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Credit deflation and the reflation cycle to come.


DurhamBorn

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Bobthebuilder
1 hour ago, Harley said:

The cable chart is a beauty.  Should have made the trade.

1881241359_Annotation2019-01-23182807.thumb.jpg.4001e5027645deda88ac8bc19797f4e3.jpg

My best performing stocks since xmas have been in the retail sector. That i find odd , but the market seems to know better than me.

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14 hours ago, MrXxx said:

I think you have covered it right there with one word `unbudgeted`...some people do not know how to manage a budget...what I do know about these people is that they always seem to have money for booze, fags, the bookies and the latest iPhone...and laugh at my four year old model!...I have sympathy for the ones that become ill/have an accident and so cannot support themselves, I don't have any for the ones that make poor financial decisions.

Understood albeit life would be pretty dull for anyone IMO if you have to work a full week to have just "existed" by the end of it, pay off your landlord's mortgage... and then not be able to buy yourself a few beers and a pack of fags. 1st world problems perhaps and shouldn't be spending money you don't have but even still. It is layabouts who spend it all on fags and booze that gets me...that is another matter!

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4 hours ago, Harley said:

The cable chart is a beauty.  Should have made the trade.

1881241359_Annotation2019-01-23182807.thumb.jpg.4001e5027645deda88ac8bc19797f4e3.jpg

And I finally know what cable is and can stop looking for stocks called cable 😂 Thanks!

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https://news.sky.com/story/paperchase-sale-on-the-cards-amid-crunch-landlord-talks-11616569

Paperchase calling in the administrators, if you can't put the dots together by now...

Quote

Sources said the decision to explore a sale would include examining a pre-pack administration, an insolvency process which involves shedding liabilities before a company is taken on by new owners.

By putting the business on the market, Paperchase joins French Connection, HMV - which is in administration - and Sofa.com among the prominent UK-based retailers which are currently up for sale.

 

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1 hour ago, Barnsey said:

https://news.sky.com/story/paperchase-sale-on-the-cards-amid-crunch-landlord-talks-11616569

Paperchase calling in the administrators, if you can't put the dots together by now...

 

Exactly.Only those with high free cash flow will survive and then they will increase prices as their competition falls away.Paperchase and similar have no chance of competing against Card Factory on the cards and gifts etc.Thats them and Cardmarket from WHsmith gone now.Each sector will see similar.The consumer will become a smaller part of the economy going forward and production and investment will take over.Mid market fashion will have to shrink by a large amount as well.Sofa.com for instance is unlikely to come out of a recession where DFS will probably turn the screw like it has in past recession's.

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On 22/01/2019 at 17:42, Barnsey said:

https://www.realvision.com/defensive-investing-in-an-uncertain-world

Great 1 hour interview with Victor Sperandeo, highly recommended

Thanks, he makes an interesting point regarding index etf`s in a recession I.e rather than some companies up, some down, they will all be going down hence an active, share picking approach is better BUT this assumes you can pick winners...if some of your company choices go bankrupt you are in the short term going to lose more than a more conservative approach in the etf where your money is spread across many more companies?

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14 hours ago, MrXxx said:

Thanks, he makes an interesting point regarding index etf`s in a recession I.e rather than some companies up, some down, they will all be going down hence an active, share picking approach is better BUT this assumes you can pick winners...if some of your company choices go bankrupt you are in the short term going to lose more than a more conservative approach in the etf where your money is spread across many more companies?

I'm a bigger fan of just pulling my money out and parking it somewhere safe rather than trying to trade in a recession, perhaps passive is a better approach than individual providing the ETF survives. I think the next cycle could be a winner for fund managers rather than the passive approach.

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On 21/01/2019 at 16:52, zugzwang said:

The UK taxpayer is currently propping up hopelessly inefficient private rail companies, bus companies, water companies, electricity companies, home builders and building services contractors either through direct govt grants or lucrative corporate tax cuts, while at the same time being relentlessly gouged year-on-year for services that are often sub-par and which at times would disgrace the Third World.

Privatisation serves the interests of Big Money; public ownership serves everyone. Indeed, as Enron demonstrated heroically, there physical reasons for believing the distribution water and electricity can never be made consistently profitable since random losses through long-distance networks constitute a considerable fraction of the cost of service to the end user.

As for Scargill and Thatcher. Had the NUM won then perhaps the UK wouldn't have squandered the vast unearned benison of North Sea oil + gas on unemployment benefits and mortgage repayments and would instead have tended that wealth into a multi-trillion pound sovereign wealth fund like socialist Norway?

Think about it!

I remember nationalised power cuts in 70's .....bad days.Privatisation has been run badly but essentially I prefer it to having the Unions run them.

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On 20/01/2019 at 20:51, kibuc said:

There's a difference between socialism and social democracy. Social benefits as you describe can be overlaid on top of a free-market capitalist economy, and indeed have to be implemented as such as they are massively expensive and the funding needs to come from somewhere. If you want to run a welfare state with an inefficient central-planned economy to support it then you'll go broke in a flash. If you go full retard with social benefits and disincentivize economic activity and productivity then you're fucked regardless of your economic backbone.

