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Credit deflation and the reflation cycle to come.


DurhamBorn

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Rewinding back to the start of all this, IF I was to put together a proper reflation portfolio, now knowing what you know about the way things are going, what would your ideal portfolio look like?

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Bobthebuilder
1 minute ago, Barnsey said:

Rewinding back to the start of all this, IF I was to put together a proper reflation portfolio, now knowing what you know about the way things are going, what would your ideal portfolio look like?

Interesting, apart from CNA i would say its all been pretty good so far.

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7 hours ago, spygirl said:

 

    Expectations of a heavy interest rate cut in the US later this month were dealt a blow on Friday by surprisingly strong jobs numbers.

The US 10-year government bond yield shot above 2 per cent after figures showed the economy added 224,000 jobs in June, comfortably beating expectations of just 160,000.

The benchmark yield surged to 2.015 per cent from 1.98 per cent.
 

https://www.ft.com/content/885767f6-9f1e-11e9-9c06-a4640c9feebb

Bobby R 4 hours ago Labour force participation is now stabilized at around 63% after the sharp drop during Obama years. https://data.bls.gov/timeseries/LNS11300000 Unemployment is at the lowest in recent times. https://data.bls.gov/pdq/SurveyOutputServlet GDP growth is at 3.1%. https://www.bea.gov/data/gdp/gross-domestic-product And all these are happening whilst Fed's tapering is at full throttle. QE has dropped by $500bn in the last year alone.  https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm Overall, not a bad picture at all, compared to lets say Europe or Japan...



RiskManager 2 hours ago US keeps exceeding economists expectations Eurozone and particularly Germany keeps turning out way below economists expectations There is a lot of certainty in this pattern.  Economists have a false narrative in their head.  The "experts" are useless. https://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp493.pdf

https://www.ft.com/content/9abe4f16-9f2f-11e9-b8ce-8b459ed04726

Strong US hiring catches economists off guard

Better than expected labour report puts big rate cut in doubt
 
Jesus. It was obvious jyst cyatting to a few people. These econo ists are fucking idiots.
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On ‎05‎/‎07‎/‎2019 at 00:07, sancho panza said:

I don't think this is a general buying oppurutnity yet.I'm with many others eg Kaplan, DB, that bloke who always gets quoted on Mish(help me here) etc etc.60-70% off peak and then we'll commit ourselves.There are opportunities in companies that are already at huge discounts to peak but this is a difficult market to call.I bouhgt our first ladder in Centrica at £2-00,so best not to time off me.

But as we've discussed a fe wtimes on here,buy good value stocks and hold.With the tobacco's I'll take my chances of a bigger discount in 2020.We might buy some oilies in the near term and commodity producers but little else unless it cheap,eg CNA and Vod.They aren't must haves for me in the way that mobile telecoms or Godlies are.If they get cheap enough,we'll have some.

MY research is guiding me towards timing off the dollar,treasuries and gold stocks.

In short ,consider taking your time and buying in small amounts across the next two years.Some of these Brokers offer super cheap dealing fees.

Thanks again SP, in preparation I shall certainly be building back up my investor war-chest. In the meantime I will continue reading this excellent blog, helping me to create / further refine my ‘watch (and - frustratingly for now - wait) list’.   

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14 hours ago, Bobthebuilder said:

Interesting, apart from CNA i would say its all been pretty good so far.

I'm thinking something very simple like the following for me, just drip feeding a fixed regular payment every month from here onwards into FTSE 100 value stocks and some PMs:

Centrica, Vodafone, National Grid, Stagecoach, BT, Unilever, Associated British Foods, Imperial Brands, Shell, Diageo, GSK/AstraZeneca?, Rio/Glencore/Anglo?, GDX, GDXJ, SIL

Too simplistic?

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Bobthebuilder
Just now, Barnsey said:

I'm thinking something very simple like the following for me, just drip feeding a fixed regular payment every month from here onwards into FTSE 100 value stocks and some PMs:

Centrica, Vodafone, National Grid, Stagecoach, BT, Unilever, Associated British Foods, Imperial Brands, Shell, Diageo, GSK/AstraZeneca?, Rio/Glencore/Anglo?, GDX, GDXJ, SIL

Too simplistic?

