Credit deflation and the reflation cycle to come (part 8)

[Lightscribe]

Fuck off Tavi, stop reading Dosbods. 

[Democorruptcy]

2 minutes ago, Bobthebuilder said:

I get annoyed by this.

The other thing is payment of interest on cash balance, calculated to the 10th of every month but paid into the account on the 15th. Do I receive interest on that money during those 5 days?

If you think about how many clients the larger firms have and how much the total dividends are over a year, it would make them a lot now rates are higher, if they could delay payments just by a day or two.

I check my interest and it's always the correct amount for the period 10th to 9th, even though it's paid in late.

[Harley]

3 hours ago, DurhamBorn said:

Stage 2 of the inflation cycle is kicking it IMO.My portfolio hit a record Friday after treading water for around 18 months after an explosive 2 years (though im taking out as well now).I still have many areas down a bit,but those reds are shrinking,most are now green with divis added on and many others moving nicely green.I still think most of what i own is dirt cheap given the cycle.The market is positioning mostly for lower rates etc,and we will likely see them,but the inflation drop will be short lived until structural issues are worked out,and they take one or two cycles,not one or two years.This 2nd stage of the distribution will see the polos panic and push the investment button after seeing re-distribution of bennies etc is not working because its a cost push cycle,i didnt expect them to get policy so wrong .Im convinced we will see more sharing etc of assets,and many investment areas will be a disaster,but anyone who can increase prices close to inflation with fixed depreciation will do very very well.Looks to me the first stage destroyed value in gilts etc,wiping 30% from retirement portfolios (50% loss compared to bennies and retired public sector),the next stage will smack the big tracker funds and ETFs.They might run up a bit first but then go lower and stay lower as stage 2 inflation eats them away.Likely 20%ish off those trackers plus inflation over the rest of the cycle,so private sector pensions likely losing 70% to 80% against retired public sector by end of cycle.

My job is to keep my families saved labour whole.Iv outpaced official inflation (so retired public sector and bennies) by 37% since March 20 ,my aim here is to match it or more from here.

In very simple terms its obvious massive amounts of capital sat in "growth" and bubble areas will need to go to work in commods and energy.The macro demands it,and the macro is always paid in the end.

If the miners could run really hard first we might get a chance to switch some from them into other areas.

Im very worried about the amount of cash producing companies we are losing though from the UK equity market.All comes back to welfare spending of course.Government forcing pensions to buy gilts instead of UK equity.Distribution in its pure form.

Yep, we hit a forever ath this month on a solid base despite the increasing drawing down of SIPPs and various risk mitigations.  We also leave the tax year in very good order and are well positioned for the next, including being ready for some new initiatives.

I assume you mean broad etf trackers rather than them all, else we'll have to disagree.  IMO waiting for a BK is quite risky but we have very little broad exposure atm as the run up is very late and it'll hurt should when these trackers go into reverse.   

IMO we have to get used to sweating a volatile market which may go nowhere or down overall, but not necessarily a dramatic BK.  That spells trend following for us and our investment in knowledge, back testing, tech, etc is paying off as we feel we now have an edge as well as feel this is the best approach to minimise our specific risks. 

We know and believe nothing.  We just sit and wait for etfs to signal and then ride them until the turn.  And we have a low tolerance to a turn as this does not seem a market that'll bail you out over time.

All our current equity holdings are in sector etfs like general, PM major and junior, and silver, miners.  Plus commodities such as ags as well as their producers.  We'll open some core positions in regional equity but not at these prices.

Very few daily buy signals coming through atm although we just opened lowish conviction entry positions into European consumer and renewables and might do carbon, but most of the other key themes and sectors are well underway so don't particularly like the risk reward.  That said, we should take some time to consider any signals on the weekly data.  Else we earn 5% pa net, paid monthly, while waiting.

We're slowly closing out individual div equity positions and need to finally confirm that sort of investing is not for us given where we are.  We've made very good gains (not on the consensus trades) with relatively little capital down so any future action will be trade based and risk limited.

