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Credit deflation and the reflation cycle to come.


DurhamBorn

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1 minute ago, Harley said:

Sorry but a quick superficial put down does not do this analysis justice.

Open minds, enquiring minds, search to find, and all that.

There isn't too much to add, though.

It's great if your signals gave you an edge, and even better if you acted on it and actually made gains. That being said, it's important to highlight the timeframe.

If I cannot use TA to automate my deals - and long-term data seems to confirm that I cannot - then I still have to make a judgement call when to trust my signals and when to discard them. In which case I'd rather trust my judgement exclusively.

If I'm in for a long haul, using TA to pinpoint my time of entry to perfection and get that extra 3-5% percent wouldn't matter too much, and that's assuming that it'd be 100% reliable in the first place.

Then again, if you make money using it, more power to you.

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4 hours ago, kibuc said:

It's also worth remembering that the leverage is re-adjusted daily, so their long-term performance may detach from the underlying asset.

A crude example:

1. Buy 1 unit of 5x gold, with unit price of $1000 and gold price at $1000/oz. Leverage for this transaction is $4000.

2. Gold drops 10% on the day, to $900/oz.  Our 1 unit is now worth $500.

3. Next morning, leverage on our 1 unit of 5x gold is re-adjusted to be $2000.

4. Gold recovers 11%, back to $1000/oz. Our 1 unit is, however, not back to where it was and is now worth only $775.

Daily re-adjusting is a killer with volatile underlying assets. On the other hand, it helps reduce losses in a consistent downtrend and raises gains exponentially in a consistent bull run.

Cheers Kibuc,Appreciate the clear explanation and accompanying example.I've never understood how they could do these 2x things without excessive cost burining your advantage.

 

2 hours ago, Democorruptcy said:

Governbankment's FOBT ruling cutting stakes to £2

 

 

I knew that had come into play didn't realsie that it created such a big hit.

 

2 hours ago, Barnsey said:

I'm thinking the £2 FOBT limit is somewhat priced in, hence the share price plummeting by over 50% since the summer, they're expanding aggressively into the States, and along with their bid for Mr Green Group, things are looking very promising should they make it through the next year or two of turbulence and not take too much of a hit from the loss of business in their shops. Hopefully @DurhamBorn can chime in with more detail but this could be a very good reflation stock as he mentioned recently.

The key for WH is to get those who are stuck on FOBTs hooked on their online side of the business. Live casino seems to be the most addictive thing right now from what I see through work colleagues on their phones.

The FOBT's effectively kept high st Landlords in business.Betting shops sprouted up over the last few years.Losing that footprint could be a route to profit but then I guess that depends on the leases.

I've used WH and their online telephone operation is quite good,although not very liquid for the events I'm interested in.

40 minutes ago, kibuc said:

Buying on technicals is all nice and well until a major event comes round and you end up catching a falling knife on your buy signals.

Is that true that no automated strategy managed to beat the index over any 30y period? I'm quite sure I read in more than one place criticising TA.

I think it depends on the user.I use TA a lot-and I mean a lot - but I keep it on the simpler side.In terms of short term trading,you have to use it mainly because the big boys are timing off it as well quite often.I generally use my experience and judgement to pick the sectors I can see a profit in,then I use TA to to take me in and out.

Longer term it matters less.But I held off my first Vodafone purchase at £1-90 becausee the downtrend on longer term MA's looked strong.It stops me getting the bottom quite often but I'm not that bothered about the bottom 15% ,same with the top 15%.

All our goldie purchases in 2017 were done without me using any TA and some have been a disaster :ph34r: but the Goldies are so volatile,it was one less thing to confuse me.

 

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1 hour ago, kibuc said:

There isn't too much to add, though.

It's great if your signals gave you an edge, and even better if you acted on it and actually made gains. That being said, it's important to highlight the timeframe.

If I cannot use TA to automate my deals - and long-term data seems to confirm that I cannot - then I still have to make a judgement call when to trust my signals and when to discard them. In which case I'd rather trust my judgement exclusively.

If I'm in for a long haul, using TA to pinpoint my time of entry to perfection and get that extra 3-5% percent wouldn't matter too much, and that's assuming that it'd be 100% reliable in the first place.

Then again, if you make money using it, more power to you.