Not many on here would agree, cant time the monthly purchase price, more on fees than laddering etc,etc.

But its pretty much what i do, i use a monthly stock builder account £2 per trade for a similar list to yours. Its a good way to do it for smaller amounts or getting started etc.

I buy PM miners in £500 blocks.

Not advice DYOR etc.

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18 minutes ago, Barnsey said:

I'm thinking something very simple like the following for me, just drip feeding a fixed regular payment every month from here onwards into FTSE 100 value stocks and some PMs:

Centrica, Vodafone, National Grid, Stagecoach, BT, Unilever, Associated British Foods, Imperial Brands, Shell, Diageo, GSK/AstraZeneca?, Rio/Glencore/Anglo?, GDX, GDXJ, SIL

Too simplistic?

I plan to do the exact same here on Barnsey- similar thoughts.

 

Interesting read and line graph seems to support your thinking DB- hope you’re having a good weekend despite all the work upheaval. 

http://www.the92ers.com/blog/august-15-1971-nixon-temporarily-closes-gold-window-opens-door-inflationary-chaos-and-wealth

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20 minutes ago, Bobthebuilder said:

Not many on here would agree, cant time the monthly purchase price, more on fees than laddering etc,etc.

But its pretty much what i do, i use a monthly stock builder account £2 per trade for a similar list to yours. Its a good way to do it for smaller amounts or getting started etc.

I buy PM miners in £500 blocks.

Not advice DYOR etc.

It's a tricky time for me as all funds currently going into NS&I premium bonds ready for house deposit, but equally don't want to miss out on the gains to benefit from.

Interactive Investor £9.99 a month, gives you £7.99 credit but just seeking clarification if this can include regular investing at £0.99 each.

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Bobthebuilder
11 minutes ago, Barnsey said:

It's a tricky time for me as all funds currently going into NS&I premium bonds ready for house deposit, but equally don't want to miss out on the gains to benefit from.

Interactive Investor £9.99 a month, gives you £7.99 credit but just seeking clarification if this can include regular investing at £0.99 each.

Thats good if it does include the monthly drips.

Good luck with the house, i never look at a house as an investment just 4 walls with a roof that i can live in.

I must say i timed my house purchase using a thread on TOS called "house prices adjusted for inflation" by a poster on here called "Crash Moniter". It was a really good thread, hated by many on TOS but it worked a treat for me. I will always be grateful to posters like Crash Moniter, thats why im here as well, great people sharing there thoughts and work.

Hats off to you all.

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31 minutes ago, Barnsey said:

I'm thinking something very simple like the following for me, just drip feeding a fixed regular payment every month from here onwards into FTSE 100 value stocks and some PMs:

Centrica, Vodafone, National Grid, Stagecoach, BT, Unilever, Associated British Foods, Imperial Brands, Shell, Diageo, GSK/AstraZeneca?, Rio/Glencore/Anglo?, GDX, GDXJ, SIL

Too simplistic?

I have a good few of those already when I started in the New Year.  In retrospect I was too early for some (Centrica/Vodaphone/Royal Mail) but some are coming good now.  I just bought a lump all in one go eg about £700 in each share with buying fee of £9.95 with AJ Bell.  I haven't sold any yet.  I will buy more when/if funds allow.  I've had a few divis which help to offset the so far quite substantial paper losses (Centrica is the main culprit).  I'm hanging on for the long-term so not looking too closely at the actual value if I were to sell now.

My next thrill will be when I decide to sell GDX...........sell at 28 or wait if there's a pull-back until it reaches 38/40 as predicted.

I don't have the massive amounts of some on here so it won't make a huge difference either way:)

I must say I'm enjoying the ride so far and wish I'd started a few years earlier but without some guidance I most probably would have lost more than gained. The decisions I make don't matter hugely because I haven't got a large amount involved.

