Credit deflation and the reflation cycle to come (part 9)

[AWW]

3 hours ago, Jesus Wept said:

You are right - it only took the S&P 14 years to recover and the DOW 13 years to recover.

If you had invested £1,000 in a FTSE 100 tracker on New Year’s Eve 1999, your investment 24 years later with the ftse at 7500pts was worth £2,222. That’s an annual return of 4%, not adjusted for inflation or charges, compared with 0.4% if you had invested in the index alone.

Think about that.

4% a year (reinvesting dividends), not adjusted for inflation or charges since NYE 1999. What’s that in real terms? 

The relevance is the Nasdaq / S&P / DOW are all examples of a bubble and what happens when it pops. FTSE has done fuck all over the “long term” in 25 years. 

We are in an “everything bubble”.

Most people are in essence in one sector - the Mag7 or at least heavily weighted.

Don’t listen to me mind - I am probably wrong going to 80/20 (cash/commmodities), suits me personally. Go with what you feel suits you. 

...during which you would be regularly buying! Does anybody buy at peak then sit it out until the next peak?

[Errol]

Apparently, the cost of the Israeli air defence for one night was north of $1 billion.

Edited April 14 by Errol

[Democorruptcy]

6 hours ago, wherebee said:

I changed my mind on sitting out with a sizeable sum in 2022 after watching a couple of vids discussing lost opportunity cost of cash.

When there is a BK, I expect the stocks I hold now to decline much less than the market, and recover much much faster (and survive - let's not forget a number of organisations won't survive a big shock).  In the meantime, I am getting dividends rolling  in above what I could get from a cash account here in Oz.  Every six months that delta gets bigger.  For my biggest dividends payers, I'm now getting 10% divvies on what I originally bought for - that's double the cash % rate here for an on-access account.

I'm also, with the non divvies, actively trading in and out which has generated substantial capital growth which I wouldn't have had a sniff of otherwise; a fair bit of that has gone into BATS and oilies.  On uranium stocks, for example, an initial 400AUD is now 1800AUD from trading in and out.  That's not to be sniffed at - even if EL8 falls to 50% current value, I am still up over 100% since 2021.  No cash account can give that.

I will agree that anyone 100% in tech, banking, and retail stocks is insane and looking at a 50%+ loss.
 

The other issue is that I am pretty damn sure some well known banks will collapse in this BK in the west, and you'll lose everything above a 'guarantee' but you're guaranteed to be given toilet paper (GBP halves in buying value, your 85k is looking pretty shit).  I wouldn't be surprised if the UK government of the day declares 85k across ALL banks, one hit only - the plebs would cheer that on, seeing anyone with 85k at two or more banks as rich.  So cash accounts are not safer, in my personal view, just less income generating.

Another one of those posts about BATS and divvies.... hang on I'll give him a shout.... @Mandalorian !!!!

 

 

[Harley]

3 hours ago, jamtomorrow said:

There's that word "backed" again, quickly followed - in the same sentence - by "LBMA". What could possibly go wrong?

Chards say they've become a member of the LBMA.  No idea if that implies anything.

[Harley]

1 hour ago, Pip321 said:

As a freak I had a bit of an epiphany yesterday. I had been harping on about Gold, Ukraine, Printing etc to someone (woke leftie) for a year or so. 

It transpires their green investments in their SIPP have turned to shit and they were angry….and they were dying for me to say ‘I fucking told you so, oh and I’m 15% up, oh and my gold miners that dig into our beautiful planet are up 43%’.’ 

My epiphany was I realised ‘being right and them being wrong’ wasn’t important to me. Indeed they will sneer if I was wrong and just hate me for being right. 

My private personal financial return is my business and was all that matters, I guess I will put it down to luck….and not talk to them about anything financial or geopolitical etc again. Just agree that it’s a shame the government doesn’t put all our money into wind farms, we need more money in Ukraine and migration is great for cultural diversity….(whilst investing in the exact opposite narrative

The War threads will be banging on about who is right and who is wrong….who had the best weapons….how air strikes were effective or ineffective…..who started what. These threads are a useful place to argue, vent anger, debate and learn. Particularly from those dug into their views. 

