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Credit deflation and the reflation cycle to come.


DurhamBorn

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DurhamBorn

@sancho panza 

Endeavour Silver,Coeur Mining i mentioned id bought yesterday on here,its up 7% today,its no2 on my rubber band list,another you havent got is Mcewen Mining Inc its no3 on my rubber band stocks,HMY of course.Technical buys include Kirkland Lake and Goldfields,though i put less into those,im more interested in the rubber band stocks.

Woodford has gone pop today as im writing this.Lots of the middle class wont be able to access their savings any time soon,suspended trading.Kier destroyed again today one he has been piling money into.He started with a decent portfolio but due to some terrible stock picking and a miss read of the macro situation he has slowly sold the solid stocks.I dont care what he says about domestic facing stocks being under valued,they are in many areas,but piling into the likes of the AA at £3 a share with those debts was madness.

https://woodfordfunds.com/statement-on-lf-woodford-equity-income-fund/

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20 minutes ago, DurhamBorn said:

Woodford has gone pop today as im writing this.Lots of the middle class wont be able to access their savings any time soon,suspended trading.Kier destroyed again today one he has been piling money into.He started with a decent portfolio but due to some terrible stock picking and a miss read of the macro situation he has slowly sold the solid stocks.I dont care what he says about domestic facing stocks being under valued,they are in many areas,but piling into the likes of the AA at £3 a share with those debts was madness.

https://woodfordfunds.com/statement-on-lf-woodford-equity-income-fund/

Ouch.. I was chatting to my dad this morning and he'd been in Woodford's fund in a ISA...  he sold up a few days ago. A close call?

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DurhamBorn
29 minutes ago, MvR said:

Ouch.. I was chatting to my dad this morning and he'd been in Woodford's fund in a ISA...  he sold up a few days ago. A close call?

Woodford was a fantastic investor during the deflation cycle and his record until he went on his own was superb.However he might of had a good team behind him then of macro guys etc.This time he seemed to start with a decent portfolio,but then slowly liquidated it to buy into more and more very dodgy assets.There is nothing wrong with timing wrong,or in some investments going down 25% etc.However there is something wrong in piling into the likes of the AA,Kier,Purplebricks etc when it was clear they were a mess.Id agree with him that the UK is in a decent macro position,but that is due to sterling falling so hard over several years.It also means many sectors has seen its margins destroyed.Kier a prime example that he has kept buying.

Selling the likes of Imperial with 11% dividend yields and free cash flow of £2.5billion while they are down 50% to fund rights issues in the likes of Kier seemed very strange to me.

This present market is brutal,and most portfolios will be in the red as they are built out.Nothing wrong with that,i have many stocks underwater myself and fully expected it as i re-deploy,but the Woodford fund ended up looking a disaster.Kent County Council have £250 million in there as well.Im sure they will be pleased to hear they helped fund the private equity holders to unload crap like the AA,SAGA etc.Reckon they will be taking a big bath.

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1 hour ago, DurhamBorn said:

@sancho panza 

Endeavour Silver,Coeur Mining i mentioned id bought yesterday on here,its up 7% today,

Well that's why, you mentioned it on here and everyone went out and bought it!...just hope YRS didn't see your post today and bought in otherwise it will be `bombing` tomorrow! :-) :-) :-)

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DurhamBorn
Just now, MrXxx said:

Well that's why, you mentioned it on here and everyone went out and bought it!...just hope YRS didn't see your post today and bought in otherwise it will be `bombing` tomorrow! :-) :-) :-)

ha yes lets hope not.Actually we might see some pull backs as there are some big gaps to fill so there might be some more reduced stickers yet.However its up 8% today as we speak.Lots of energy in rubber band stocks once you get a turn,but if we dont turn they provide lots of pain.

Incredible to think Woodford had to suspend his fund,but if he is quick he can buy the rubber band stocks and get things back in shape,sell them on the run up and ladder into some reflation stocks.Imagine if before it goes back trading the top ten holdings become silver and goldies xD

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Bricks & Mortar
1 hour ago, DurhamBorn said:

im more interested in the rubber band stocks.