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leonardratso
7 minutes ago, janch said:

I have a good few of those already when I started in the New Year.  In retrospect I was too early for some (Centrica/Vodaphone/Royal Mail) but some are coming good now.  I just bought a lump all in one go eg about £700 in each share with buying fee of £9.95 with AJ Bell.  I haven't sold any yet.  I will buy more when/if funds allow.  I've had a few divis which help to offset the so far quite substantial paper losses (Centrica is the main culprit).  I'm hanging on for the long-term so not looking too closely at the actual value if I were to sell now.

My next thrill will be when I decide to sell GDX...........sell at 28 or wait if there's a pull-back until it reaches 38/40 as predicted.

I don't have the massive amounts of some on here so it won't make a huge difference either way:)

I must say I'm enjoying the ride so far and wish I'd started a few years earlier but without some guidance I most probably would have lost more than gained. The decisions I make don't matter hugely because I haven't got a large amount involved.

i do both, trickle in some every month and buy up chunks, the trickling and regular investments win the cost wars massively (cost to trade) so it doesnt push the average per share into not worth it territory or make them too negative immediately. I have a few hundred gambling money for crypto as well on the side, which is good since it stops me buying crap when i think i should be doing something and am impatient with cash. Have to admit that BTC since january, ive removed £188 in profit from capital of £200 and ive still got £200 worth of bitcoin floating around there, house money is the bestest money, ie money i havent had to sweat blood and tears for.

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leonardratso

heres my not so great equity list;

image.png.fdf4ff324a341612961f02c05b81bae8.png

not to be confused with my fantastic no negatives funds list;

image.png.9783c858b4fde15a39f7901560972436.png

of course goes without sating that £37.66 spreads pretty thin over the whole lot.

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Castlevania

With regards to telco’s I already have a small amount of BT and Vodafone and don’t really want to increase my exposure to those two names. So does anyone have any thoughts on Airtel Africa and Telefonica? Airtel Africa recently listed and to be honest I’m more intrigued by their mobile payments service. Telefonica have a load of debt but do have huge cash flows. They have a big presence in Latin America too which I like.

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Bobthebuilder
18 minutes ago, leonardratso said:

heres my not so great equity list;

image.png.fdf4ff324a341612961f02c05b81bae8.png

not to be confused with my fantastic no negatives funds list;

image.png.9783c858b4fde15a39f7901560972436.png

of course goes without sating that £37.66 spreads pretty thin over the whole lot.

As a not very accurate comparison my CNA by monthly drip inc fees and divis is currently -30%. VOD -13%. SLA +13%

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leonardratso
38 minutes ago, Bobthebuilder said:

As a not very accurate comparison my CNA by monthly drip inc fees and divis is currently -30%. VOD -13%. SLA +13%

yar, vod and cna i dont trickle into, they have an allocation and thats sucking divis, should really have added them to the trickle in to get the losses down and averge them out, but i dont really trust cna to be honest so i can take the hit on whats in it at hthe mo, but dont want to throw good money after bad (hahaha as i trade off my bitcoin blindly), sla i trickle into every month, that ones a keeper for me.

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Bobthebuilder
35 minutes ago, leonardratso said:

yar, vod and cna i dont trickle into, they have an allocation and thats sucking divis, should really have added them to the trickle in to get the losses down and averge them out, but i dont really trust cna to be honest so i can take the hit on whats in it at hthe mo, but dont want to throw good money after bad (hahaha as i trade off my bitcoin blindly), sla i trickle into every month, that ones a keeper for me.

I also have a max limit to how much i would drip into any individual stock. Take CNA, im close to my limit on that one.

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3 hours ago, janch said:

I have a good few of those already when I started in the New Year.  In retrospect I was too early for some (Centrica/Vodaphone/Royal Mail) but some are coming good now.  I just bought a lump all in one go eg about £700 in each share with buying fee of £9.95 with AJ Bell.  I haven't sold any yet.  I will buy more when/if funds allow.  I've had a few divis which help to offset the so far quite substantial paper losses (Centrica is the main culprit).  I'm hanging on for the long-term so not looking too closely at the actual value if I were to sell now.

My next thrill will be when I decide to sell GDX...........sell at 28 or wait if there's a pull-back until it reaches 38/40 as predicted.

