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Credit deflation and the reflation cycle to come.


DurhamBorn

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36 minutes ago, Shatner's Bassoon said:

Hat tip to Solzhenitsyn. Infrastrata up around 21% today.  

Lots to like about this share - in talks with a major blue chip over an offtake deal, the closure of Rough leaving the UK without gas storage, a highly competent CEO, the board buying shares with their own money, European project of common interest etc. 

https://www.hl.co.uk/shares/shares-search-results/i/infrastrata-plc-ordinary-0.01p?tab=security_details

I see they're in NI. A lot of houses are oil centrally heated from what I noticed when looking at homes over there, although newer do seem to be gas. One needs to weigh up the cost benefit of upgrading to gas if it's even possible to connect to the mains. Only two providers of gas to consumers as well.

Any idea what went on with the share price in their early days?

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3 hours ago, Admiral Pepe said:

I see they're in NI. A lot of houses are oil centrally heated from what I noticed when looking at homes over there, although newer do seem to be gas. One needs to weigh up the cost benefit of upgrading to gas if it's even possible to connect to the mains. Only two providers of gas to consumers as well.

Any idea what went on with the share price in their early days?

If there's gas connected it'll already be gas.  If there's no gas they'll be oil.  They hardly ever put in gas lines to established housing areas, only to new developments.  For recent build properties it is difficult to even get planning/regs to put in oil if there's gas to the property.

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9 hours ago, Admiral Pepe said:

I wouldn't be surprised we see a bit of downward trend for a while yet. I'm very much in favour of the ultilties long term and am averaging in on most of them. For me RM I won't touch in it's current form. Too bloated and unions.

Flybe is an interesting one, we had a small discussion in another thread about it. I like them as an airline, use them frequently. The issue I see is I can't see another airline wanting to take that fleet on. I suspect other airlines would rather take their routes that they deem they can make a profit on.

Flybe is my gamble stock, got a lot going for it and changes being made asap, ripe for a takeover soon imo, Monarch it ain't.

39 years of ups and downs but a fundamental airline to the regional airports of the UK with a much higher NAV per share than current silly price. Personally expecting a bounce to 20p to sell, still well below the 40p area it held for so long. Could go the other way of course, a risky bet for sure.

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5 minutes ago, Barnsey said:

Flybe is my gamble stock, got a lot going for it and changes being made asap, ripe for a takeover soon imo, Monarch it ain't.

39 years of ups and downs but a fundamental airline to the regional airports of the UK with a much higher NAV per share than current silly price. Personally expecting a bounce to 20p to sell, still well below the 40p area it held for so long. Could go the other way of course, a risky bet for sure.

How about air berlin? :D The problem is they've been making change after change and can't get anything right unfortunately. The Embraer mistake really sums it up in a nutshell. There's lots of issues operationally I could list but won't as I'm sure you're fully aware. I hope they survive as do I hope you profit. As I said previously you're a braver man than I am. I personally booked my xmas flight with BA this year. Hopefully that won't turn around and bite me in the arse xD

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13 minutes ago, Admiral Pepe said:

How about air berlin? :D The problem is they've been making change after change and can't get anything right unfortunately. The Embraer mistake really sums it up in a nutshell. There's lots of issues operationally I could list but won't as I'm sure you're fully aware. I hope they survive as do I hope you profit. As I said previously you're a braver man than I am. I personally booked my xmas flight with BA this year. Hopefully that won't turn around and bite me in the arse xD

The shift to the smaller 175s is a positive step, but if Etihad announce a takeover bid I'll accept my losses and run xD

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6 hours ago, kibuc said:

New Gold having a very nice 3rd day in a row, roughly 14% up in that span. Good enough for me. In the meantime, WDO dropped 8% and is a screaming buy.

I hope these two will keep see-sawing for a bit :)

Sibanye had an even nicer week but they are hardly of any interest to me at this price point.

