Credit deflation and the reflation cycle to come.

[DurhamBorn]

2 hours ago, MrXxx said:

DB (or anyone else), can you explain the first sentence...I understand laddering in thought.

Thanks.

I bought Harmony Gold at $2.04,$1.81 and $1.66,it then went up to $2.12,i sold my bottom bought ladder the $1.66 one at $2.06.It then went back down all the way to $1.50.I re bought my last ladder (minus the profit) at $1.58 so holding my 4 ladders againThe shares went back above $2.00 and i again sold the bottom ladder.I now own 3 ladders in Harmony,and have £9600 taken out £1600 of it profit.If the shares go to $1.54 i would re-buy £4k worth.

Vodafone i have ladders in at £1.81,£1.67,£1.53,£1.34 and have cash for 1 more ladder and now have an average price of £1.58,but have had an average of 8p in dividends.

Go Ahead i bought at £15.32,£14.12,£13.43 and only got 3 ladders in before they turned.I sold the bottom ladder at £19.22 even though i only got 3 ladders in and now only own 2 when i prefer 4 or 5.However i always sell my bottom ladder at 20%+ unless its my first ladder.If a share falls around 30%-40% from where i start buying il own a full 5 ladders probably and if it turns up ending up owning 4 for the cycle as i slice the profits from the bottom.If i do 5 £4k ladders and the share hits them all then turns up il end up investing £20k,selling £4k+£800 profit.

[leonardratso]

36 minutes ago, DurhamBorn said:

I bought Harmony Gold at $2.04,$1.81 and $1.66,it then went up to $2.12,i sold my bottom bought ladder the $1.66 one at $2.06.It then went back down all the way to $1.50.I re bought my last ladder (minus the profit) at $1.58 so holding my 4 ladders againThe shares went back above $2.00 and i again sold the bottom ladder.I now own 3 ladders in Harmony,and have £9600 taken out £1600 of it profit.If the shares go to $1.54 i would re-buy £4k worth.

Vodafone i have ladders in at £1.81,£1.67,£1.53,£1.34 and have cash for 1 more ladder and now have an average price of £1.58,but have had an average of 8p in dividends.

Go Ahead i bought at £15.32,£14.12,£13.43 and only got 3 ladders in before they turned.I sold the bottom ladder at £19.22 even though i only got 3 ladders in and now only own 2 when i prefer 4 or 5.However i always sell my bottom ladder at 20%+ unless its my first ladder.If a share falls around 30%-40% from where i start buying il own a full 5 ladders probably and if it turns up ending up owning 4 for the cycle as i slice the profits from the bottom.If i do 5 £4k ladders and the share hits them all then turns up il end up investing £20k,selling £4k+£800 profit.

NB. do not attempt this with northern rock.

[zugzwang]

50 minutes ago, leonardratso said:

NB. do not attempt this with northern rock.

I know someone who threw away £4k doing exactly that.

[DurhamBorn]

1 hour ago, leonardratso said:

NB. do not attempt this with northern rock.

There will always be some that go under (even though i would never of owned any of the banks before the crash and didnt) and its crucial people keep a balanced portfolio.Outside of the PMs i wont have more than 9% in any sector,never mind share.A lot of bank employees had most of their savings in the bnaks shares though sharesaves that they kept and were wiped out.

[Harley]

13 hours ago, sancho panza said:

I had an excllent shorting year last year.Made me cocky,stepped back in a bit too big in Feb and a bit too firm,only to get a lesson in discipline as my good run had enouraged me to override my experience and my plan.

I used to specialise in trading covered warrants prior to the GFC.  I did this in addition to a normal full on day job.  Things went quite well with annual profits peaking at an unprecedented £xxk blow off top. 

Then came the GFC.  I was working away from home so came back to my hotel room in the evening, booted up the laptop, and saw a £xxk loss across all my holdings.  I stared in the mirror for an eternity, thinking about what £xxk really meant.  I thought of the car I could have bought, how long it would take to recover, etc.  The numbers suddenly became painfully real.

It took a long time to get back into the markets.  I had to first go back to basics, actually as it turned out, go to them for the very first time! 

