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Credit deflation and the reflation cycle to come.


DurhamBorn

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DurhamBorn

Drama in Aldi at 8am this morning.I was just waiting for the doors to open to go and get the 50% off stuff without anyone being there as is usual,only to find a boomer couple in front.Worse they headed straight to the back and got some chicken breast fillets reduced and some cod loins,beat me to it and knew exactly what they were doing.I did get strawberries,blueberries and some stir fries and one pack of diced chicken breast but still it was traumatic.On a positive note the only other person there was a yummy mummy who must of just come from the gym,all in black tight gym clothes,late 30s id guess and fit as a butchers dog got a nice smile off her.I was tempted to come out of retirement for a moment,but she wasnt the type to be shacked up with during a debt deflation and reflation cycle xD

 

Imperial Brands announced today exactly what i hope and expected they would,they are moving from a 10% divi increase each year instead to simply progressive dividends.Likely 4% to 5% id expect.Also continued de-leverage,though they did announce a share buyback.Only small at £200 million,but id still rather see it come of debt.However the interesting line is this one.

Investment in targeted M&A opportunities to build on the capabilities and technologies of our NGP portfolio and in other growth adjacencies.

The other growth adjacencies is the interesting bit,because its almost certain to mean cannabis.Crucial they dont over pay of course,but i expect we might see them do something in Canada later in the year,perhaps a low dose cannabis vape.

 

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Imperial Brands

From Thomson Reuters

** Shares of British tobacco company Imperial Brands Plc
IMB.L  climb 2.3% to 2005.5p; top pct gainer on the FTSE 100
.FTSE
    ** Co says will revise dividend policy from next year,
announces stock repurchase plan of 200 million pounds ($250.42
million)
    ** Reaffirms 10% increase in final dividend for this year,
div policy to be more progressive and payouts would grow
annually from next year  urn:newsml:reuters.com:*:nL4N2491EI
    ** Broker Jefferies had previously noted that market  was
already pricing a dividend cut for IMB
    ** "With the dividend yield now over 10%, management have
clearly decided enough is enough, and while payments to
shareholders will continue to grow going forwards, share
buybacks and debt reduction have moved up the list of
priorities," says Hargreaves Lansdown analyst Nicholas Hyett
    ** IMB has dividend yield of ~11.3%; 200 mln stg stock
buyback represents ~21% of co's free float of shares - Refinitiv
Eikon data
    ** Stock has not booked yearly gains since 2015; shares have
trimmed losses to ~15% this year
    ** Shares of peer BATS  BATS.L  up 1.4% and is top boost on
the FTSE 100
 

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DurhamBorn
Just now, DoINeedOne said:

 

When i and lots of people around me lose our jobs over the next few months we will be escorted off site,its the way its done due to the odd person deciding to commit a bit of sabotage.Never bothered me in the slightest.There is nothing new under the sun,cycles repeat,

 

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1 hour ago, DoINeedOne said:

 

I fail to see how this can come to surpise to someone working in an investment FFS.

There s a funny piccy on the FT article:

03b59122-a148-11e9-a282-2df48f366f7d?fit

Bloke with sports hold all knows whats coming.

Then the bloke on the left, with a ladies handbag is trying to pull the 'cant sack me Im trans!'

And the bloke with the bag of sandwichs .. idiot. Most be HR ...

 

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2 hours ago, DurhamBorn said:

.On a positive note the only other person there was a yummy mummy who must of just come from the gym,all in black tight gym clothes,late 30s id guess and fit as a butchers dog got a nice smile off her.I was tempted to come out of retirement for a moment,but she wasnt the type to be shacked up with during a debt deflation and .

 

Anf therein lies the difference between a young mans thought process and a middle-aged one....thinking with your brain rather than your penis! :-) :-) :-)

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DurhamBorn
Just now, MrXxx said:

Anf therein lies the difference between a young mans thought process and a middle-aged one....thinking with your brain rather than your penis! :-) :-) :-)

Very true,and im not 100% happy about it,but there you go xD

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Castlevania
2 hours ago, DurhamBorn said:

When i and lots of people around me lose our jobs over the next few months we will be escorted off site,its the way its done due to the odd person deciding to commit a bit of sabotage.Never bothered me in the slightest.There is nothing new under the sun,cycles repeat,

 

I liked the brutal but efficient way UBS did it a few years ago. Didn’t tell anyone in advance of their restructuring plans (they announced to the market later that day) so people come in as normal and if your Pass didn’t work - game over you’d been let go. Didn’t even let you in to collect any belongings.

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3 hours ago, Tdog said:

Crikey thats a bit indepth for the So-Called BBC, didnt even directly blame Brexit for the impending recession.