Any particular reason?

o/t Impala Platinum apears to have turned the corner.

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On 14/11/2018 at 21:49, spygirl said:

Extending beyond 30 years has luttle to no affect on making the mortgage cheaper.

Anyone with a spreatsheet will avoid a mortgage much beyond 20 years.

Just having a quick browse on reddit to see what the normies are up to. 35+ year mortgages O.o

 

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7 minutes ago, Admiral Pepe said:

Just having a quick browse on reddit to see what the normies are up to. 35+ year mortgages O.o

 

The maths on 25+ mortgages are brutal.

Theres no excuse on not using an online mortgage calculator, just to see how brutal.

Start putting normalish APR in - 6- 7% - and SVRs are not a million miles from those figures, and its shocking.

Ive a 10 y mortgage, fixed for 5 years at 1.4% ish - i cant remember exact figure, its well under 2%.

Ive just stopped overpaying after halfing it in under 2 years - i had a lump sum to knock stuff off too.

 

 

 

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43 minutes ago, Admiral Pepe said:

Just having a quick browse on reddit to see what the normies are up to. 35+ year mortgages O.o

 

If you are going to overpay, why extend the term?

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1 minute ago, Cosmic Apple said:

If you are going to overpay, why extend the term?

I believe the thinking behind it is to secure a lower monthly payment in event one finds their circumstances change. Is an odd way to look at it. The fact that they can't comprehend if they need to do that then they really shouldn't be taking the mortgage out in the first place is amusing yet a little troubling.

What's alarming is that 35+ year mortgages seem to fairly prevelant on that subreddit. As Spy says the maths cleary doesn't add up. So it's all about the monthly payment. No further thought is required.

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13 hours ago, Barnsey said:

Flybe is my gamble stock, got a lot going for it and changes being made asap, ripe for a takeover soon imo, Monarch it ain't.

39 years of ups and downs but a fundamental airline to the regional airports of the UK with a much higher NAV per share than current silly price. Personally expecting a bounce to 20p to sell, still well below the 40p area it held for so long. Could go the other way of course, a risky bet for sure.

I used to work for the once great Monarch, although I left in 2015 just as the shit was really hitting the fan and the Mantagazza family who owned it were on their way out of the door. They were making hay in the days when the old A300B6's and Boeing 757's were rotating 3 times a day out of the Canaries and the rest of the Med, the A300's with 360 pax on each sector! We also had our two A330's rotating on Long Haul destinations to the Caribbean, Goa, and the Maldives. Great days to be crew!:Jumping: The Company never declared much profit though, as most of it got funneled out to the Mantagazzas leasing companies based in the Caymen Islands! LOL!:ph34r:


The writing was on the wall as soon as those aircraft came to the end of their serviceable life, and reliability suffered. Delays aren't accepted by the traveling public now, or the Charterers who Monarch were flying for. The remaining fleet of A321 Airbuses (Short Haul only and now owned by Greybull capital) was trying to compete with Ryanair and Easyjet, along with BA and Norwegian on scheduled routes. That never really worked, and there was never any offers to Greybull for the carcass left leading to failure in Oct 2017.

Flybe??? Yes, possibly worth a gamble, very different to Monarch! I hope it works for you Barnsey!

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15 minutes ago, Admiral Pepe said:

I believe the thinking behind it is to secure a lower monthly payment in event one finds their circumstances change. Is an odd way to look at it. The fact that they can't comprehend if they need to do that then they really shouldn't be taking the mortgage out in the first place is amusing yet a little troubling.

What's alarming is that 35+ year mortgages seem to fairly prevelant on that subreddit. As Spy says the maths cleary doesn't add up. So it's all about the monthly payment. No further thought is required.