Thanks for the reply.  The focus of my analysis was whether these inverse ETFs provide a useful hedging opportunity and to investigate the often cited mantras.  Wherebee had mentioned them and it seemed a good thing to look at, even if to dismiss them. That I used TA was inconsequential.  Any trigger would do.  I had to choose some basis for a buy and sell to test the concept.  My initial analysis just used historic chart peaks and troughs but this was clearly cheating.  The focus was about whether they are truly inverse, how much, how quickly they decayed and how costly they were.  Again, how the buy decision is made was not the point of the analysis. And I agree with your sentiment in part, moving to weekly rather than daily data to partly remove any false or excessive "science".  I once did a paper (a follow up to Friedman) on whether econmics is an art or science.  Same here.

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1 hour ago, sancho panza said:

All our goldie purchases in 2017 were done without me using any TA and some have been a disaster :ph34r: but the Goldies are so volatile,it was one less thing to confuse me

I looked at gave up, even on the simplest TA.  Even GDX, presumably better as an aggregate vehicle, was no good.  And I don't even try on anything, miners or anything, below a £1bn cap.  And even then, just one piece of the buy/sell jigsaw.  But the miners - oh boy, like coralling a bunch of sugar rushed kids at some play area!  Not for me.  If I did invest, I would use a dartboard!

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Democorruptcy
1 hour ago, sancho panza said:

I knew that had come into play didn't realsie that it created such a big hit.

It's a biggie. When you mentioned Ladbrokes before I mentioned the £670m difference in the GVC takeover deal of Ladbrokes/Coral based on the FOBT ruling.

The expectation is for lots of UK shops to close but the majors are hoping the US ruling will more than offset it.

HL on W Hill

HL on GVC

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Democorruptcy
1 hour ago, Harley said:

Thanks for the reply.  The focus of my analysis was whether these inverse ETFs provide a useful hedging opportunity and to investigate the often cited mantras.  Wherebee had mentioned them and it seemed a good thing to look at, even if to dismiss them. That I used TA was inconsequential.  Any trigger would do.  I had to choose some basis for a buy and sell to test the concept.  My initial analysis just used historic chart peaks and troughs but this was clearly cheating.  The focus was about whether they are truly inverse, how much, how quickly they decayed and how costly they were.  Again, how the buy decision is made was not the point of the analysis. And I agree with your sentiment in part, moving to weekly rather than daily data to partly remove any false or excessive "science".  I once did a paper (a follow up to Friedman) on whether econmics is an art or science.  Same here.

Monevator article might be of interest https://monevator.com/short-etf-maths/

 

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1 hour ago, Democorruptcy said:

Monevator article might be of interest https://monevator.com/short-etf-maths/

Thanks, but that is not what my limited analysis showed me.  Seems to be how and when it is used.  It has to be very targeted.  The devil is in the detail.  I have done enough to decide to use it, now the question is precisely when and how.  I've used derivatives in the past so understand things quite well, as well as seeing them break down in extreme (2008/9) market stress (e.g. due to over-riding liquidity issues).  I'll be data led as always.

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Interesting read- I am always trying to figure out when they say Liquidity do people refer to just US domestic money flows or if there is truth in the M Armstrong idea of the importance of international capital flight. I do not know how to find the answer yet - still digging about- but found this.

https://www.sprottmoney.com/Blog/gold-still-looking-for-direction-david-brady-07-122018.html

"A stock market crash is unavoidable at this point, in my opinion. Liquidity is all that matters to stocks, and it is falling. It is only a question of when. October was just the beginning of the first leg down, then comes the rally, then the main event, the crash to 2100/2200 S&P (“ABC” in Elliott Wave terms). The buyback blackout period starting in January is a possible candidate for that main event. If not, we’ll have to wait a little longer. When it does occur, Gold could fall initially, as in 2008. But when it becomes clear that the Fed is about to reverse policy, I expect the dollar to peak and fall hard, USD/CNY also. Gold soars from that point forward."

 

 

 

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Question: 

will we see 15% interest rates in the U.K. again when this bubble pops? 

Im looking at a 10 year fixed mortgage @2.9% 

still cheaper than paying rent.. but I don’t know if I’m being smart or stupid? 

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8 hours ago, Harley said:

Thanks for the reply.  The focus of my analysis was whether these inverse ETFs provide a useful hedging opportunity and to investigate the often cited mantras.  Wherebee had mentioned them and it seemed a good thing to look at, even if to dismiss them. That I used TA was inconsequential.  Any trigger would do.  I had to choose some basis for a buy and sell to test the concept.  My initial analysis just used historic chart peaks and troughs but this was clearly cheating.  The focus was about whether they are truly inverse, how much, how quickly they decayed and how costly they were.  Again, how the buy decision is made was not the point of the analysis. And I agree with your sentiment in part, moving to weekly rather than daily data to partly remove any false or excessive "science".  I once did a paper (a follow up to Friedman) on whether econmics is an art or science.  Same here.