If you swing the pendulum too far in the direction of cut-throat capitalism, you can always try to push it back - at least you have money to try and do so. If you go too far down the other end you'll find it's much harder to reverse.

Agree with virutally all of that particualry highlights

On 20/01/2019 at 21:56, zugzwang said:

Have you been living in a cave for the last ten years? Capitalism failed catastrophically in 2008 because the system of checks and balances on the financial services industries established in the aftermath of the Great Recession were systematically diluted or repealed by right-wing neoliberal ideologues in the three decades after 1979, allowing debt leveraging to proceed without constraint in the shadow banking system. It's taken an extraordinary (and ongoing) intervention by the world's treasuries and central banks to keep the lights on. Industrial civilisation would have effectively ended the day that Lehman Brothers closed its doors otherwise.

Disagree, agree, disagree.

 

1) capitalism didn't fail,it wasn'ty allowed to function either in the run up to 2007/8 or thereafter

2) the neo libs/cons also included a great many of the left eg G.Brown etc.The reality is that the banking classes got control of the political lcsses in the West ,got Glass Steagall repealed and then 2008 became inevitable, as did QE/Zirp(although I failed to understand that at the time)

3) No it wouldn't,the bond holders and equity holders would have got burned but the wheat would still have grown and the oil would still have been drilled out.

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On 22/01/2019 at 13:06, DurhamBorn said:

We are a hugely efficient economy and the next cycle will suit us compared to most.The consumer will be less of the economy though and will take the pain and the leveraged will be hit hard.

The UK is a very cheap place to live if you take housing out of the picture.Iv never known it so cheap for a night out etc.Im off out to an Italian restaurant tomorrow that does 3 course lunch for £7.99 and its lovely quality only have to work 25 minutes to earn that and can earn a pint in Spoons and other places in 7 minutes.In the 80s i had to work 30 minutes for a pint.Like you say wealth funds arent much use when everything costs so much.The UK oil money was spent,but it helped get the economy through the transition from an inflation cycle to a deflation one.The opposite is about to happen now of course as we exit a deflation cycle.Its ironic in the US Trump is saying to the chinese we want a zero trade deficit and they are saying ok by 2022.He is without knowing asking them to export back to the US all the inflation they soaked up from them since the 80s.The rust belt might not be so happy when everything is going up in price faster than their wages.

Currently in SA, and the price of food is really high especially compared to the local minimum wage of 20 rand an hour.Unemployment is 25% but probably even higher due to poor data caollction.

20 rand gets you a decent loaf of bread

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19 hours ago, DurhamBorn said:

Exactly.Only those with high free cash flow will survive and then they will increase prices as their competition falls away.Paperchase and similar have no chance of competing against Card Factory on the cards and gifts etc.Thats them and Cardmarket from WHsmith gone now.Each sector will see similar.The consumer will become a smaller part of the economy going forward and production and investment will take over.Mid market fashion will have to shrink by a large amount as well.Sofa.com for instance is unlikely to come out of a recession where DFS will probably turn the screw like it has in past recession's.

DB  Do you still think we won't get inflation before the debt deflation kicks in, in earnest?  You seem to be veering towards thinking we are going to get a lot of inflation soon

 

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Good people of dosbods, I need a little bit of financial education here.

I might be buying a used car this year which would set me back around 12-13k. Now, while I could just cough it up, I've got far better ideas about what to do with such sum, so started looking into hire pruchase agreement instead. A "representative example" on the dealer page indicated 7.7% fixed percentage, presumably secured against the car although I'm not at the stage of reading into fine print yet.

The thing is, every time I log into my bank account I get a big banner about being pre-approved for up to 15k personal loan at fixed 3.3%. "Click here and get money in your account in an hour" kind of thing. How come such an unsecured loan is twice as cheap as a car hire-purchase, which is probably secured with a car that has already taken the biggest depreciation hit? Are there any obvious catches I should be looking for?

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4 minutes ago, kibuc said:

Good people of dosbods, I need a little bit of financial education here.

I might be buying a used car this year which would set me back around 12-13k. Now, while I could just cough it up, I've got far better ideas about what to do with such sum, so started looking into hire pruchase agreement instead. A "representative example" on the dealer page indicated 7.7% fixed percentage, presumably secured against the car although I'm not at the stage of reading into fine print yet.

The thing is, every time I log into my bank account I get a big banner about being pre-approved for up to 15k personal loan at fixed 3.3%. "Click here and get money in your account in an hour" kind of thing. How come such an unsecured loan is twice as cheap as a car hire-purchase, which is probably secured with a car that has already taken the biggest depreciation hit? Are there any obvious catches I should be looking for?

All to do with credit scores, you've got to have a pretty good one for the 3.3% loan whereas the dealers cast their net wide, along with relying on customers being impulsive and lazy. You can haggle on rates though quite a bit.

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5 minutes ago, kibuc said:

Good people of dosbods, I need a little bit of financial education here.

I might be buying a used car this year which would set me back around 12-13k. Now, while I could just cough it up, I've got far better ideas about what to do with such sum, so started looking into hire pruchase agreement instead. A "representative example" on the dealer page indicated 7.7% fixed percentage, presumably secured against the car although I'm not at the stage of reading into fine print yet.