Turns out I made almost every mistake in the book.  But to me, the most important was the unrealised thought that I could trade the markets when I was ready (ie. not doing my normal job).  That the markets would just give unto me.  How arrogant and statistically idiotic!

I'm now very pleased with what happened, especially as it did not wipe me out, although cost me missing most of the post GFC run up.

That £xxk loss was not so bad as at least I could use it to offset future gains for tax purposes (the reason I don't trade within a tax wrapper).  The losses missing the GFC run up were more extensive, but mostly only if I put on a hair shirt and imagine I had done everything right in that period.

Oh and the collapse in covered warrants around the GFC (where the supporting maths went right out the window) taught me how derivatives and "guaranteed" relationships can blow up at a time of stress.

But that was yesterday and today is a bright new day because I choose it to be so!  I'm still here and wiser.  That makes me happy.

[leonardratso]

you are fence and i claim my £5.00

[Castlevania]

29 minutes ago, leonardratso said:

you are fence and i claim my £5.00

I thought that was well known?

[Majorpain]

https://business.financialpost.com/commodities/mining/barrick-gold-offers-to-buy-newmont-in-all-stock-deal

Another PM merger.  Still the big boys though, no one interested in the little guys yet?

[Harley]

And so it starts. 

The issue here is not about the rights and wrongs on this specific scheme ("too good to be true") but how it's been approached and the standards it sets for the future.

No doubt plenty more regulation and (retrospective) rule changes to follow as we head into stormy waters........

Contractors face loan charge choice

https://www.bbc.co.uk/sounds/play/m0002rn7

"On April 6th the loan charge comes into force. It's an anti-tax avoidance measure which will enable HMRC to recover tax from disguised remuneration schemes which involved paying earnings back via a loan. Contractors, some of whom now face bills of hundreds of thousands of pounds, have told Money Box they were advised by their accountants to use these schemes, while others said they were told they would lose contracts without one. HMRC options for people in this situation are to repay the loans, settle the tax due or pay the loan charge in April which will apply to all loans made since 6 April 1999 if they are still outstanding. If a settlement has been agreed or is in progress with HMRC the charge will not apply".

It's been a declared scheme with HRMC for some time and they never said not to do it, letting it to run and accumulate interest!  It's retrospective (technically retroactive), with a specific legal change passing Parliament to enable HRMC to go back 20 years without appeal, not the current seven (which assumes no fraud).

First they tried "unconventional" policies such as QE funny money, and next they'll try Canute type regulation.

And the beauty of such things is it can be discriminately targeted at a few grubby contractors and the like rather than wider voter BTLers, etc.

At least not to start with!

[DurhamBorn]

48 minutes ago, Harley said:

And so it starts. 

The issue here is not about the rights and wrongs on this specific scheme ("too good to be true") but how it's been approached and the standards it sets for the future.

No doubt plenty more regulation and (retrospective) rule changes to follow as we head into stormy waters........

Contractors face loan charge choice

https://www.bbc.co.uk/sounds/play/m0002rn7

"On April 6th the loan charge comes into force. It's an anti-tax avoidance measure which will enable HMRC to recover tax from disguised remuneration schemes which involved paying earnings back via a loan. Contractors, some of whom now face bills of hundreds of thousands of pounds, have told Money Box they were advised by their accountants to use these schemes, while others said they were told they would lose contracts without one. HMRC options for people in this situation are to repay the loans, settle the tax due or pay the loan charge in April which will apply to all loans made since 6 April 1999 if they are still outstanding. If a settlement has been agreed or is in progress with HMRC the charge will not apply".

It's been a declared scheme with HRMC for some time and they never said not to do it, letting it to run and accumulate interest!  It's retrospective (technically retroactive), with a specific legal change passing Parliament to enable HRMC to go back 20 years without appeal, not the current seven (which assumes no fraud).

First they tried "unconventional" policies such as QE funny money, and next they'll try Canute type regulation.

And the beauty of such things is it can be discriminately targeted at a few grubby contractors and the like rather than wider voter BTLers, etc.

At least not to start with!