Not sure if this is helpful in your hedging case, but i looked into leveraged ETFs as a long term buy and hold and found a few theories: 

For those that don't mind the volatility, they may be a good option. As leveraged ETFs compound daily, violability drag can dramatically reduce returns. For all those disbelievers, here is an interesting article calculating returns based on daily compounding of different indexes at different levels of leverage. For those who don't wish to read the article, the conclusion is that x2 leverage is the optimum level of leverage for the best returns over the long term. Here's a link to the article for those interested: http://ddnum.com/articles/leveragedETFs.php

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On 11/12/2018 at 13:06, Thorn said:

Ok Viceroy- mulling here...do you think that over the last few months there has just been a head and shoulders bottom in the DOW and it could actually take off, despite all the noise?

Hi Thorn - I wouldn't know based on the patterns - i use Armstrong's Reversal numbers for guidance.   Only a monthly close below 21,600 would signal a bear market crash.  
 
"..The Monthly Bearish (21600) that would signal a bear market into 2020 and a cycle inversion with a flip out back up into a Bull Market thereafter into 2032 would be indicated by a Monthly Closing below 21600. So far, there is nothing implying that pattern just yet.   However if this did happen, this would simply reset the Phase Transition and we would be looking for an incredible price explosion into the 2025/2026 time period. That would certainly warn of the currency reset.
We are at a crossroads here where capital will be confronted by insanity. This appears to be setting up for the biggest bear-trap perhaps in history. This is when we need the computer more than ever to pierce through the veil of emotions to reveal the true trend.'
 
I've posted this before too; 
 
I do read his past posts with great interest.  This one from 2014 did forecast the possibility of DOW reaching 26,000 in 2017-2018 timeframe.
"..we still see the two primary targets for highs on this run in the 26000 area followed by 43000 area. The latter would have been a Sling Shot Move now for a high in 2015.75. We are still in a position to see that level but it would appear more-likely-than-not to be the 2017-2018 time period...'
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4 hours ago, Viceroy said:

Not sure if this is helpful in your hedging case, but i looked into leveraged ETFs as a long term buy and hold and found a few theories: 

For those that don't mind the volatility, they may be a good option. As leveraged ETFs compound daily, violability drag can dramatically reduce returns. For all those disbelievers, here is an interesting article calculating returns based on daily compounding of different indexes at different levels of leverage. For those who don't wish to read the article, the conclusion is that x2 leverage is the optimum level of leverage for the best returns over the long term. Here's a link to the article for those interested: http://ddnum.com/articles/leveragedETFs.php

Excellent find.  Many thanks.  Such is the power of this board.  I shall read in detail, maybe even the long version!  Looks like some proper analysis, although defining  "long term" is probably the crux of the issue. I'm thinking of using it in limited situations, rather than as a long term blanket, something increasingly relevant given the likely direction outlined in this thread.

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7 hours ago, macca said:

Question: 

will we see 15% interest rates in the U.K. again when this bubble pops? 

Im looking at a 10 year fixed mortgage @2.9% 

still cheaper than paying rent.. but I don’t know if I’m being smart or stupid? 

This is what I'm going to do. I'm planning on buying in the next few months, but not not in the SE where I currently reside. My personal opinion is we will unlikley see rates above 5% on the current fiat currency. Interesting times going forward to see what rabbits will be pulled out the hat to keep the plates spinning.

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21 hours ago, Harley said:

I looked at gave up, even on the simplest TA.  Even GDX, presumably better as an aggregate vehicle, was no good.  And I don't even try on anything, miners or anything, below a £1bn cap.  And even then, just one piece of the buy/sell jigsaw.  But the miners - oh boy, like coralling a bunch of sugar rushed kids at some play area!  Not for me.  If I did invest, I would use a dartboard!

Yeah,I find my brand of tea leaves TA jsut doesn't work with PM miners.Love your description.I think that's the art in the science of TA and that's when to apply it and when to work off fundamentals.

I've made some 50 short bets over the last 4 months,mainly using my judgement to pick the sector then using my tea leaves to time in and out(out usually ahead of the tea leaves cos I believe you don't go bust taking profits.)