The elephant in the room though is preparing for the overt financial repression that has started and we feel will increase significantly in a very overt manner.  We are looking and acting 360 degrees.  That underpins all we do, not just financially.

Never has there been such a key time to know your objectives, strategies, plans, and capabilities.  To attain meaningful knowledge and to use it.  To know yourself and how to accept and deal with what's in front of you rather than let it control you.  This is our preferred world and it has always brought out the very best in us.

[Pip321]

38 minutes ago, Democorruptcy said:

If you think about how many clients the larger firms have and how much the total dividends are over a year, it would make them a lot now rates are higher, if they could delay payments just by a day or two.

I check my interest and it's always the correct amount for the period 10th to 9th, even though it's paid in late.

This always reminds me of the highlight of superman 3.

Richard Pryor (an employee of a huge firm own by Lex Luther) and he steals all the 1/2 cents from payroll checks that otherwise would go to the company….the company directors are holding a meeting and know they will never catch whoever has done this unless ‘he is a complete moron’ 

Whilst saying that the chairman (Lex Luther) walks to the office window and looks down at the screeching tyres of the brand new red Ferrari being parked by Richard Pryor arriving for work. 😆

[Harley]

2 hours ago, reformed nice guy said:

If its the start of a major new credit cycle with cost push inflationary pressure then would it be worth buying up positions with some big mining companies before they pop? Glencore, Rio, Vale, Anglo-American etc

They seem best placed as they are start of the chain and also match up with the sort of fiscally driven (and green) projects that Keynsians would favour - electric lines (copper, steal), building sprees of any type, wind turbines, nuclear power etc big things that politicians want to stand in front of wearing hard hats

The thesis is sound (other reasons too) but, as always, timing is key.  This is a market that needs good timing more than ever.  Just as has always been the case in the options market.  That'll be the main reason people fail to make, indeed lose, money.

Edited March 29 by Harley

[Harley]

49 minutes ago, Lightscribe said:

Fuck off Tavi, stop reading Dosbods. 

Anybody reading that with anything other than annoyance distain is so out of their depth.

Edited March 29 by Harley

[Ash4781b]

National living wage is up soon. Overall I expect  average wage inflation to run at around 6-7%.  the frozen personal tax allowances are creating a massive problem but people are doing what they can. 

A recent one. I read it the other day and thought what fantastic insight. I still feel the new inflation target is 5% loosely steered around Sunak’s 5 pledges.

“"We don't have to actually get inflation all the way back to target… to cut rates for instance, what we have to do is be convinced that it is going there," Mr Bailey told the BBC's economics editor Faisal Islam who was interviewing him on behalf of UK broadcasters. “

"We should act ahead of time in that sense because we have to be forward looking."

https://www.bbc.co.uk/news/business-68618436.amp

 

[Ash4781b]

2 hours ago, reformed nice guy said:

If its the start of a major new credit cycle with cost push inflationary pressure then would it be worth buying up positions with some big mining companies before they pop? Glencore, Rio, Vale, Anglo-American etc

They seem best placed as they are start of the chain and also match up with the sort of fiscally driven (and green) projects that Keynsians would favour - electric lines (copper, steal), building sprees of any type, wind turbines, nuclear power etc big things that politicians want to stand in front of wearing hard hats

There seems to be a move to ramp up European military spending. The press are reporting it’s due to Russia but interesting if it’s aligned here. As typically military production is at home and associated industries. 

[Errol]

39 minutes ago, Harley said:

Anybody reading that with anything other than annoyance distain is so out of their depth.

Tavi is made fun of here, but what is the performance of the Crescat funds he manage/advises?

 

Edited March 29 by Errol

[Errol]

55 minutes ago, Harley said:

The elephant in the room though is preparing for the overt financial repression that has started and we feel will increase significantly in a very overt manner. 

