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

[Chewing Grass]

55 minutes ago, CannonFodder said:

Ah 1950s toys, before the world got sensible.

 

In only I could find one of them, currently after one of these.

 

[PETR4]

4 hours ago, Mandalorian said:

Might as well keep it in interest paying cash accounts than have a bond as far as I can see.

Small amounts of cash yes. Large amounts needs to be kept out of cash due to the risk of bank failure. Most countries have deposit protection schemes but for wealthy individuals and corporations you'd need to look at bonds from a wealth management point of view.

Wealth management is what happens once you have built a lot of wealth as objectives of what to do change.

 

[Pip321]

40 minutes ago, DoINeedOne said:

I was watching a podcast about 6 months ago that mentioned how we argue, listen or advise people trying to help them only for them never to take any action and for us to wonder why

So much time is wasted on this

For example, someone constantly complaining about their weight, job, equality, girlfriend whatever you mention things that may help or your thoughts yet, 3 months later you're still hearing them rant about the same shit

The simple phrase from the podcast the woman's daughter said to her after she was complaining about someone not helping themselves

"LET THEM"

Why that stuck in my head I will never know but when someone says XYZ is doing this or did that rather than have an opinion I often now think "LET THEM" do whatever they want because often they will continue to do the same old shit no matter what anyone says

Learning to sit back and just observe people too

Yep, I think the epiphany would normally come after a debate or argument but mine came before hand. I kind of felt like it was a ''set up'' i.e. their genuine hardship from some significant falls in the SIPP were causing some grief and they wanted to at least be proved ''right'' from a virtue viewpoint. 

They wanted me to defend Putin, defend use of energy, defend drilling into the mother earth for gold etc so then they could justify their actions of morality against those who measure things in wealth.

Instead I heard myself agree with them....knowing that was not what they wanted. Bloody Brexit 😂

My morality, my 'what I would do if I ran the world' is genuinely ethical, I believe we have no leader now who run countries for their citizens. Bit like the video posted by @JMD earlier...no one actually says 'okay, we have generated all this money in the world...what would Jesus do with it?'. Instead we create GDP for rockets, guns and selfish gains. 

The measures of success are so 2 dimensional it is quite sad. But this little virtue signalling, woke, self righteous tosspot could have trapped me into defending a system I don't even support. 

Its not a question of passively accepting things in the world.....its just as you say, for this type of person it is a waste of my energy. 

The realisation for me was I was up....they were down. And whilst that's terrible for them they were looking for someone other than themselves or their wonderful system to blame.  Lots could have been said I just thought don't blame the player....blame the game. 😉

[HousePriceMania]

6 hours ago, Mandalorian said:

Successful investing is simple.  Very simple.

It starts with admitting you cannot predict the future.

 

Buy a global tracker (or developed world tracker if you think tinpot countries are too risky).  Every month. Like clockwork.  Through thick and thin.  Come what may.

Automate the purchases by direct debit.  Adjust them for pay rises every year.

Reinvest back into the tracker the annoying dividends that come in.

Do all this inside a tax shelter (ISA or SIPP).  Tax eats your returns and cause admin issues.

Once you breach (say) £100k/£150k, start again with a different broker to cover broker failure.  (Adjust value for own risk tolerance.)  Broker failure risk.

 

Don't try to time the market (you can't do it consistently), don't pick shares or sectors (you can't do it consistently), don't panic and don't stop the payments (buying after market falls when things are cheap boosts your returns).  Psychology risk.

Don't have everything in ONE tracker.  Go for similar products from different providers (Vanguard, iShares, HSBC etc).  Provider risk

Don't put everything in one market - or you end up all in Japan/UK/USA.  Country risk.

 

Long and short of it.  Let the market make your decisions for you.

It's easier than that.

 

Wait for each crash and buy then, you can get interest on your investment pot till then

 

They're easy to spot, prices fall 30%

 

They're will be one along soon 

Edited April 14 by HousePriceMania

[AWW]

5 hours ago, Mandalorian said:

Agree.  Wouldn't have a bond given to me.