BBC will slant narratives just like Ukraine….same story in the Middle East just with different disputes and different clothes

I missed the Covid opportunity because they drew me into the narrative as I visited my mum in a nursing home masked and vax’d. 

I ain’t missing this.

I am past worrying too much on who starts what and who delivers democracy and who is worst. For me, the world leaders deserve each other….they all know the plan, they are all coming out of this alive and personally wealthier. It’s interesting to debate and understand but only so we can determine agendas and invest accordingly. 

Happy to learn, chat with like minded freaks many of whom have specialist knowledge. Some out in the real world too. 

But I ain’t interested in convincing any one of anything in the real world. Happy they ‘know what they know’ and are convinced inflation is going, rates are falling and this is a blip. 

Only interested in seizing the financial opportunity to protect what I have.

Hopefully the PTB won’t kill us all in the process…but what I have learnt from history is they are happy to sacrifice us if need be. 

Congrats.  So much simply does not matter and can be ignored.  Walk your own and stay grey.  Then every now and then go on a bit of an R&R bender to stay sane!

[Harley]

A podcast mentioned yesterday that Harry Browne, author of the Permanent Portfolio (wealth protection portfolio allocation model), also recommended an 80% allocated to the PP and 20% to active investing.  Apparently he accepted folk had an urge that needed to be met, and maybe some other reasons.  I didn't know that.

[Axeman123]

2 hours ago, belfastchild said:

Tell that to Cyprus.

47% haircut on deposits over 100k euro, below that gauranteed. People (mostly Russian) that lost over 3m euro got a free Cypriot (EU) passport as a goodwill gesture AIUI.

IIRC depositors had to wait a long time for the money they did get, and first prove the original source of funds was kosher to a far higher standard than when depositing.

The key thing AIUI was that Cyprus was blantantly laundering Russian money prior to the crisis, and the bailout required from the EU was was used as an opportunity to smash that up. We will only see similar here if the bailout is external and malicious, but no country will be big enough to back such a bailout for the UK (plus the US etc will all be in similar trouble).

 

[Castlevania]

Couldn’t have said it better myself.

 

[Mandalorian]

1 hour ago, Democorruptcy said:

Another one of those posts about BATS and divvies.... hang on I'll give him a shout.... @Mandalorian !!!!

 

 

Wonderful share.  Look at those excellent returns at the bottom when compared to a global tracker.

Actually.  No.  Don't.  You might feel sick.

BuT mUh dIvViEs

[Mandalorian]

On 13/04/2024 at 10:05, DurhamBorn said:

Indeed.I left at 49 and now is the time my portfolio would be flying higher if i was not taking from it never mind adding more from paid work.However i figured my 50s are the last years where im still in good shape and i intend to keep it that way as long as i can.Freezing of allowances also came into it.I knew i would hit them (i have) and it would just come sooner if i kept working.Work pays fine,its because the bennies and pensions are so high it feel like it does not.The reason someone on £33k a year cannot buy a house is due to bennies and immigration,they both fuel retired public sector to buy BTLs.

I remember not long ago, £30k was a good wage.

Now minimum wage is £24k for a 40 hour week, that £6k differential (more like £4k after your charitable donations to fat Shazza to sit on her arse) isn't that great.  £40k is the new £35k.

[Mandalorian]

On 13/04/2024 at 10:17, Jesus Wept said:

Cheers 🍻 - I may watch that.
 

Could be - or the alternative:

Once we get 20-30% falls the falls will go much further as leverage unwinds and margin calls - 50%

I would also say that once the (when the never before seen huge shock and awe) QE starts on the mega scale required -   commodities will go into a secular bull - inflation / stagflation going into double digits as there is a “dash to assets”.

Stocks will ‘recover’ nominally but will drop precipitously in real terms against gold / commodities. 
 