I don't have the massive amounts of some on here so it won't make a huge difference either way:)

I must say I'm enjoying the ride so far and wish I'd started a few years earlier but without some guidance I most probably would have lost more than gained. The decisions I make don't matter hugely because I haven't got a large amount involved.

This is not a criticism of you (or Barnseys) approach, but my understanding of the consensus here was that S&P, FTSE and shares generally were overpriced, and that in the near future they were going to crash. So why not wait in cash until then, rather than buying and then getting drops? Of course PM and miners are the exception to this at the moment!

Have I got this completely wrong?

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38 minutes ago, MrXxx said:

This is not a criticism of you (or Barnseys) approach, but my understanding of the consensus here was that S&P, FTSE and shares generally were overpriced, and that in the near future they were going to crash. So why not wait in cash until then, rather than buying and then getting drops? Of course PM and miners are the exception to this at the moment!

Have I got this completely wrong?

I think drip feeding evens things out a bit. Otherwise it just seems really hard to time the wee bastards turning. 

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DurhamBorn
4 hours ago, Thorn said:

I plan to do the exact same here on Barnsey- similar thoughts.

 

Interesting read and line graph seems to support your thinking DB- hope you’re having a good weekend despite all the work upheaval. 

http://www.the92ers.com/blog/august-15-1971-nixon-temporarily-closes-gold-window-opens-door-inflationary-chaos-and-wealth

% Weight

Sector
1 IMPERIAL BRANDS 10.6%  
2 VODAFONE GROUP 9.9%  
3 BRITISH AMERICAN TOBACCO 7.9%  
4 CENTRICA 7.4%  
5 CARD FACTORY 7.2%  
6 NEWRIVER REIT 7.0%  
7 ROYAL MAIL 6.7%  
8 STANDARD LIFE ABERDEEN 6.6%  
9 GO-AHEAD GROUP 6.5%  
10 STAGECOACH GROUP 5.6%  
11 BT GROUP 5.6%  
12 PLAYTECH 5.1%  
13 SSE 4.7%  
14 TUI AG 4.3%  
15 Cash 3.7%  
16 WILLIAM HILL 1.3%

 

My dad sold his gold miners for a 36% profit and added it to the dosh he made selling Anglo American for a 300% gain and BHP and Rio.He asked me to build a divi portfolio with 15 to 17 stocks from the money with a max weighting of 20% in any one sector .Iv been building it over the last 3 months and its nearly finished.The cash was meant for William Hill but they bounced too much as i was laddering so it will stay as cash for now.The portfolio is as above.He said the income over 10 years needs to cover any capital falls.

He has a bigger portfolio and other investments,the above one was built from profits in the above and an extra £20k.He tagged the bottom on Harmony Gold with a decent stake and took 50% profit from them in a few months.

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1 hour ago, Thorn said:

I think drip feeding evens things out a bit. Otherwise it just seems really hard to time the wee bastards turning. 

Exactly this, and I wouldn't be buying the overall market ETFs, just select value stocks, many of which are on their arse.

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6 hours ago, Barnsey said:

I'm thinking something very simple like the following for me, just drip feeding a fixed regular payment every month from here onwards into FTSE 100 value stocks and some PMs:

Centrica, Vodafone, National Grid, Stagecoach, BT, Unilever, Associated British Foods, Imperial Brands, Shell, Diageo, GSK/AstraZeneca?, Rio/Glencore/Anglo?, GDX, GDXJ, SIL

Too simplistic?

Was just looking at aj bell which I have been drip feeding some into a Lisa type thing, quite long term obviously being lifetime.  Anyway going to take the plunge as at the moment it's just some cash so like the sound of regular thing low dealing.  Limited investment range but reading now seems the ftse350 included.

Glad I won't be second guessing my timing either.

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Thanks for your advice all, I've decided on 8 regular monthly investments:

Centrica, Vodafone, BT, Stagecoach, Go-Ahead, Standard Life Aberdeen, Imperial Brands and NewRiver.

Will stick lump sums into GDX, GDXJ, PHSP, and other value stocks when possible.

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DurhamBorn
12 hours ago, Barnsey said:

Thanks for your advice all, I've decided on 8 regular monthly investments:

Centrica, Vodafone, BT, Stagecoach, Go-Ahead, Standard Life Aberdeen, Imperial Brands and NewRiver.