Lifestrategy seems aimed at those who cash in to buy an annuity.  Who does that these days?  Drop dead and your pension money vanishes.

If you are using it for retirement and planning drawdown over many years then I'd be staying 100% in equities and selling batches of them to fund retirement and leaving the rest to the magic of global capitalism.  Drop dead and the pension pot still exists and can be passed on to your loved ones.

If you've no more room in this year's various tax shelters, low coupon Gilts issued prior to IR normalisation provide pretty much tax free returns as they are CGT free.

[Harley]

5 hours ago, DurhamBorn said:

So did you buy SEDY? 

Sedy has a poor historical return:risk rating versus similar etfs apart from the last 12 months or so.  The question therefore is has something fundamental changed that makes sedy the better bet?

[Harley]

2 hours ago, DoINeedOne said:

Why that stuck in my head I will never know but when someone says XYZ is doing this or did that rather than have an opinion I often now think "LET THEM" do whatever they want because often they will continue to do the same old shit no matter what anyone says

I said to someone a while ago that I don't have opinions these days.  It really triggered him.  Clearly he likes to have an argument and presumably win.  I just thought what a poor use of my time.  He was working within the construct rather than constructing his own.  You kind of look at these people and notice you're looking through them with the sound turned off!

[Transistor Man]

3 hours ago, CannonFodder said:

Ah 1950s toys, before the world got sensible.

 

From a commercial cloud Chamber in our lab. You can make one though. 

We once made a scintillator detector from a piece of tv screen phosphor, and a magnifying lens. It was quite a sight if you looked at it in the middle of the night, with fully adjusted eyes.  

Edited April 14 by Transistor Man

[leonardratso]

ive seen those lines before.

They were in crayon by stuey and nirvana i believe.

Edited April 14 by leonardratso

[DurhamBorn]

59 minutes ago, Harley said:

Sedy has a poor historical return:risk rating versus similar etfs apart from the last 12 months or so.  The question therefore is has something fundamental changed that makes sedy the better bet?

Yep,EM and mostly inflation friendly holdings.I would never own it during dis-inflation ,or during a rising western currency cycle,but all the things i like are lined up for it the last year.Its outperformed he S+P by 5%ish in a week.I suspect with divs it might do 14%+pa for the rest of this cycle.

[wherebee]

11 minutes ago, DurhamBorn said:

Yep,EM and mostly inflation friendly holdings.I would never own it during dis-inflation ,or during a rising western currency cycle,but all the things i like are lined up for it the last year.Its outperformed he S+P by 5%ish in a week.I suspect with divs it might do 14%+pa for the rest of this cycle.

i bloody hope so, I have a bucket in there based on a prediction that the future is EM.

[sancho panza]

18 hours ago, Jesus Wept said:

If they let anything and everything above £85k default then it’s the end of the financial system as it all unwinds due to contagion of the chain reaction.

Not a chance of that. They will back it all and print. 

 

how do you explain that which at first appears a paradox?

18 hours ago, Jesus Wept said:

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. 

how can you be long a bank deposit if you think they'll cure the BK with printing?

Edited April 14 by sancho panza

[sancho panza]

9 hours ago, belfastchild said:

Friends of mine bought a house out in Cyprus, sold their house here, sold their business, sold everything pretty much and moved out and then had it all haircut. They couldnt afford to complete on the house in Cyprus and then ended up back here in rented accom having had to rent in Cyprus until their funds were released.

If anyone thinks it cant happen here think again. That story above all else made me spread money around in both terms of banks/nat savings but also having cash floats in sterling, euro and usd (although have used the usd up now) as well as pms 'in my hand'. This was someone who played by the rules, built up a business over 35 years and was looking forward to retirement. The whole thing either made them ill or exacerbated an existing illness and they died a few years after.