Couple weeks ago, we had some disparaging talk on here about Hecla.  I was already down 30-ish% at that point.  By mid last-week, it was 40-odd%.  I nearly punted them.  Earlier explanations of the rubber-band concept in the thread stopped me. 
12.21% today.

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sancho panza
2 hours ago, DurhamBorn said:

@sancho panza 

Endeavour Silver,Coeur Mining i mentioned id bought yesterday on here,its up 7% today,its no2 on my rubber band list,another you havent got is Mcewen Mining Inc its no3 on my rubber band stocks,HMY of course.Technical buys include Kirkland Lake and Goldfields,though i put less into those,im more interested in the rubber band stocks.

Woodford has gone pop today as im writing this.Lots of the middle class wont be able to access their savings any time soon,suspended trading.Kier destroyed again today one he has been piling money into.He started with a decent portfolio but due to some terrible stock picking and a miss read of the macro situation he has slowly sold the solid stocks.I dont care what he says about domestic facing stocks being under valued,they are in many areas,but piling into the likes of the AA at £3 a share with those debts was madness.

https://woodfordfunds.com/statement-on-lf-woodford-equity-income-fund/

Cheers DB,I had Endeavour and Couer from Dec.McEwen I ahd missed.

Bought GF in tranche 1 2017,brewing nicely now ...

54 minutes ago, Castlevania said:

It’s only the Woodford Equity Income Fund that’s suspended dealing. Which of his funds was that? The flagship one?

Oh the tiony of his flagship fund punting the AA and Kier rights issue.

Kent taxpayers going to get the good news.Goes to show that internet forums can sometimes trump highly paid fundies.DB has a long record of calling this one.

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sancho panza
7 minutes ago, Bricks & Mortar said:

Couple weeks ago, we had some disparaging talk on here about Hecla.  I was already down 30-ish% at that point.  By mid last-week, it was 40-odd%.  I nearly punted them.  Earlier explanations of the rubber-band concept in the thread stopped me. 
12.21% today.

The reason I spray n pray is that from what I've found through bitter experience- is that it's a very volatile sector and it's very hard to know who's going to do well without a deep knowledge of teh industry/company.Averaging down can end up in yuo having some overlarge positions(see my investments in New river/Eldorado).Investing across a spread,you have more chance of making a profit imho. However,for me a  rising tide floats all boats and even the portfolio dogs will liekly have a moment in the sun in PMs.

Thing is as well,even with the dogs,all it takes is one magic find and they're off to the races.

 

As I've said before,very difficult sector to invest in.

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1 hour ago, DurhamBorn said:

Woodford was a fantastic investor during the deflation cycle and his record until he went on his own was superb.However he might of had a good team behind him then of macro guys etc.This time he seemed to start with a decent portfolio,but then slowly liquidated it to buy into more and more very dodgy assets.There is nothing wrong with timing wrong,or in some investments going down 25% etc.However there is something wrong in piling into the likes of the AA,Kier,Purplebricks etc when it was clear they were a mess.Id agree with him that the UK is in a decent macro position,but that is due to sterling falling so hard over several years.It also means many sectors has seen its margins destroyed.Kier a prime example that he has kept buying.

Selling the likes of Imperial with 11% dividend yields and free cash flow of £2.5billion while they are down 50% to fund rights issues in the likes of Kier seemed very strange to me.

This present market is brutal,and most portfolios will be in the red as they are built out.Nothing wrong with that,i have many stocks underwater myself and fully expected it as i re-deploy,but the Woodford fund ended up looking a disaster.Kent County Council have £250 million in there as well.Im sure they will be pleased to hear they helped fund the private equity holders to unload crap like the AA,SAGA etc.Reckon they will be taking a big bath.

I feel a little uneasy about how divergent the performance has been. I just don’t understand how could get it so wrong? 