Inflation is how they will get most people.BTL of course will be a big target.Care home fees is the other.

The government will be desperate to remove capital from the middle class/those workers with assets to stop them handing money down to children so they can retire early.The government needs to keep those children working to pay for those who wont ever work.

My daughter is a nurse and my partner is a nurse/carer.It took me a long time and lots of dates to find one.If my dad needs care he ill move in with me and my partner will pack in work.

Its crucial for ordinary people to use SIPPs etc to get their income up to £12k with state pension then ISAs and then retire early to look after grandchildren/elderly parents.That keeps the state out of things.

[leonardratso]

3 hours ago, Castlevania said:

I thought that was well known?

do you remember fence? he had a story similar to harleys there, about losing a shit ton of money on a dead cert. He disappeared a while back.

[A_P]

3 minutes ago, leonardratso said:

do you remember fence? he had a story similar to harleys there, about losing a shit ton of money on a dead cert. He disappeared a while back.

Sounds like Harley was one of the OG's before r/wallstreetbets.

[Castlevania]

17 minutes ago, leonardratso said:

do you remember fence? he had a story similar to harleys there, about losing a shit ton of money on a dead cert. He disappeared a while back.

Yeah. I just assumed they were the same person

[leonardratso]

Just now, Castlevania said:

Yeah. I just assumed they were the same person

could be.

[Shatner's Bassoon]

5 hours ago, DurhamBorn said:

There will always be some that go under (even though i would never of owned any of the banks before the crash and didnt) and its crucial people keep a balanced portfolio.Outside of the PMs i wont have more than 9% in any sector,never mind share.A lot of bank employees had most of their savings in the bnaks shares though sharesaves that they kept and were wiped out.

Very true. I heard of an RBS employee who killed himself because of this. Which often crosses my mind when I look at my (fairly) daft number of Centrica shares and its ever dwindling share price.

With the tax benefits, cheap option prices, a buy 2 get 1 free scheme, dividends, and the ability to cancel sharesaves and take out new ones at a lower price, it's pretty hard to make a loss with these schemes, even at this level, but I'd still be a bit goosed if the company went under. On the flip side, if it ever does take off in a reflation it would probably buy me a cheap house...

[Harley]

54 minutes ago, Shatner's Bassoon said:

With the tax benefits, cheap option prices, a buy 2 get 1 free scheme, dividends, and the ability to cancel sharesaves and take out new ones at a lower price, it's pretty hard to make a loss with these schemes, even at this level, but I'd still be a bit goosed if the company went under. On the flip side, if it ever does take off in a reflation it would probably buy me a cheap house...

Nothing like employee share schemes to boost the share price for those executive bonus schemes!

[Harley]

2 hours ago, DurhamBorn said:

Its crucial for ordinary people to use SIPPs etc to get their income up to £12k with state pension then ISAs and then retire early to look after grandchildren/elderly parents.That keeps the state out of things.

Great bit of food for thought and with some changes at home, we are heading somewhere similar.  These thoughts are as good as your macro calls!  I expect the old (UK) and elsewhere idea of several generations living under one roof to return.  Just imagine merging several (by then) cheap executive starter flats on the same floor into one!

[sancho panza]

Cross psot from the HPI thread.This ones a biggie

LCP uses Acadata,hence more accurate than Hailwide.Also includes new builds.Prime london has gone.

 

The LCPAca Residential Index is now available. It is based on every transaction for full market value recorded by HM Land Registry in England & Wales, including prices of properties bought with cash and new builds, as opposed to statistics based on asking prices, mortgage approvals, or selective samples. The index tracks residential property prices and transactions within England & Wales, Greater London and Prime Central London. Click here to download the full report...

