what is the point in holding a share for its dividend income if it's never going to increase.

 

My price target is 40p.

 

Surely dividend income ABOVE inflation is the goal for the next few years?  If I can get 5% in a bank, but 9% from BAT....

the 9% keeps my head above water a little bit longer?

[ashestoashes]

9 minutes ago, headrow said:

I lost 7k on mine , easily the worst investment I ever made.

Glad to be out of it. It's the opportunity cost of having a decent chunk of money , in my case it was £20k , tied up underperforming in a buoyant market that hurts the most. Yes I got some decent dividends but let's face it that is bound to get rerated in the future. It certainly isn't going to increase and with inflation where it is what is the point in holding a share for its dividend income if it's never going to increase.

 

My price target is 40p.

 

yes, some real losers suggested on these threads, cna, vod, abdn, 1&1, wood group even bat, guess should stick to what you know

[ashestoashes]

5 minutes ago, wherebee said:

Surely dividend income ABOVE inflation is the goal for the next few years?  If I can get 5% in a bank, but 9% from BAT....

the 9% keeps my head above water a little bit longer?

you carry the risk of the world turning against smoking and vaping which is not a 0% risk

[Joncrete Cungle]

2 minutes ago, ashestoashes said:

you carry the risk of the world turning against smoking and vaping which is not a 0% risk

Most of the rest of the world smoke like chimneys. South America, Asia, Africa and Eastern Europe, India, China etc.

[DurhamBorn]

6 minutes ago, ashestoashes said:

yes, some real losers suggested on these threads, cna, vod, abdn, 1&1, wood group even bat, guess should stick to what you know

Mosaic made double the losses on all those put together.So did DRAX,and many many more.Many are up on Centrica,i made profits on ABRDN,iv added 54% to net worth in 3 years while most pensions have seen big losses.This game is hard.Im glad some things are down because my next big uplit to family wealth will come from some of them.VOD has been a real let down no question,there will be may more.

[Harley]

2 hours ago, ThoughtCriminal said:

I know you keeping caveating it by saying the Titanic (UK) will eventually change course and avoid the iceberg, but I keep wondering, there's has to be a point of no return surely? We can't just keep heading towards the metaphorical iceberg forever.

Best listen to the latest State Of The Markets.  Outlines a scenario if the Dems win next year:  MMT, UBI, etc for an entitled and disgruntled 1969 population that doesn't want to work with masterful politicians like Newson centre stage.  Probably here too. 

And as DB says, they'll take everything (money, freedom, the fun, etc) before it all implodes in a crescendo of pain.  That's one realistically possible scenario.  This festering virus has to burn itself out and that takes time and pain.

IMO, time to talk and prepare for tail end risks, such as:

 

Edited October 25, 2023 by Harley

[Harley]

34 minutes ago, wherebee said:

Another canary in the coalmine: ETF collapse in Australia.  Reported in the mainstream press

 

Looks like they gave retail investors access to corporate bonds via ETFs.  A reminder of how return OF capital is as important as return ON capital.

Better check our SSHY.  Been great but looking intermediate toppy anyways.  Pimco though.  Defo need a stop though to stay close to the exit!

Of course, as I have mentioned many times over the years, etfs are something to be cautious about.  Most lend their holdings at quite tame coverage (collateral) levels (say 125%) to banks, shorts, etc. 

Especially the "safe" bond etfs to banks to presumably improve their apparent capital tier positions.  Could be a domino effect if things get nasty.

I worry about trust and funds too - any collective.  Hell, stocks with a depository is bad enough!

Edited October 25, 2023 by Harley

[ThoughtCriminal]

17 minutes ago, DurhamBorn said:

Mosaic made double the losses on all those put together.So did DRAX,and many many more.Many are up on Centrica,i made profits on ABRDN,iv added 54% to net worth in 3 years while most pensions have seen big losses.This game is hard.Im glad some things are down because my next big uplit to family wealth will come from some of them.VOD has been a real let down no question,there will be may more.

Wondered how I missed that one, then I realised I have that cocksucker on ignore. Perfect demonstration of why.

[Harley]

2 hours ago, wherebee said:

Surely dividend income ABOVE inflation is the goal for the next few years?  If I can get 5% in a bank, but 9% from BAT....

the 9% keeps my head above water a little bit longer?

I can't say it enough.....

RISK!

Apples and oranges!  Different risk profiles.  BATS is simply more risky overall.  Both as an equity asset class and as a company.  You need to compare risk adjusted returns using reasonable individual risk scores.

By all means include in a portfolio but at an overall weighted adjusted risk that is appropriate for you.   One you ain't going to cry about.  For example, a capital preserver may cry about an irretrievable loss while an accumulator may cry about the loss as an opportunity (capital gain or compounding).

We use a very aggressive minimum 2% risk premium for equity and that's on the div element only and for sound companies.  We do own a bit of BATS though!

PS:  "You" = IMO everyone!

Edited October 25, 2023 by Harley

[Plan-b]

Another collapse indicator, an ever growing list of people waiting for Ops and treatment - while this kind of crap is going on..

 

 

[Harley]

35 minutes ago, DurhamBorn said:

Mosaic made double the losses on all those put together.So did DRAX,and many many more.Many are up on Centrica,i made profits on ABRDN,iv added 54% to net worth in 3 years while most pensions have seen big losses.This game is hard.Im glad some things are down because my next big uplit to family wealth will come from some of them.VOD has been a real let down no question,there will be may more.

Only 54%?  I had double that in mind.  Was it that time distracted with the pointing?  Or the ladders, coal mine, or fence posts!  I feel deflated!  Is that what the thread title means?!

PS: Don't worry, the bromance is as strong as ever!

Edited October 25, 2023 by Harley