Yes, extending the term is only to make the monthly payment cheap enough to pass the toothless MMR. In a normal world as wages rise these are then eaten by mortgage rate rises and it means their standard of living doesn't improve as they never have any spare cash. Unless they dramatically improve their job prospects. BoE boost house prices via larger mortgages at higher income multiples, then banks take the wage rises. The borrower's nightmare scenario being mortgage rates rise more than wages but the BoE are watching their backs.... until they aren't.

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1 hour ago, Admiral Pepe said:

I believe the thinking behind it is to secure a lower monthly payment in event one finds their circumstances change. Is an odd way to look at it. The fact that they can't comprehend if they need to do that then they really shouldn't be taking the mortgage out in the first place is amusing yet a little troubling.

What's alarming is that 35+ year mortgages seem to fairly prevelant on that subreddit. As Spy says the maths cleary doesn't add up. So it's all about the monthly payment. No further thought is required.

i do it that way also,its easy to shorten a morgage a bit harder to extend one.another fact is that none of us know what future goverment policy might be and has a last resort you can get your house reposed if you ever have a mad bitch in it that wont leave.

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10 minutes ago, stokiescum said:

i do it that way also,its easy to shorten a morgage a bit harder to extend one.another fact is that none of us know what future goverment policy might be and has a last resort you can get your house reposed if you ever have a mad bitch in it that wont leave.

If it works in your individual circumstance as I'm sure it does for many in a better financial position I see no harm and may even make sense to do so. But we're not talking about people in that position. FTB'ers trying to reduce their £1000+ payment (plus their equity loan payment) by £100 isn't going to make a blind bit of difference.

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1 minute ago, Admiral Pepe said:

If it works in your individual circumstance as I'm sure it does for many in a better financial position I see no harm and may even make sense to do so. But we're not talking about people in that position. FTB'ers trying to reduce their £1000+ payment (plus their equity loan payment) by £100 isn't going to make a blind bit of difference.

i know it saddens me.

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2 hours ago, Cosmic Apple said:

If you are going to overpay, why extend the term?

Because it's essentially a free option.  If your circumstances change dramatically, it might be the difference between keeping your house and being turfed out of it.

Given how many people (myself included) now work on a contract basis, and given how precarious even "permanent" employment can be, I think it's a good idea to get as long a term as you can get away with, providing of course that overpayments don't attract a penalty fee.

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54 minutes ago, Admiral Pepe said:

FTB'ers trying to reduce their £1000+ payment (plus their equity loan payment) by £100 isn't going to make a blind bit of difference.

True, and if that's the real reason for seeking out a 40 year mortgage, these homeowners better damn well like where they live, because they won't be moving, ever.

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14 hours ago, sancho panza said:

Any particular reason?

o/t Impala Platinum apears to have turned the corner.

Too many red flags at the moment.

Short term, the price is all about the Lonmin deal. It's hit a few roadblocks, mostly related to labor unions opposing the deal, and the price kept moving this way and that. It went from $2.05 to $3.40 (+65%) in two months, then dropped back to $2.25 in just 4 weeks when the unions started making noise and now it's been climbing up again after SA's competition commision recommended that the court let's the deal go through 4 days ago (+18% in that span). That's way too much volatility for me, especially if it's due to regulatory risk - the kind of risk you cannot really estimate without insider knowledge.

For that reason alone, I'm not touching it before the deal is either formally concluded, or it hits so many obstacles that it looks dead and burried (and is priced accordingly).

With that out of the way, you enter the realm of typical Sibanye mid and long-term risks, which have been well known for some time, but my optics changed in recent months, courtesy of Tahoe.

First, SA mining is a low-grade, deeeeep undeground affair, meaning it's very high cost per ounce. In Q3, their all-in cost was $1290 at the realised gold price of $1205, meaning they were mining at a loss. AISC was $1295 in Q2 as well, which clearly shows it's not a one-off. They need a bull run to start making money - any money - and if that run comes, you'll still be able to do fine entering at $1300, probably even$1350/oz, as their labour costs are guaranteed to go up: https://thevault.exchange/?get_group_doc=245/1542212701-sibanye-stillwater-signs-three-year-gold-wage-agreement-three-unions-14nov2018.pdf

Then, there's debt. Plenty of debt. Again, a bull run should help with that, but until then each passing quarter pushes the company deeper and deeper into the red, and I'd expect the price to resume it's relentless march downwards while that happens.