My TA work told me we were oversold a few days back-as I posted on here-and I've stayed clear sinxce.Even went long Poodential to keep my toes in.Tea Leaves work well with the poo.

21 hours ago, Democorruptcy said:

It's a biggie. When you mentioned Ladbrokes before I mentioned the £670m difference in the GVC takeover deal of Ladbrokes/Coral based on the FOBT ruling.

The expectation is for lots of UK shops to close but the majors are hoping the US ruling will more than offset it.

HL on W Hill

HL on GVC

US ruling? 

 

You're an experienced speculator DM.Any views on who will propser from this?

https://edition.cnn.com/2018/05/14/politics/sports-betting-ncaa-supreme-court/index.html

The Supreme Court cleared the way on Monday for states to legalize sports betting, striking down a 1992 federal law that had prohibited most states from authorizing sports betting.

15 hours ago, Thorn said:

Interesting read- I am always trying to figure out when they say Liquidity do people refer to just US domestic money flows or if there is truth in the M Armstrong idea of the importance of international capital flight. I do not know how to find the answer yet - still digging about- but found this.

https://www.sprottmoney.com/Blog/gold-still-looking-for-direction-david-brady-07-122018.html

"A stock market crash is unavoidable at this point, in my opinion. Liquidity is all that matters to stocks, and it is falling. It is only a question of when. October was just the beginning of the first leg down, then comes the rally, then the main event, the crash to 2100/2200 S&P (“ABC” in Elliott Wave terms). The buyback blackout period starting in January is a possible candidate for that main event. If not, we’ll have to wait a little longer. When it does occur, Gold could fall initially, as in 2008. But when it becomes clear that the Fed is about to reverse policy, I expect the dollar to peak and fall hard, USD/CNY also. Gold soars from that point forward."

 

 

 

You can have rising pricves and poor liquidity.The two aren't mutually exclusive.

14 hours ago, macca said:

Question: 

will we see 15% interest rates in the U.K. again when this bubble pops? 

Im looking at a 10 year fixed mortgage @2.9% 

still cheaper than paying rent.. but I don’t know if I’m being smart or stupid? 

Smart.If you can get it at that rate and you're happy to have the house for 10+years.

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On 11/12/2018 at 14:34, Barnsey said:

I'm thinking the £2 FOBT limit is somewhat priced in, hence the share price plummeting by over 50% since the summer, they're expanding aggressively into the States, and along with their bid for Mr Green Group, things are looking very promising should they make it through the next year or two of turbulence and not take too much of a hit from the loss of business in their shops. Hopefully @DurhamBorn can chime in with more detail but this could be a very good reflation stock as he mentioned recently.

The key for WH is to get those who are stuck on FOBTs hooked on their online side of the business. Live casino seems to be the most addictive thing right now from what I see through work colleagues on their phones.

Like you say they need to get through to the other side.The FOBT thing was a huge hit,and will see them close a lot of shops.A £10 limit might not of hit them so hard but a £2 limit will.A lot will depend how many they can move to online.If they can gain a decent share in the US (an they are the leader right now) they might be able to get profit to £350 million+.As with all companies getting through the next couple of years is the key.

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7 minutes ago, DurhamBorn said:

Like you say they need to get through to the other side.The FOBT thing was a huge hit,and will see them close a lot of shops.A £10 limit might not of hit them so hard but a £2 limit will.A lot will depend how many they can move to online.If they can gain a decent share in the US (an they are the leader right now) they might be able to get profit to £350 million+.As with all companies getting through the next couple of years is the key.

o/t has your view on yamana changed much.You were a fan.

 

Just looking at HUI,and their shares are still on the floor.

 

Seems some real momentum building under the PM miners at the mo.

 

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Democorruptcy
22 minutes ago, sancho panza said:

US ruling? 

You're an experienced speculator DM.Any views on who will propser from this?

https://edition.cnn.com/2018/05/14/politics/sports-betting-ncaa-supreme-court/index.html

The Supreme Court cleared the way on Monday for states to legalize sports betting, striking down a 1992 federal law that had prohibited most states from authorizing sports betting.