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10 minutes ago, sancho panza said:

As I've said before,very difficult sector to invest in.

Indeed. But you have to bear in mind the long term picture - which is what will these shares look like when gold is $5000 an ounce or more? That's why I'm a buyer of Barrick for instance.

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DurhamBorn
10 minutes ago, sancho panza said:

Cheers DB,I had Endeavour and Couer from Dec.McEwen I ahd missed.

Bought GF in tranche 1 2017,brewing nicely now ...

Oh the tiony of his flagship fund punting the AA and Kier rights issue.

Kent taxpayers going to get the good news.Goes to show that internet forums can sometimes trump highly paid fundies.DB has a long record of calling this one.

Funny thing is SP i owned a lot of the stocks he had,but sold them like BAT at £50,Imperial £38 etc.Iv started to buy them back now in ladders.I also own a few other stocks he has,but bought them again much lower than him and in ladders.Buying Imperial at £30 like he was wouldnt of been so bad done in 10% ladders with a £2.06 a year divi.However buying the likes of the AA at £3 and Kier group was crazy stuff.Add in Capita,SAGA etc.To me if i want cruise ships/holidays i buy Tui,if i want insurance i buy Aviva.Why would SAGA be able to do it better than them ?.

As for the PMs i think platinum might be the big winner going forward over the next couple of years,before silver takes over of course.Notice the likes of Eldorado Gold up 11% today as well.Lots of gaps might need to be filled though with the scale of the quick bounce.Harvey might have some thoughts on the technical set up if he is along later,but for me i see the 23.50 area on the GDX first target to break and the moving averages are all pinching together tightly now.The move started exactly on the timeframe i expected late May/early June so im glad i topped up when i did,and hope this is where we start to trend.

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Castlevania
17 minutes ago, sancho panza said:

The reason I spray n pray is that from what I've found through bitter experience- is that it's a very volatile sector and it's very hard to know who's going to do well without a deep knowledge of teh industry/company.Averaging down can end up in yuo having some overlarge positions(see my investments in New river/Eldorado).Investing across a spread,you have more chance of making a profit imho. However,for me a  rising tide floats all boats and even the portfolio dogs will liekly have a moment in the sun in PMs.

Thing is as well,even with the dogs,all it takes is one magic find and they're off to the races.

 

As I've said before,very difficult sector to invest in.

Agreed. It’s a tricky one. My approach has been mainly to buy the larger well capitalised producers (Barrick, Fresnillo etc) that I’m fairly confident could survive a sustained downturn in PM prices. In theory there should be less downside (but still plenty) but also less upside. Aligned to this I have some small recovery plays that I regard as being fundamentally undervalued (Shanta, Acacia etc), which move a lot less with the price of PM’s than they do to the underlying politics in the country they operate in. Plus some GDXJ for a bit of excitement.

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56 minutes ago, sancho panza said:

The reason I spray n pray is that from what I've found through bitter experience- is that it's a very volatile sector and it's very hard to know who's going to do well without a deep knowledge of teh industry/company.Averaging down can end up in yuo having some overlarge positions(see my investments in New river/Eldorado).Investing across a spread,you have more chance of making a profit imho. However,for me a  rising tide floats all boats and even the portfolio dogs will liekly have a moment in the sun in PMs.

Thing is as well,even with the dogs,all it takes is one magic find and they're off to the races.

 

As I've said before,very difficult sector to invest in.

If that's the case/approach why don't you buy ETF then as you would get a wider exposure and smoothing in one hit? 

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1 hour ago, sancho panza said:

.....Kent taxpayers going to get the good news.....

Did Spunko say he was from Kent?  He'll be in a foul mood when he sees this!  £250m!  WTF they doing with that kind of cash!  The whole LG sector needs a kicking.

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DurhamBorn
18 minutes ago, Cattle Prod said:

Yes I see what you're saying, if low grade miners are currently considered worthless. I haven't quite thought through the resource -> price scenarios yet. I was really surprised that high grade ore bodies are mostly depleted, and no new ones and I guess I was thinking of my own resource, oil, where you can still find whole countries full of top quality stuff (Guyana).