[DurhamBorn]

3 hours ago, reformed nice guy said:

If its the start of a major new credit cycle with cost push inflationary pressure then would it be worth buying up positions with some big mining companies before they pop? Glencore, Rio, Vale, Anglo-American etc

They seem best placed as they are start of the chain and also match up with the sort of fiscally driven (and green) projects that Keynsians would favour - electric lines (copper, steal), building sprees of any type, wind turbines, nuclear power etc big things that politicians want to stand in front of wearing hard hats

Maybe,but im hoping the PM miners run up fast and i might get the chance to swap.I think there is going to me a massive bull market in commods.Lots of things will be happening.Looks like China will destroy the European car industry for instance with its EVs,so we might see ICE through hybrids pushed more so they can save the industry.East will stick to coal and gas but nuclear looks certain to expand (what were Germany thinking) so uranium might see $200 .Its a terrible set up for FIAT.

[MrXxxx]

Is this the Black Swan event to upset the markets?...

https://www.msn.com/en-gb/news/world/israel-strikes-kill-hezbollah-commander-and-syrian-colonel/ar-BB1kKUTq

I suppose it depends on the American and Russian reaction to it...well we know where the US stands in regards Israel by looking at their apathy regarding Gaza, and the Russian have their 'hands full' anyway, so perhaps it may just 'pass everyone by'?!

[Funn3r]

49 minutes ago, Pip321 said:

he steals all the 1/2 cents from payroll checks that otherwise would go to the company….

This is starting to sound like the plot of "Post Office 2024" shunting any postmasters positive discrepancies into the slush fund and then into declared profits. 

I missed out on all the 2020 cheap things due to fear of all these stocks n shares thingies. I finally took the plunge and started an S&S ISA in very early January 2022 (thanks to guidance in here) and as DB said it has been a treading-water experience.  I too am looking forward to the polos loosening their grip and the market actually being a market.

 

[ashestoashes]

all you guys are going to be debanked once your ESG scores are passed to them

[Bobthebuilder]

1 hour ago, Harley said:

Yep, we hit a forever ath this month

Interesting that a few posters are saying this, my overall is looking pretty decent at the moment, and I have been taking some large amounts out from divis to live on in the last 6 months. Sorry @Mandalorian mate, but you are full of shit

 

[Mandalorian]

18 minutes ago, Bobthebuilder said:

Interesting that a few posters are saying this, my overall is looking pretty decent at the moment, and I have been taking some large amounts out from divis to live on in the last 6 months. Sorry @Mandalorian mate, but you are full of shit

 

Only ones who are, as you say, full of shit are those who don't understand where dividends come from and the effect they have on the share price compared to not paying them out.

But you do you, boo.

[Funn3r]

How do the stock markets actually work? 

Say I make an order to buy a small amount of some shares - it can't surely go to a human who says let me see, Funn3r wants to spend a few quid, and decides if it is OK. Must surely be computers? Why does it close at weekends? Seriously that was a giant surprise to me, being more used to trading crypto which you can at any time.

[leonardratso]

27 minutes ago, Funn3r said:

How do the stock markets actually work? 

Say I make an order to buy a small amount of some shares - it can't surely go to a human who says let me see, Funn3r wants to spend a few quid, and decides if it is OK. Must surely be computers? Why does it close at weekends? Seriously that was a giant surprise to me, being more used to trading crypto which you can at any time.

because weekends are the time to declare bankruptcy and wipe out the grannies before monday morning.

[Mandalorian]

28 minutes ago, Funn3r said:

How do the stock markets actually work? 

Say I make an order to buy a small amount of some shares - it can't surely go to a human who says let me see, Funn3r wants to spend a few quid, and decides if it is OK. Must surely be computers? Why does it close at weekends? Seriously that was a giant surprise to me, being more used to trading crypto which you can at any time.

Closes at weekend cos tradition.

 

When you buy a share, it's being transferred to you from someone else who wants to sell it. 

(Common myth busted: If you buy a share in, say BAE Systems, then BAE Systems doesn't get a penny of your money - the person or entity you buy it from gets your money.  The only time BAE gets any of your money is if you were the original buyer of the shares when it first went public or if you take part in a rights issue or other 'corporate event'.)

 

What if nobody is selling the shares you want to buy?