The thing is, every time I log into my bank account I get a big banner about being pre-approved for up to 15k personal loan at fixed 3.3%. "Click here and get money in your account in an hour" kind of thing. How come such an unsecured loan is twice as cheap as a car hire-purchase, which is probably secured with a car that has already taken the biggest depreciation hit? Are there any obvious catches I should be looking for?

An idiot tax? Also credit costs more for people with poor credit. Can you actually get your loan at 3.3%? I imagine few are actually given out at that rate once the credit check happens. My bank keeps emailing me (although no mention of being pre-approved) with loan of up to 30k at 3.3% or borrow up to 50k. Similar thing have the money in your account instantly. I would actually take them up on their offer if I knew I could get the 3.3% and how much they would lend.

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37 minutes ago, janch said:

DB  Do you still think we won't get inflation before the debt deflation kicks in, in earnest?  You seem to be veering towards thinking we are going to get a lot of inflation soon

 

The debt deflation is already happening so no i dont think we will get much inflation,it might spike slightly.I expect inflation to start to run around 2021 give or take 12 months,then end up in low to mid double figures by 2027/2028.My road map says minimum 11% inflation by 2027,maximum 23%.As always it will build through the cycle.Its key to remember a roadmap isnt a trading call.Its simply why im positioning my portfolio to stocks that can front run inflation to a high,or even small degree.Most cant.

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5 minutes ago, DurhamBorn said:

The debt deflation is already happening so no i dont think we will get much inflation,it might spike slightly.I expect inflation to start to run around 2021 give or take 12 months,then end up in low to mid double figures by 2027/2028.My road map says minimum 11% inflation by 2027,maximum 23%.As always it will build through the cycle.Its key to remember a roadmap isnt a trading call.Its simply why im positioning my portfolio to stocks that can front run inflation to a high,or even small degree.Most cant.

Just to confirm with your figures do you mean these will be the published CPI figures or genuine inflation numbers. Seems to me from my own tracking I'm nearly at double figures already this year. This doesn't even count for the shrinkflation/crapflation going on. Crisps are mostly air now xD Anyone checked out how thin a waitrose sirloin steak is these days? Not much thicker than what you find in a wafer thin sandwich meat packets xD

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2 hours ago, Barnsey said:

 

Great lad!  Some of the terminology was a bit specialist but I think I got the gist!  Should be able to edit that down to about 5 secs for prime time viewwing!

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Bobthebuilder
5 minutes ago, A_P said:

Just to confirm with your figures do you mean these will be the published CPI figures or genuine inflation numbers. Seems to me from my own tracking I'm nearly at double figures already this year. This doesn't even count for the shrinkflation/crapflation going on. Crisps are mostly air now xD Anyone checked out how thin a waitrose sirloin steak is these days? Not much thicker than what you find in a wafer thin sandwich meat packets xD

Go to a proper butchers shop and stop eating crisps.

Everyone's personal inflation rate is different and never believe the government's figures.

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Vodafone down 4.3% today is everyone just overreacting

Vodafone is the latest business concerned about the security of the smartphone maker after several foreign governments, including America and Australia, have considered banning or already banned Huawei’s devices to fend off possible leaks, cyberattacks and spying.

Vodafone will only stop buying new equipment at the “core” — a critical part of its network — where it uses just a “small amount” of Huawei devices.

Carriers are reluctant to pivot away from Huawei unless they are forced to. It has spurred competition, driving down equipment costs, and its equipment has become deeply enmeshed in networks in many big markets. Vodafone uses Huawei in the core of its Spanish network and some other smaller markets, but most of its spending with the Chinese vendor has been radio-access network gear.

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18 hours ago, MrXxx said:

Thanks, he makes an interesting point regarding index etf`s in a recession I.e rather than some companies up, some down, they will all be going down hence an active, share picking approach is better BUT this assumes you can pick winners...if some of your company choices go bankrupt you are in the short term going to lose more than a more conservative approach in the etf where your money is spread across many more companies?

Agreed (although "in a recession" - the market and the economy do not always follow each other in step).  But when/if the further market corrects, then it'll be a stock pickers and/or traders market.  But beware the "active" funds that are no more than tracker funds.  And I would worry a bit about instruments such as ETFs, or even funds which suspend withdrawls (per the German property funds).  But maybe a balanced portfolio might hold it's own for those not trading or stock picking.  Might be better than trying to time entries and exits from the market.   

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Just now, Bobthebuilder said:

Go to a proper butchers shop and stop eating crisps.

Everyone's personal inflation rate is different and never believe the government's figures.

Sigh. I don't buy crisps although I will eat them if they're about. I don't buy any junk food for that matter. I was making a point inflation is being hidden through every facet. I do buy their steaks though when they've been double/triple reduced. I don't have a decent butchers in town to buy their steaks or support sadly. I know they're made up the reason for seeking clarification from DB what his figures relate to. Genuine inflation or the made up numbers so much worse. Yes I know they're personal that's why I said I'm nearly at double.

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