Absolutely BC

funnily enough I was jsut talking jurisdictional risk with mrs P as shes looking a t a move abroad and was wodnering why I didnt want to take my shares with me.

it's one of the arguments for being in equities or even bonds(dont snigger) in that cyrpus was the blue rpint for the big EU banking crisis on the horizon.the will haircut middle class savers not asset ownerss like themselves.

2 hours ago, AWW said:

If you've no more room in this year's various tax shelters, low coupon Gilts issued prior to IR normalisation provide pretty much tax free returns as they are CGT free.

an excellent point and idea

[ashestoashes]

legislation is in place for bank bail ins in the UK

[Harley]

5 hours ago, DurhamBorn said:

Yep,EM and mostly inflation friendly holdings.I would never own it during dis-inflation ,or during a rising western currency cycle,but all the things i like are lined up for it the last year.Its outperformed he S+P by 5%ish in a week.I suspect with divs it might do 14%+pa for the rest of this cycle.

I was focussed on sedy rather than EMS.  It has, until recently, historically performed worse than the other EM etfs.

[Alifelessbinary]

10 hours ago, HousePriceMania said:

It's easier than that.

 

Wait for each crash and buy then, you can get interest on your investment pot till then

 

They're easy to spot, prices fall 30%

 

They're will be one along soon 

The markets can remain irrational longer than you can remain solvent!

By all means wait for the next dip, but the issue most people have is timing the bottom. Markets tend to spring back pretty quickly, as per the S&P recently, meaning you risk missing most of the envisaged gains.

Sure you can ladder into a dip, but you might as well cost average into the market and not have to worry about timing at all.

Everyone can adopt what approach they think works best, by the time the next 30% dip comes along the market can already be 60% up! 

[geordie_lurch]

Didn't see oil dropping after this weekends events I will be holding my oilies for quite some time now though

[M S E Refugee]

Silver breaks $32 in Shanghai!

 

Shanghai
15 Apr 2024
PM USD 32.04

[HousePriceMania]

53 minutes ago, Alifelessbinary said:

The markets can remain irrational longer than you can remain solvent!

 

 

I have remained solvent since 2003 and will still be solvent come the next collapse.

Do the arithmetic....

Fill your boots on each collapse ( buy and hold ) 2003, 2009 and 2020, versus steady buying over the years versus buying in 1999, 2007 and 2019 ( buy and hold ).

If the actual BK comes along soon ( and many people suspect it will ) then I'll fill my boots again.

 

[DurhamBorn]

5 hours ago, Harley said:

I was focussed on sedy rather than EMS.  It has, until recently, historically performed worse than the other EM etfs.

Yes it has because of its set up,it buys falling knives and sells winners.However i suspect we will see strong divi growth from the EMs going forward so that should mean it has more stable holdings and might even gain from re-balancing.I would build my own EM divi portfolio,but i cannot access most of them.

[BurntBread]

4 minutes ago, HousePriceMania said:

 

I have remained solvent since 2003 and will still be solvent come the next collapse.

Do the arithmetic....

Fill your boots on each collapse ( buy and hold ) 2003, 2009 and 2020, versus steady buying over the years versus buying in 1999, 2007 and 2019 ( buy and hold ).

If the actual BK comes along soon ( and many people suspect it will ) then I'll fill my boots again.

 

I think I understand how you are timing the buying: you are saying that you wait until the index has fallen 30% from its highest previous value. That bit's crystal clear. I am guessing that you then buy the index with all the cash you have on hand?

What is unclear to me is whether you have a strategy for selling; or do you never sell, but just try to buy cheaply (buy the big dips), and in the meantime accumulate cash?

As with any strategy, you can back-test against other strategies if you have the historic index data and historic data on interest available on cash. As per thread thesis, any sensible back-test must go back much more than 40 years, in order to include more than one credit super-cycle. It may well turn out that these active strategies are no better than pound-cost-averaging, but I would appreciate seeing your calculation if you're suggesting this seriously.