There are things called 'market makers' (mostly big banks and financial organisations) who guarantee to buy/sell sufficient shares in any company in the market to enable enough liquidity to allow a functioning market. 

A market maker guarantees to buy/sell a set number of shares in each company - come what may.  But they don't do it out of the goodness of their hearts, of course.

[MrXxxx]

I found this article interesting:

https://www.msn.com/en-gb/money/other/the-uk-equity-death-spiral-a-drain-on-the-lifeblood-of-british-business/ar-BB1kKoAz

...especially this QUOTE

"Comparatively, pension funds in countries like Australia and Canada hold a much larger portion of their assets in domestic equities. It’s very telling when even the pension fund for Britain's MPs and Ministers invests a mere 1.7% in UK-listed companies, which appears to indicate they do not have confidence in UK equities and companies."

...says it all really doesn't it?!...especially when:

QUOTE: "The combined ownership of UK quoted equities by insurance and pension funds has dramatically fallen from 45.7% in 1997 to just 4.2% in 2022, marking the lowest level ever recorded. This shift poses a grave risk to the UK economy's stability and sustainability."

[Ash4781b]

Anecdotally Local petrol stations near me 140p litre unleaded. Looks to be rising but seems to be demand related (edit Easter)

https://www.dailymail.co.uk/news/article-13249247/amp/Drivers-hitting-road-Easter-face-concerning-hike-fuel-prices-cost-petrol-forecourts-rises-5p-litre-diesel-6p.html

Edited March 29 by Ash4781b

[Axeman123]

4 minutes ago, MrXxxx said:

QUOTE: "The combined ownership of UK quoted equities by insurance and pension funds has dramatically fallen from 45.7% in 1997 to just 4.2% in 2022

The money for them to get into REITS and BTR had to come from somewhere else that they wouldn't be putting it.

Its Dutch Disease (with property) all the way down...

[Funn3r]

27 minutes ago, MrXxxx said:

I found this article interesting:

https://www.msn.com/en-gb/money/other/the-uk-equity-death-spiral-a-drain-on-the-lifeblood-of-british-business/ar-BB1kKoAz

...especially this QUOTE

"Comparatively, pension funds in countries like Australia and Canada hold a much larger portion of their assets in domestic equities. It’s very telling when even the pension fund for Britain's MPs and Ministers invests a mere 1.7% in UK-listed companies, which appears to indicate they do not have confidence in UK equities and companies."

...says it all really doesn't it?!...especially when:

QUOTE: "The combined ownership of UK quoted equities by insurance and pension funds has dramatically fallen from 45.7% in 1997 to just 4.2% in 2022, marking the lowest level ever recorded. This shift poses a grave risk to the UK economy's stability and sustainability."

And tax. I only have one UK share BATS and I was nastily surprised when I found I had to pay  (even more) tax for putting money into the UK economy. Why should I pay a tax when I can buy foreign shares for no tax? Do they think I 'm stupid?  Shan't make that mistake again. 

[Noallegiance]

2 hours ago, DurhamBorn said:

Maybe,but im hoping the PM miners run up fast and i might get the chance to swap.I think there is going to me a massive bull market in commods.Lots of things will be happening.Looks like China will destroy the European car industry for instance with its EVs,so we might see ICE through hybrids pushed more so they can save the industry.East will stick to coal and gas but nuclear looks certain to expand (what were Germany thinking) so uranium might see $200 .Its a terrible set up for FIAT.

I've been in miners ever since 2020.

Now I've got to play the game of finally getting what I want but not selling early.

Courage of conviction needed here.

[Spiney Norman]

6 minutes ago, Funn3r said:

And tax. I only have one UK share BATS and I was nastily surprised when I found I had to pay  (even more) tax for putting money into the UK economy.

?

By tax do you stamp duty?  It's only payable at 0.5% on UK incorparated stock, no biggie when you consider the size of gain or loss over the long term. I wouldn't let the stamp duty preclude you from buying UK stocks if you see value there. I know its annoying but for me thats all it is, is an annoyance.