Faisal Islam back in the economics department, good move.

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On 06/07/2019 at 17:02, 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?

Sorry for my tardy reply.

Yes you're right but I'm an investment newbie and just wanted to get started to see how the mechanics of it work eg dealing costs/effect of dividends etc.  So far I'm down on VOD/CNA/SGC by buying with a lump sum but the amount I have to invest doesn't really mean I can "ladder in" as advocated by DB because of dealing costs. However his approach is obviously better as all the shares he showed for his father's account were in positive territory.  I might try the drip-feeding approach as some on here have suggested.  Some of the dividends are quite generous whereas others are meagre so this can make quite a difference.  Also when to buy and sell because of when the dividend is paid.

I've just sold my GoAhead as I could see the share price is the highest it's ever been and the next divi isn't due for a few months yet.  The first one wasn't that generous either.  Now of course the share price will rocket:)!  I may buy them back if the price goes down.  Just starting out means the dealing costs have a disproportionate effect but hopefully if I do it right I may get some more funds to play with in the long run because of juicy profits!

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Yellow_Reduced_Sticker
5 hours ago, DurhamBorn said:

Drama in Aldi at 8am this morning.I was just waiting for the doors to open to go and get the 50% off stuff without anyone being there as is usual,only to find a boomer couple in front.Worse they headed straight to the back and got some chicken breast fillets reduced and some cod loins,beat me to it and knew exactly what they were doing.I did get strawberries,blueberries and some stir fries and one pack of diced chicken breast but still it was traumatic.On a positive note the only other person there was a yummy mummy who must of just come from the gym,all in black tight gym clothes,late 30s id guess and fit as a butchers dog got a nice smile off her.I was tempted to come out of retirement for a moment,but she wasnt the type to be shacked up with during a debt deflation and reflation cycle xD

 

Imperial Brands announced today exactly what i hope and expected they would,they are moving from a 10% divi increase each year instead to simply progressive dividends.Likely 4% to 5% id expect.Also continued de-leverage,though they did announce a share buyback.Only small at £200 million,but id still rather see it come of debt.However the interesting line is this one.

Investment in targeted M&A opportunities to build on the capabilities and technologies of our NGP portfolio and in other growth adjacencies.

The other growth adjacencies is the interesting bit,because its almost certain to mean cannabis.Crucial they dont over pay of course,but i expect we might see them do something in Canada later in the year,perhaps a low dose cannabis vape.

 

LOVING This! :D

@DurhamBornIf I could give 10 Cheers/Thx- UPticks for that post, I would...!

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Democorruptcy
7 hours ago, DurhamBorn said:

Drama in Aldi at 8am this morning.I was just waiting for the doors to open to go and get the 50% off stuff without anyone being there as is usual,only to find a boomer couple in front.Worse they headed straight to the back and got some chicken breast fillets reduced and some cod loins,beat me to it and knew exactly what they were doing.I did get strawberries,blueberries and some stir fries and one pack of diced chicken breast but still it was traumatic.On a positive note the only other person there was a yummy mummy who must of just come from the gym,all in black tight gym clothes,late 30s id guess and fit as a butchers dog got a nice smile off her.I was tempted to come out of retirement for a moment,but she wasnt the type to be shacked up with during a debt deflation and reflation cycle xD

Schoolboy error letting the boomer's outflank you, then thinking like an old man about the yummy mummy!

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1 hour ago, janch said:

Sorry for my tardy reply.

Yes you're right but I'm an investment newbie and just wanted to get started to see how the mechanics of it work eg dealing costs/effect of dividends etc.  So far I'm down on VOD/CNA/SGC by buying with a lump sum but the amount I have to invest doesn't really mean I can "ladder in" as advocated by DB because of dealing costs. However his approach is obviously better as all the shares he showed for his father's account were in positive territory.  I might try the drip-feeding approach as some on here have suggested.  Some of the dividends are quite generous whereas others are meagre so this can make quite a difference.  Also when to buy and sell because of when the dividend is paid.

I've just sold my GoAhead as I could see the share price is the highest it's ever been and the next divi isn't due for a few months yet.  The first one wasn't that generous either.  Now of course the share price will rocket:)!  I may buy them back if the price goes down.  Just starting out means the dealing costs have a disproportionate effect but hopefully if I do it right I may get some more funds to play with in the long run because of juicy profits!

ii offer regular investing share dealing for just 99p, and you can always make a monthly adjustment if you want to stick a larger amount in one every now and then.

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Bobthebuilder

Had a look over my drip feed portfolio today, i can be so lazy sometimes, ive gone over 10% of total in some stocks, so put a stop on a couple and added a couple of new ones.

I have made this over allocation error before, do i never learn?