Headlines from Report: Regional Prices Continue to Fall PRIME CENTRAL LONDON (PCL) A weak start to the year Average annual prices for January (excluding new build) in PCL now stand at £1,809,860. Monthly prices are down by 2.4%. Quarterly prices are down by 5.4%. All transactions fall 15.6% over the year to 3,558, down 43% on 2013. New build average prices now stand at £2,940,374 The new build premium for the year over existing stock is 74.4%. Quarterly new build transactions fall by 76% to just 51. Annual transactions are down 16.1%. GREATER LONDON Prices stagnate, transactions fall Average prices in Greater London (excluding new build) for January now stand at £621,019. Prices stagnate with monthly growth of 0.6% and quarterly growth of just 0.1%. Annual prices rise by 0.6%, the weakest performance since the Global Financial Crisis (GFC). All transactions fall by 5.2% across the year. New build prices have increased 17.1% over the year and now stand at £675,557. New build transactions, however, plummet by 19.0%. ENGLAND AND WALES (EXCLUDING GREATER LONDON) Monthly prices continue to fall Average prices in England and Wales (excluding new build) see a fourth consecutive monthly fall to £259,442. Monthly prices fall by 0.2% and quarterly prices fall 2.9%. All transactions fall by 1.9% over the year and now stand at 798,296. New build transactions now stand at 94,139, an annual increase of 3.9%. New build prices stand at £301,294 They have seen an annual increase of 3.8%, resulting in a 15% premium over existing stock. Click here to download the full report... For top-line commentary, please read below Naomi Heaton, CEO of LCP, comments: Prime Central London The bad news continues in Prime Central London (PCL) with price falls across the month, quarter and year. Average annual prices in January for Prime Central London now stand at £1,809,860. They have fallen 2.4% over the month and 5.4% over the quarter.  Transactions in PCL remain at historically low levels and now stand at 3,558, a fall of 15.6% over the year. This is fewer than 69 a week. Harrods Estates is the latest agency to ‘rationalise its business’ by closing their branch on Kensington Church Street.  With just under five weeks to go until the Brexit deadline, many investors are delaying any purchase until April, when there may at least be ‘a clear direction of travel’. However, there is a new momentum in the market as other investors see a moment of opportunity, before demand and sterling have a chance to strengthen. Greater London Average prices for Greater London in January stand at £621,019, showing monthly growth of 0.6% and nominal quarterly growth of 0.1%. Prices are lower than they were prior to the June 2017 General Election, as confidence continues to hamper the London market. Transactions have fallen 27% since the introduction of the Additional Rate Stamp Duty (ARSD) in April 2016. The last year has seen a drop of 5.2% to 88,224. Notwithstanding any decision on Brexit, this protracted period of uncertainty may well continue for 2019 and beyond. Having seen the time taken to negotiate the UK’s exit from the EU, it is likely that the transition period will represent an equally bumpy ride. In contrast, new build prices have surged ahead showing annual growth of 17.1%. This has resulted in a 21.6% premium over older stock, the highest in almost two decades. Transactions, however, have seen a significant fall of 19.0% over the year. There are now indications that these trends are reversing as developers are obliged to reduce asking prices to gain sufficient traction in the market place to generate sales. England & Wales Average prices for January in England and Wales (excluding Greater London) stand at £259,442. This represents a 0.2% fall in monthly prices and a drop of 2.9% over the quarter. Prices have now been in decline since September 2018. It appears that the uncertainty that has been so apparent in London for some time has now permeated to the rest of the UK.  Annual transactions at 798,296 are now below the levels seen in 2014 and have fallen by 1.9% over the year. The introduction of ARSD, in hindsight, seems to have been a tipping point for the UK housing market. With a flurry of transactions in the run up to April 2016 to ‘beat’ the new tax, there has been a steady decline ever since. As Brexit uncertainty continues to roll on and the chance of a ‘No Deal’ exit still very much on the table, buyers are viewing any potential purchase as a risk. As property is, by and large, the most expensive purchase of their lives, they are preferring to wait and see, not only what happens on March 29th but also during the post-Brexit transition period.  In contrast to London, the new build sector in England and Wales is showing a more robust performance, with both annual transactions and prices moderately up.

[sancho panza]

11 hours ago, A_P said:

Good post SP and enlightening.

After all that's been discussed though you're still looking at the FTSE 100. Why is this, say rather than the FTSE All Share? Not suggesting you go with the latter at all but interested in why you've chosen it. The All-Share can be picked up for 0.03% (https://www.ii.co.uk/funds/hsbc-ftse-all-share-index-instl-acc/3033434) now which is crazy. Although one's particular broker may charge more given its an institutional fund open to us plebs for some reason.