And finally, there's their safety record and a very Tahoe-y way it's dealt with. Over the course of this year, it's been raised time and time again that the regulators should take strong action against SA given their death toll and possibly even suspend their SA license. Now, I understand that they have much bigger pull in the SA than Tahoe had in Guatemala but still, I wouldn't simply disregard that risk.

All that being said, you can make a killing if the Lonmin deal goes smoothly and it coincides with a proper gold run. It's just that it's a huge gamble, the potential downside at the moment is substantial, and you can still make good money on it even if you join late when most of the risks dissipate.

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3 hours ago, spygirl said:

The maths on 25+ mortgages are brutal.

Theres no excuse on not using an online mortgage calculator, just to see how brutal.

Start putting normalish APR in - 6- 7% - and SVRs are not a million miles from those figures, and its shocking.

Ive a 10 y mortgage, fixed for 5 years at 1.4% ish - i cant remember exact figure, its well under 2%.

Ive just stopped overpaying after halfing it in under 2 years - i had a lump sum to knock stuff off too.

 

 

 

I disagree.  At a time of ultra-low interest rates lengthening the term makes sense, especially on a longish fix.   I'd also note that while SVR might be 6%, most people will be on a much lower rate.  The complex bit would be to ensure that you're in a position to cope with increased interest payments when rates rise (and shorten the term then, not now).

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On 16/11/2018 at 10:16, Barnsey said:

My stocks really taking a beating, but need to wait until next pay day before topping up some more at these brexit panic levels, Royal Mail 315p, SSE 1120p, Centrica 142p! Bargains to be had.

Royal Mail for me,ladder set from here to 2.50p.Very happy if i got to the 2.50p price.I noticed they put prices up 9% to lots of business customers.Key to them is letters will make parcels profitable where other delivery companies dont have that luxury.Centrica and SSE will be down on political worries,the more Brexit trouble the more likely a Labour government etc.Centrica im full,SSE id buy another tranche at £10.30 though they are and would remain a small holding as i prefer Centrica.Im also watching the gambling sector,William Hill and Playtech.Not reflation stocks of course,but a sector that will pick up inflation sloshing around.Iv nibbled some of both and happy to increase going forward.

 

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On 16/11/2018 at 15:00, Harley said:

Absolutely nailed that one (DXY).  I'll have some of what you're taking!

Lets see if it can get down to 85 Harley before a worldwide debt deflation really gets going.85 and gold $1500,silver $22+.As ever direction of travel along the road map would be fine.

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UnconventionalWisdom
3 minutes ago, DurhamBorn said:

Lets see if it can get down to 85 Harley before a worldwide debt deflation really gets going.85 and gold $1500,silver $22+.As ever direction of travel along the road map would be fine.

This made me think of your predictions on the dollar.. Morgan Stanley believe the dollar has turned

https://www.bloomberg.com/news/articles/2018-11-16/morgan-stanley-says-dollar-s-bull-run-has-ended-time-to-sell?utm_campaign=socialflow-organic&cmpid=socialflow-twitter-business&utm_source=twitter&utm_medium=social&utm_content=business

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3 hours ago, dgul said:

I disagree.  At a time of ultra-low interest rates lengthening the term makes sense, especially on a longish fix.   I'd also note that while SVR might be 6%, most people will be on a much lower rate.  The complex bit would be to ensure that you're in a position to cope with increased interest payments when rates rise (and shorten the term then, not now).

If ..... you have low rates and are in gainful employment in the same place all 30 then yes.

30y timeframe for repaying huge lumps is a bit like winning a 5 horse accumulator.

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