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14 hours ago, CVG said:

You probably know this already, and not to diss your employer because I don't know who they are anyway!, but never let your Employer shares become greater than 10% of your equity portfolio. The investment world is full of stories of employees being wiped out when their employers went bust - not only taking their jobs but their savings too.

Siemens.. I’m hoping with their advanced hospital equipment, turbine technology, renewables and transportation arm they are ready for the next cycle.. 

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leonardratso
6 hours ago, macca said:

Siemens.. I’m hoping with their advanced hospital equipment, turbine technology, renewables and transportation arm they are ready for the next cycle.. 

its a load of bull.

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Democorruptcy

The problem is that a likely rush of "take-privates" will contribute further to the process known as de-equitisation - under which the supply of equities is shrinking each year. Fewer companies are coming to market and more of them are being de-listed, due to mergers and takeovers, while many of those companies that do remain quoted on the stock market are buying back their shares in increasing quantities.

This phenomenon is well-established in the United States, where the number of companies quoted on the stock market has halved since 1996, but is also happening in the UK.

The investment bank Citi calculates there are now 3% fewer shares listed on the UK stock market than there were at the beginning of 2018. That is ultimately bad news for investors in public markets, particularly small investors, because it means they have less choice over how they put their money to work.

https://news.sky.com/story/sky-views-rash-of-private-equity-buy-outs-could-be-bad-news-for-your-pension-11756987

 

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On 08/07/2019 at 08:49, CVG said:

You probably know this already, and not to diss your employer because I don't know who they are anyway!, but never let your Employer shares become greater than 10% of your equity portfolio. The investment world is full of stories of employees being wiped out when their employers went bust - not only taking their jobs but their savings too.

Very wise not having eggs in one basket  Hopefully nobody here would do that.

RBS was a big one that I think quite as few experienced.

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DoINeedOne
A government plan could see cigarettes banned in England by 2030
The Daily Mail reports it has seen a government green paper outlining plans to encourage 100% of smokers to switch to e-cigarettes within eleven years.
 
Daily Mail so....

For me though provides another buying opportunity if the price drops more
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1 hour ago, Dogtania said:

Very wise not having eggs in one basket  Hopefully nobody here would do that.

RBS was a big one that I think quite as few experienced.

Easier said than done, given most share plans are locked in for 3-5 years.

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On ‎04‎/‎07‎/‎2019 at 21:48, Yellow_Reduced_Sticker said:
@DurhamBornThanks for posting the above.
 
Here's my layman's understanding to help other dosbods folks who may get confused along the way...i certainly did!xD
 
1) from now to anytime within the next few months to up to 2021 -> we get a stock market high then... COLLAPSE!
 
this is the time when us good folks of dosbods start our bottom buying/feeding frenzy and hoover up them CHEAP stocks!:D
 
during this time CB's make IR's go to zero in the panic -> ( Deflation period)
the above will last around 2 years...
 
2) then we move to Inflation -> IR's start to go up AND in to double figures by 2025/28
 
its during this period that DB expects house to drop by the biggest falls (i would agree with this - how many of today's house buyers can even get their head around 17% mortgage rates? well i REMEMBER them very well...i can remember 1990 to 93 like it was yesterday!)
 
@DurhamBorn Correct me if i'm wrong.
 
BTW, just came back from tesco's and BLANKED!:o

YellowReducedSticker - thank you for providing this, I understand it is only a rough guide, but must say it helps keep things in focus. 

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4 hours ago, Democorruptcy said:

The problem is that a likely rush of "take-privates" will contribute further to the process known as de-equitisation - under which the supply of equities is shrinking each year. Fewer companies are coming to market and more of them are being de-listed, due to mergers and takeovers, while many of those companies that do remain quoted on the stock market are buying back their shares in increasing quantities.

This phenomenon is well-established in the United States, where the number of companies quoted on the stock market has halved since 1996, but is also happening in the UK.

The investment bank Citi calculates there are now 3% fewer shares listed on the UK stock market than there were at the beginning of 2018. That is ultimately bad news for investors in public markets, particularly small investors, because it means they have less choice over how they put their money to work.

https://news.sky.com/story/sky-views-rash-of-private-equity-buy-outs-could-be-bad-news-for-your-pension-11756987

 

I dont think its one way.

BigCo gets bought out by PE, who borrow shit loads.

As its PE, BigCo gets run to be milked bythe the finance. Pisses off workers. Pisses off customers.

BigCO loses customers and workers. 

Competitor starts, outcompetes BigCo as it uses equity rather being lumbered with onerous debt levels.

When I started FT work, I used to be a big in awe of BigCos. But, as I start working with them, you learn how ineffieceint and useless they are.

 

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