Also I would like to add I'm not knocking active versus passive, I just enjoy discussing it and seeing where you chaps coming from. We are all at different life stages and that is easily forgotten and lost when discussing on the forum. Like you say I do think there is some confusion/conflating when we discuss as there is various ways one can arrange and intergrate their portfolio.

You take me too literally.I look at msot things and will speculate jsut using charts alone.FTSE 100 was an example(although possibly quite good for my mum as she's familair with the concept.)

 

I agree 0.03% is incredible value.As I said,wehn I first checked out ETF's years ago the costs were 0.5% plus and I jsut switched off until our chat a while backl.Which is strange really but then there's optehr areas of finance I'm really badly informed on eg SIPS and pensions as we hold all our stocks ourselves or via nominees.Probably why I spend so much time on here.

 

As for active/passive,in thsi game results speak for themselves over the chosen timeframe.I actively use both if that's possible as I certainly fit the definiton of passive in some respects that I quoted above.

As long as the chatrges are as low as the one you highlighted to me,or at least reasonalbe and covered by divi's then there's a world of ETF's out there.

[sancho panza]

9 hours ago, leonardratso said:

NB. do not attempt this with northern rock. Deutsche bank

 

7 hours ago, Harley said:

I used to specialise in trading covered warrants prior to the GFC.  I did this in addition to a normal full on day job.  Things went quite well with annual profits peaking at an unprecedented £xxk blow off top. 

Then came the GFC.  I was working away from home so came back to my hotel room in the evening, booted up the laptop, and saw a £xxk loss across all my holdings.  I stared in the mirror for an eternity, thinking about what £xxk really meant.  I thought of the car I could have bought, how long it would take to recover, etc.  The numbers suddenly became painfully real.

It took a long time to get back into the markets.  I had to first go back to basics, actually as it turned out, go to them for the very first time! 

Turns out I made almost every mistake in the book.  But to me, the most important was the unrealised thought that I could trade the markets when I was ready (ie. not doing my normal job).  That the markets would just give unto me.  How arrogant and statistically idiotic!

I'm now very pleased with what happened, especially as it did not wipe me out, although cost me missing most of the post GFC run up.

That £xxk loss was not so bad as at least I could use it to offset future gains for tax purposes (the reason I don't trade within a tax wrapper).  The losses missing the GFC run up were more extensive, but mostly only if I put on a hair shirt and imagine I had done everything right in that period.

Oh and the collapse in covered warrants around the GFC (where the supporting maths went right out the window) taught me how derivatives and "guaranteed" relationships can blow up at a time of stress.

But that was yesterday and today is a bright new day because I choose it to be so!  I'm still here and wiser.  That makes me happy.

I've had some eye watering losses too and to be fair,the main things is to get through them and then reflect on what went wrong.Every day is a learning day in this game,and when you stop learning/reflecting,the losses will come.

I got up this morning,switched on my IG a/c and my losses were down 50% since friday as the UK builders had got walloped.

But like you said,you need to keep the muscle memory,which is why 2019 has started on a sour note in terms of my shorts,although I did avoid getting rinsed in the New Year rally having reasoned it was inbound.

6 hours ago, Castlevania said:

I thought that was well known?

So did I? The only person who can interpret academic economic speak for us plebs.Stood out a mile to me on page 50 .

1 hour ago, Shatner's Bassoon said:

Very true. I heard of an RBS employee who killed himself because of this. Which often crosses my mind when I look at my (fairly) daft number of Centrica shares and its ever dwindling share price.

With the tax benefits, cheap option prices, a buy 2 get 1 free scheme, dividends, and the ability to cancel sharesaves and take out new ones at a lower price, it's pretty hard to make a loss with these schemes, even at this level, but I'd still be a bit goosed if the company went under. On the flip side, if it ever does take off in a reflation it would probably buy me a cheap house...