By the way, we do have a Boggleheads thread already, and because of this credit deflation thread's title, I think nobody should be complaining that it discusses market timing: arguably any post that disavows the possibility of market timing (cycles) is strictly speaking off-topic -- although of course always welcome as a counterpoint to the main theme.

[M S E Refugee]

I believe in some Martial Arts you use your opponent's power and momentum against them.

I'm thinking this is what the Chinese are doing in the PM markets.

[Majorpain]

30 minutes ago, M S E Refugee said:

I believe in some Martial Arts you use your opponent's power and momentum against them.

I'm thinking this is what the Chinese are doing in the PM markets.

If we have indeed reached the endgame stage of PM manipulation when everyone tries to get their hands on the real stuff and not paper promises before the music stops, when does the West step in and do something about it?  Shanghai/China must be scooping up millions of ounces of physical silver alone on the cheap using arbitrage between them and Comex/LBMA, suppressing prices does nothing but help them do this!

[HousePriceMania]

1 hour ago, BurntBread said:

I think I understand how you are timing the buying: you are saying that you wait until the index has fallen 30% from its highest previous value. That bit's crystal clear. I am guessing that you then buy the index with all the cash you have on hand?

What is unclear to me is whether you have a strategy for selling; or do you never sell, but just try to buy cheaply (buy the big dips), and in the meantime accumulate cash?

As with any strategy, you can back-test against other strategies if you have the historic index data and historic data on interest available on cash. As per thread thesis, any sensible back-test must go back much more than 40 years, in order to include more than one credit super-cycle. It may well turn out that these active strategies are no better than pound-cost-averaging, but I would appreciate seeing your calculation if you're suggesting this seriously.

By the way, we do have a Boggleheads thread already, and because of this credit deflation thread's title, I think nobody should be complaining that it discusses market timing: arguably any post that disavows the possibility of market timing (cycles) is strictly speaking off-topic -- although of course always welcome as a counterpoint to the main theme.

You'r nit picking now.  Buy into the big drops rather than the big rises, you decided, 10%, 20%, 30%, 40%.

Do the maths and tell me if you still think it's a bad idea.

 

 

[Pip321]

1 hour ago, HousePriceMania said:

 

I have remained solvent since 2003 and will still be solvent come the next collapse.

Do the arithmetic....

Fill your boots on each collapse ( buy and hold ) 2003, 2009 and 2020, versus steady buying over the years versus buying in 1999, 2007 and 2019 ( buy and hold ).

If the actual BK comes along soon ( and many people suspect it will ) then I'll fill my boots again.

 

I kind of agree.

There is a lot of debate about time in market verses timing.....for me its an academic argument as to which is better rather than a practical one because it depends on the person and what they want. 

Its really about personal objectives and everyone assumes 'maximising the best return' is the best result but for me its just about protecting what I have already against inflation....and against any massive crash. 

So my Glencore buy at 380p and sale at 420p with one of my cash pots did what I wanted...it beat inflation and now it can earn 4% for 18 months and I am happy. 

My gold miners pot can do whatever they want, up or down....they are a hedge and i wont sell. 

However, my main monies are shifting into cash and happy to buy in the dip....because my cash is getting 5.1% tax free. If rates fell for a sustained period I would have to review. 

But I am under no illusion that's a great long term plan but for me we are not just facing into a dip but we are on the edge of something very special and quite unpredictable....other than its bad.

So I am with HPC on this one....but only because we are in unprecedented times (ie we have seen it all before but many in finance haven't seen it in their lifetimes). Global shift occurring and when the sentiment goes then it really could be a great buying opportunity. 

The key issue is when there is blood on the street lots of people who said they would don't buy because they begin to believe the narrative.....that have definitely been something I am good at, buying when others don't. Its not that I am brave but rather stupid....I see buying into a dip as money not previously lost. 

Lots of people say they will....but they don't. 😉