Will stick lump sums into GDX, GDXJ, PHSP, and other value stocks when possible.

Looks good enough to me Barnsey and regular monthly investments might work out very well.The key is to remember dividends as well.That portfolio will pay out a lot of cash,even with dividend cuts in a few of them.You could always roll the dividends every 6 months into an extra stock,maybe some of the smaller silver miners.

I was in Tesco last night getting the bargains (£36 worth for £9) and they over charged me on jersey royals so i went to the customer service area for the refund.Nobody there just the guy and i noticed behind him the locked up fag counter as usual and next to that all the vape products.They had the one from BAT tobacco,one from Japan Tobacco and the Myblu from Imperial and one other.I asked the guy do you sell many of those myblu things.He said they sell "bucket loads" of them,and he himself smoked the my blu and now had 1 box of fags every 3 days and my blu the rest of the time.Whats interesting here is that although vaping at the moment is mainly vape shops and those big mods etc,big tobacco is squeezing everyone else out in the big retail stores.Its highly likely we end up with 4 or 5 vape brands on those shelves and the smaller players squeezed out,perhaps simply becoming niche players.Big tobacco makes more profit on a vape pod than a box of fags (once investment equity taken out) yet they are 30% of the cost to a consumer as a box of fags in the UK,40% to 65% in other markets.Throw in the fact its highly likely we will be seeing cannabis pods at some point and the present prices might prove a gift.The only worry is they have far too much debt going into a rising rate cycle.They need to keep de-leveraging as fast as possible,but iv a feeling they will be considering share buy backs at these levels,especially Imperial.

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Just a quick post to thank all those who have put up what they are drip feeding in to.

I am doing the same and its good to know others are doing the same. Also it makes looking at the losses on some of the stocks easier to take and to stay on this ride for the long haul. 

My biggest losses are VOD and SXX but the goldies have been good for me (thanks DB).

CNA and BT are next on my list.

Cheers 🍻

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38 minutes ago, DurhamBorn said:

Looks good enough to me Barnsey and regular monthly investments might work out very well.The key is to remember dividends as well.That portfolio will pay out a lot of cash,even with dividend cuts in a few of them.You could always roll the dividends every 6 months into an extra stock,maybe some of the smaller silver miners.

I was in Tesco last night getting the bargains (£36 worth for £9) and they over charged me on jersey royals so i went to the customer service area for the refund.Nobody there just the guy and i noticed behind him the locked up fag counter as usual and next to that all the vape products.They had the one from BAT tobacco,one from Japan Tobacco and the Myblu from Imperial and one other.I asked the guy do you sell many of those myblu things.He said they sell "bucket loads" of them,and he himself smoked the my blu and now had 1 box of fags every 3 days and my blu the rest of the time.Whats interesting here is that although vaping at the moment is mainly vape shops and those big mods etc,big tobacco is squeezing everyone else out in the big retail stores.Its highly likely we end up with 4 or 5 vape brands on those shelves and the smaller players squeezed out,perhaps simply becoming niche players.Big tobacco makes more profit on a vape pod than a box of fags (once investment equity taken out) yet they are 30% of the cost to a consumer as a box of fags in the UK,40% to 65% in other markets.Throw in the fact its highly likely we will be seeing cannabis pods at some point and the present prices might prove a gift.The only worry is they have far too much debt going into a rising rate cycle.They need to keep de-leveraging as fast as possible,but iv a feeling they will be considering share buy backs at these levels,especially Imperial.

Hi DB, 

so just to make sure my `financial education` (garnered from this site and other sources; thanks all!) and understanding is correct...

...Imperial are doing this as a) credit is currently cheap, and b) it reinforces their share price (as many companies have done in this cheap credit period) BUT this can be an `Achilles heel` as the cycle changes, interest rates increase, and the cycle becomes one of debt deflation = bankruptcy unless they can afford payments?...

...so why are Imperial doing the opposite of what they should be doing at this stage of the cycle I.e. reducing debt to make themselves fitter for the crash that we can all see that's coming?!

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