We';ve got too much in CNA too,such is life.Payes yer moeny etc but I will shrink it fi and when it moves up a little.

On reflection,we probably have too much in BP as well but that holding has doubled and then some with scrip, and CG over 6/7 years or so that it's been hedl.

 

[Lightscribe]

11 hours ago, A_P said:

LISA is 60 btw but at least it's all tax free

 

Sorry meant my SIPP, I shall be taking the LISA at age 60 to hopefully bridge the gap until 65

[spygirl]

4 hours ago, Harley said:

And so it starts. 

The issue here is not about the rights and wrongs on this specific scheme ("too good to be true") but how it's been approached and the standards it sets for the future.

No doubt plenty more regulation and (retrospective) rule changes to follow as we head into stormy waters........

Contractors face loan charge choice

https://www.bbc.co.uk/sounds/play/m0002rn7

"On April 6th the loan charge comes into force. It's an anti-tax avoidance measure which will enable HMRC to recover tax from disguised remuneration schemes which involved paying earnings back via a loan. Contractors, some of whom now face bills of hundreds of thousands of pounds, have told Money Box they were advised by their accountants to use these schemes, while others said they were told they would lose contracts without one. HMRC options for people in this situation are to repay the loans, settle the tax due or pay the loan charge in April which will apply to all loans made since 6 April 1999 if they are still outstanding. If a settlement has been agreed or is in progress with HMRC the charge will not apply".

It's been a declared scheme with HRMC for some time and they never said not to do it, letting it to run and accumulate interest!  It's retrospective (technically retroactive), with a specific legal change passing Parliament to enable HRMC to go back 20 years without appeal, not the current seven (which assumes no fraud).

First they tried "unconventional" policies such as QE funny money, and next they'll try Canute type regulation.

And the beauty of such things is it can be discriminately targeted at a few grubby contractors and the like rather than wider voter BTLers, etc.

At least not to start with!

Not this bollocks.

Hmrc have always been able to go back 20y for fraud.

A declared scheme is meaningless. A load of two bit scammers tell hmrc about their genius scheme. They dont hear anythung back, so assume its ok. Its not.

Accountants come up with stupud udeas, edp the small ones.

You really beed to ask yourself about these schemes. A self e ployed contractotpr can take out travrl and accomodation costs before tax, then, roughly pay 30% on whats left. You get some flexubily on drawing out cash during quiet years. And you can stuff a pension.

Anyone coming up with udeas to onoy pay 10% tax is a loon.

 

[Democorruptcy]

10 hours ago, leonardratso said:

NB. do not attempt this with northern rock.

My cousin had his house deposit in HBOS shares. I saved him just in time. He still mentions it and is nearly mortgage free now.

[A_P]

1 hour ago, Sideysid said:

Sorry meant my SIPP, I shall be taking the LISA at age 60 to hopefully bridge the gap until 65

if you have a LISA i suspect you wont be taking your SIPP at 55 but 57. Even then I wouldnt be surprised if we have to face another delay and they push sipps back to 60 in-line with LISA's. 

[Harley]

1 hour ago, spygirl said:

Not this bollocks.

Hmrc have always been able to go back 20y for fraud.

A declared scheme is meaningless. A load of two bit scammers tell hmrc about their genius scheme. They dont hear anythung back, so assume its ok. Its not.

Accountants come up with stupud udeas, edp the small ones.

You really beed to ask yourself about these schemes. A self e ployed contractotpr can take out travrl and accomodation costs before tax, then, roughly pay 30% on whats left. You get some flexubily on drawing out cash during quiet years. And you can stuff a pension.

Anyone coming up with udeas to onoy pay 10% tax is a loon.

 

Crossing wires - you're responding to a different (but important) topic/issue than mine.

"The issue here is not about the rights and wrongs on this specific scheme ("too good to be true") but how it's been approached and the standards it sets for the future".

This was (very arguably) not a fraud.  The 20 year rule could have been challenged in appeal, as has traditionally been the right.  It required extra statutory intervention to avoid this possibility.

And, as stated, my key point is far broader than this specific example - an expected rise in regulation and such actions.

But yes, buyer beware indeed!