When there is a bull run in price, the high quality oil resouces are pumped at maximum because they have low per barrel costs, and higher margins. For companies with 'good' fields, their share price can explode.

An example is the Elgin-Franklin field. It's a 'good' one, highly productive with c.$8 a barrel opex. Every company in the North Sea wants to buy a piece of it, as it's a licence to print money. But there are very very few like that left. Anyone who owns something like that in a bull will have money coming out tbeir ears and be buying companies,  investors loving it etc etc

I guess what also happens is that companies with shitty resouces become profitable, as you point out. In oil, that already happened in the 2009-2014 bull, (i.e) the shale patch. If thats not happened yet in gold, it's probably coming. If reserve upgrades are like oil, once price moves up the likes of Harmony will be booking more once crappy ore to reserves, and add have the value added to the balance sheet.

Perhaps its a timing thing. If there are still companies who own high grade accesible ore, I thinl they will shoot up first. And then probably buy the pick of the next tier with the cashflow.

Keen to hear your thoughts, Ive a fair bit to learn on the mining side.

In a PM  bear market they value companies on margins over the all in cost minus where they are,ie South African miners lower rating,Canadian higher.In a PM bull they start to value miners at oz in the ground because at $2000 almost all oz become very profitable.Harmony might have around 150 million oz in the ground .If the market decided to value those at $200 an oz Harmony 30 bags.If gold goes below $1000 for long Harmony go bust.(after hedges end).

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sancho panza
2 hours ago, Errol said:

Indeed. But you have to bear in mind the long term picture - which is what will these shares look like when gold is $5000 an ounce or more? That's why I'm a buyer of Barrick for instance.

That's what I mean by a rising tide.Even at $2000 most stocks will be way north of where they are now

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sancho panza
2 hours ago, DurhamBorn said:

Funny thing is SP i owned a lot of the stocks he had,but sold them like BAT at £50,Imperial £38 etc.Iv started to buy them back now in ladders.I also own a few other stocks he has,but bought them again much lower than him and in ladders.Buying Imperial at £30 like he was wouldnt of been so bad done in 10% ladders with a £2.06 a year divi.However buying the likes of the AA at £3 and Kier group was crazy stuff.Add in Capita,SAGA etc.To me if i want cruise ships/holidays i buy Tui,if i want insurance i buy Aviva.Why would SAGA be able to do it better than them ?.

As for the PMs i think platinum might be the big winner going forward over the next couple of years,before silver takes over of course.Notice the likes of Eldorado Gold up 11% today as well.Lots of gaps might need to be filled though with the scale of the quick bounce.Harvey might have some thoughts on the technical set up if he is along later,but for me i see the 23.50 area on the GDX first target to break and the moving averages are all pinching together tightly now.The move started exactly on the timeframe i expected late May/early June so im glad i topped up when i did,and hope this is where we start to trend.

Saw today that IMB is 50% off peak .Incredible what's been thrown up already value wise.

https://uk.investing.com/equities/imperial-tobacco

Have to say Capita is on the same list for me as Intu/Foxtons/Countrywide/Debenhams.

Just checked Eldorado and yes 11% up.Hecla was 14% up at one point.Only purchase today was some more Freeport.I hate buying on days that look like a short squeeze and the last two days price action was jsut a sign of where this sector might go.

I remember you saying months back re May/June.................great call thus far,espcially as you were making it in Feb .Fair play

 

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sancho panza
2 hours ago, MrXxx said:

If that's the case/approach why don't you buy ETF then as you would get a wider exposure and smoothing in one hit? 

As said previosuly,if I'd known then what I know now,I'd have sacked it and bought GDX/SIL.But the fees are expensive and the dividends barely cover it.I'll be buying ETFs going forward a year or so,totally converted on that one for things liek indices and sectors.But the PM ETFs have very high fees.