Not sure on the timing of this - the election year is a real curve ball. I’d say sooner rather than later. I think they will have TrumP a real shit sandwich. 

Or all these talking heads shut up shop as they realise they don't know what's going to happen.

But that would involve them working out they ain't Mystic Meg.  SO not going to happen.

 

[Mandalorian]

18 hours ago, Chewing Grass said:

If you were invested in the Dow in 1929 it took 25 years for your shares on average to recover to their 1929 value and that’s in “nominal" terms, without adjusting for the effects of inflation or its opposite, deflation.

Assuming you bought a lump of the Dow in 1929 and never bought previously or since.  Yes.

In practice, no.

[Mandalorian]

13 hours ago, Calcutta said:

If they're smart the drones will be to attract the air defenses then they launch missiles from all three sides and hit as many targets as possible on the first night. Close the Gulf to shipping and the world will be squealing for a ceasefire before what's left of Israel can retaliate. 

This is it then, WWIII just went live.

 

 

WW3 started in 2014.  It's just that most people didn't notice.

[DurhamBorn]

Bennies are the main bomb destroying the UK,but this is a close 2nd.The theft is off the scale that is going on.My numbers say they are taking around 52% now of earnings from the private sector,and around 7% a year of saved labour pa (after the initial two year 30% take).During dis-inflation it was EMs and their workers funding it.Not anymore.Its now all falling on the productive here (and once productive retired).At this rate the state will take everything over the cycle unless you match or outrun inflation.

https://www.telegraph.co.uk/money/tax/taxpayers-to-foot-25bn-bill-for-public-sector-pension-boost/

[Mandalorian]

6 hours ago, Jesus Wept said:

You are right - it only took the S&P 14 years to recover and the DOW 13 years to recover.

If you had invested £1,000 in a FTSE 100 tracker on New Year’s Eve 1999, your investment 24 years later with the ftse at 7500pts was worth £2,222. That’s an annual return of 4%, not adjusted for inflation or charges, compared with 0.4% if you had invested in the index alone.

Think about that.

4% a year (reinvesting dividends), not adjusted for inflation or charges since NYE 1999. What’s that in real terms? 

The relevance is the Nasdaq / S&P / DOW are all examples of a bubble and what happens when it pops. FTSE has done fuck all over the “long term” in 25 years. 

We are in an “everything bubble”.

Most people are in essence in one sector - the Mag7 or at least heavily weighted.

Don’t listen to me mind - I am probably wrong going to 80/20 (cash/commmodities), suits me personally. Go with what you feel suits you. 

These 'if you had invested all your money in the FTSE on this day 30 years ago' articles make me laugh.

Who in their right mind invests only in the dead FTSE or FTSE companies presided over by a government that sees business as the enemy and wants to tax it our of existence?

The British stock market is a dead duck.  Companies fall over themselves to list in New York rather than London.  Growth is NOT in London listed operating companies.

[Jesus Wept]

48 minutes ago, Mandalorian said:

These 'if you had invested all your money in the FTSE on this day 30 years ago' articles make me laugh.

Who in their right mind invests only in the dead FTSE or FTSE companies presided over by a government that sees business as the enemy and wants to tax it our of existence?

The British stock market is a dead duck.  Companies fall over themselves to list in New York rather than London.  Growth is NOT in London listed operating companies.

Err no …. The ftse rose a massive 500% in 16 years. It definitely was not a dead duck. There was massive growth.
 

If you added in / reinvested the dividends you would probably have turned £100k into £1,000,000 in those 16 years.

 

 

Edited April 14 by Jesus Wept

[Jesus Wept]

@Mandalorian

FTSE NYE 1999 is maybe the S&P / DOW Jones / Nasdaq / Euro STOXX Index May 2024.

What do we have left ? Global Index? China? Africa? S America? 

 

 

Edited April 14 by Jesus Wept

[Mandalorian]

23 minutes ago, Jesus Wept said:

Err no …. The ftse rose a massive 500% in 16 years. It definitely was not a dead duck. There was massive growth.
 