 

This is from May and likes Barnsey and DB's William Hill
https://www.gambling.com/news/the-uk-bookmakers-best-prepared-for-legal-us-sports-betting-759100

 

PaddyPowerBetfair also get a mnetion in that one but started doing the groundwork years ago by buying US Racing TV Channel TVG. Another addition is Fanduel

https://www.theguardian.com/business/2018/may/16/paddy-power-betfair-in-talks-to-buy-fanduel-after-us-sports-betting-ruling

https://www.independent.ie/business/world/paddy-power-betfair-in-new-partnerships-to-access-new-york-and-new-jersey-online-markets-36989254.html

 

GVC bought MGM

https://www.cnbc.com/2018/07/30/gvc-hits-a-record-after-making-us-betting-deal-with-mgm-resor.html

 

They are all going for gold but I wouldn't like to say who would be the winner. Those are just a few UK bookmakers but it's going to be hugely competitive. I think one winner will be the shrewder US punters with so many bookies scrambling for their bets.

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@kibuc  @durhamborn and anyone who cares to offer a comment

Sorry if I sound like an idiot for asking but I've posted several times about how bad my PM trades have faired so genuinely seeking any enlightenment or avenues of inquiry.DYOR as ever.But if you see any glaring inclusions or omissions feel free etc.

Q.

Have you got a view on where the value is in the PM miners..I've been delaying and delaying sticking more in and am looking at these charts thinking I'd better hurry after tranche 1 in 2017.

Already have Goldfields,Goldcorpse,Barrick.Anglo,New Gold:ph34r:,Eldorado:ph34r: Yamana Novagold.

Looking to add

1) Decent size producers/Companies.

Kinross/Sibanye/Harmony/Sandstorm/B2G/Hecla/Coeur/PAAS

Querying Alamos-they seem beat down

 

 

2) Smaller players

Alexco/Atico/Intergra/Regulus/Amergio/Tinka

 

 

 

 

 

 

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23 minutes ago, Democorruptcy said:

This is from May and likes Barnsey and DB's William Hill
https://www.gambling.com/news/the-uk-bookmakers-best-prepared-for-legal-us-sports-betting-759100

 

PaddyPowerBetfair also get a mnetion in that one but started doing the groundwork years ago by buying US Racing TV Channel TVG. Another addition is Fanduel

https://www.theguardian.com/business/2018/may/16/paddy-power-betfair-in-talks-to-buy-fanduel-after-us-sports-betting-ruling

https://www.independent.ie/business/world/paddy-power-betfair-in-new-partnerships-to-access-new-york-and-new-jersey-online-markets-36989254.html

 

GVC bought MGM

https://www.cnbc.com/2018/07/30/gvc-hits-a-record-after-making-us-betting-deal-with-mgm-resor.html

 

They are all going for gold but I wouldn't like to say who would be the winner. Those are just a few UK bookmakers but it's going to be hugely competitive. I think one winner will be the shrewder US punters with so many bookies scrambling for their bets.

Thanks for the insight.I guess it's probably a case of spreading yourself around the bigger guys.

 

That first article is excellent.Must say there's a real opportunity in the US.

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51 minutes ago, sancho panza said:

o/t has your view on yamana changed much.You were a fan.

 

Just looking at HUI,and their shares are still on the floor.

 

Seems some real momentum building under the PM miners at the mo.

 

I own Yamana among a portolio of 12 PM miners.The problem they have over others is a big debt pile,but they do have very good assets.I would still buy them today as i would all the other ones i own.Its highly likely i will sell my PM portfolio at some point in one go (or sell maybe half the portolio).I would consider a 50% return across the 12 as good,though my targets on gold are $1500 and silver $22/24 and its likely those prices will decide when i sell and would expect 100%+ on my miners.

 

For a speculative punt in the space my favourites are Harmony,Endeavour silver,Alexco.

 

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1 hour ago, sancho panza said:

You foreseeing a bounce into Chriggy?

Bounce or not, IMHO we're now in a stock pickers market. 

Passive index tracking, any index tracking, is so last year.  At best they will see-saw up and down.  Great for trading but for investing, I look for value or equity income in individual stocks.  They will defacto become increasingly attractive. 

The beaten up FTSE seems the place to start, then overseas.  Imagine the rubber band once international flows and sterling deem it safe to enter our market.  Well as long as companies stop leaving ours!

TBH, a Christmas bounce is the last thing I want unless it ultimately accelerates the coming final low.  Now is the time to prep for the emerging new normal in 2019+.  Use strength and weakness to sell and buy into positions.

But just had a quick look at the FTSE and a continued bounce of some sort would not surprise me but DYOR folks.

Dumb money will (have?) stop making money this year and the smart, hard working bods like us will be rewarded for once.

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