 

Aslo SIL is loaded up with Wheaton and Poly.WHen you buy the ETF you buy their weighting.I'm willing to take some risk for exposure to the multibaggers

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Castlevania
7 minutes ago, sancho panza said:

 

Aslo SIL is loaded up with Wheaton and Poly.WHen you buy the ETF you buy their weighting.I'm willing to take some risk for exposure to the multibaggers

Interesting. I’d always assumed with an ETF it would be weighted by market cap, but 1/8 of SIL is in Polymetal. How do they decide how much to buy? Or do they pick and choose like any active fund manager would?

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DurhamBorn
14 minutes ago, sancho panza said:

Saw today that IMB is 50% off peak .Incredible what's been thrown up already value wise.

https://uk.investing.com/equities/imperial-tobacco

Have to say Capita is on the same list for me as Intu/Foxtons/Countrywide/Debenhams.

Just checked Eldorado and yes 11% up.Hecla was 14% up at one point.Only purchase today was some more Freeport.I hate buying on days that look like a short squeeze and the last two days price action was jsut a sign of where this sector might go.

I remember you saying months back re May/June.................great call thus far,espcially as you were making it in Feb .Fair play

 

Imperial 11% divi at todays price.I think they might drop the "10% increase per year" to 5%,or to RPI +2%.Id prefer they pay down the debt and invest in Myblu etc and drop divi increases to inflation,but happy to be buying them here.They will be in cannabis at some point as well,probably well being,sleep,relax sort of area.I owned Imperial since i owned Hanson Trust and it was tough selling them when i did,but very happy to get them back at 50% off.

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sancho panza
3 minutes ago, Castlevania said:

Interesting. I’d always assumed with an ETF it would be weighted by market cap, but 1/8 of SIL is in Polymetal. How do they decide how much to buy? Or do they pick and choose like any active fund manager would?

This the blurb,I list a few for compariosn.SIL is just someone's best guess in terms of exposure.SMH/IWM both appear to be weighted for market cap.

https://etfdb.com/etf/SIL/

This ETF gives investors an opportunity to achieve exposure to silver without holding the physical metal or encountering the nuances of a futures-based strategy. For investors looking to bet on increased demand for a raw material used widely in various applications, SIL is a nice option. SIL often trades as a leveraged play on the underlying natural resources, meaning that this fund can experience significant volatility but can be a powerful tool for profiting from a surge in commodity prices.

https://etfdb.com/etf/SMH/

SMH tracks the overall performance of the 25 largest, U.S. listed companies that produce semiconductors, a crucial component of modern computing.  Given its shallow portfolio, SMH is inherently top-heavy; the top ten holdings account for over two-thirds of total assets. Overall, this ETF is fairly priced and it may hold appeal as a long-term, core holding for buy-and-hold investors looking to tilt exposure towards this corner of the technology sector.

https://etfdb.com/etf/IWM/

This ETF is one of several offering exposure to the Russell 2000 Index, a widely followed measure of small cap U.S. stocks. 

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sancho panza
7 minutes ago, DurhamBorn said:

Imperial 11% divi at todays price.I think they might drop the "10% increase per year" to 5%,or to RPI +2%.Id prefer they pay down the debt and invest in Myblu etc and drop divi increases to inflation,but happy to be buying them here.They will be in cannabis at some point as well,probably well being,sleep,relax sort of area.I owned Imperial since i owned Hanson Trust and it was tough selling them when i did,but very happy to get them back at 50% off.

With IMB you've got a great currency hedge as well.Their downtrend looks established though so I'll wait out for now but the potential particualrly in terms of buying out the cannabis companies that get thought that bubble,is really quite exciting

As an aside,I've been shorting US ETF's like QQQ/XLK/IHI/XLF/XLP(mainly to reduce volatitiy) and really like the variety they offer-as long as the expense ratio is right.So Ill definitely be running my slide rule over these when the time is right for the small sector punts,then leveroing up in the sectors I like with the individual stocks.

 google and FBhammered today

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