If you added in / reinvested the dividends you would probably have turned £100k into £1,000,000 in those 16 years.

 

 

No idea where you get those figures from.

I get the FTSE 100 values as :

4th January 2008.  6348

12 April 2024.  7995

 

A change of 1647 points from 6348 16 years ago.  I make that a 26% increase.  Not 503%.

[Jesus Wept]

1 minute ago, Mandalorian said:

No idea where you get those figures from.

I get the FTSE 100 values as :

4th January 2008.  6348

12 April 2024.  7995

 

A change of 1647 points from 6348 16 years ago.  I make that a 26% increase.  Not 503%.

1984 to 1999

501% rise in ftse. 

Edited April 14 by Jesus Wept

[Mandalorian]

2 minutes ago, Jesus Wept said:

@Mandalorian

FTSE NYE 1999 is maybe the S&P / DOW Jones / Nasdaq / Euro STOXX Index May 2024.

What do we have left ? Global Index? China? Africa? S America? 
 

 

 

Or maybe it's not.

Nobody knows.

[Jesus Wept]

2 minutes ago, Mandalorian said:

Or maybe it's not.

Nobody knows.

45 year bull market coming to an end. 

You can feel it - surely? 
 

Edited April 14 by Jesus Wept

[Mandalorian]

11 minutes ago, Jesus Wept said:

1984 to 1999

501% rise in ftse. 

Fair enough.  But in the recent past, the FTSE 100 has been shite.  7.64% in 5 years.  Grim.  Could have more from cash the bank in that time since interest rates normalised.

BuT mUh DiVvIeS still only bring total return in 5 years to around 30%.

In any case, the world has moved on since 40 years ago.  Back then that boom was from Thatcher's policies, which ended in about 1992 and the UK is now a low growth, stagnating, high tax, anti business economy.  It's stock market is following suit.

 

For comparison - from 1984 1999, the S&P 500 on 27/4/84 was 159 and on 27/8/99 was 1348. 

A 747% increase, which still trounces the 500% in the FTSE.

9 minutes ago, Jesus Wept said:

45 year bull market coming to an end. 

You can feel it - surely? 
 

No.  That's my whole point.

Feelings.  Market timing.  Hunches.

It's all bollocks.

NOBODY KNOWS.

Edited April 14 by Mandalorian

[Jesus Wept]

4 minutes ago, Mandalorian said:

In any case, the world has moved on since 40 years ago.  Back then that boom was from Thatcher's policies, which ended in about 1992 and the UK is now a low growth, stagnating, high tax, anti business economy.  Its stock market is following suit.

Can you not see any parallels with the US now? 

Nothing to stop USA heading this way and its stock market following. 

Take a look at Japan - late 80s.

Edited April 14 by Jesus Wept

[Jesus Wept]

Nikkei 

40,000 pts dec 1989.

 

7,173 pts 19 years later. Recovered this month  35 years after the crash. 

You’ll be about 80 years old in 35 years give or take.

 

 

[Mandalorian]

1 minute ago, Jesus Wept said:

Can you not see any parallels with the US now? 

Nothing to stop USA heading this way and its stock market following. 

Again.  Unknown.  Unknowable.

It could equally take off again. 

You can see parallels with anything you want.  All I know is the business culture in the UK and the US couldn't be more different and I don't see the UK becoming more business friendly.  Read into that what you will.

 

Look what we said about house prices on ToS for years.  Yet they kept growing and growing.  It can't carry on.  But it has.  It's loose credit.  It's government meddling.  It's immigration.  It's...<insert cause here>.

 

Maybe house prices will fall.  Maybe they won't.  Maybe the government will print and give everyone with a pulse a free £500k mortgage.  Maybe we'll all be living in caves and eating soil in 6 months' time.  Maybe none of this will happen.

I've long suspected house prices will fall.  But they still refuse to follow my script.

 

Again, NOBODY KNOWS what any financial instrument is going to do.