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Credit deflation and the reflation cycle to come.


DurhamBorn

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leonardratso

i just flogged ego off last tranche, +44%, i kept the funds they are +20 odd % ill keep drip feeding them, think ill start some drip feeding into HMZ.

I see cna and vod had a couple of very minor green days, looks like ill start averaging into them with the profits from hmy and ego.

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Bricks & Mortar

Scottish Government nationalising a shipyard.   A shipyard currently building hybrid-engined ferries for Calmac, the state-owned ferry company.   They already nationalised and mothballed an offshore windmill manufacturer last year and have a wave energy company too.  Same shipyard also hoping for a frigates order. 
I think the Scottish Govt know whats up.   They're always trying to 'outsocialist' the local Labour lot of course... but they seem to know exactly what they want to nationalise right now and are picking them up for good prices as they fall into difficulty.
https://www.bbc.co.uk/news/uk-scotland-scotland-business-49042463

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Greenies want to ban gas in new builds. Here and in the US. Germany goes without saying. It's not about muh polar bears, it's about control.

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Bobthebuilder
3 minutes ago, Loki said:

Greenies want to ban gas in new builds. Here and in the US. Germany goes without saying. It's not about muh polar bears, it's about control.

I would like to see them try and get 25KW off a standard house 60amp main fuse. They have been saying this for years with no alternative to gas.

Simply, no gas = no combi boilers.

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Talking Monkey
2 hours ago, DurhamBorn said:

You could always sell your original capital and ride the rest free.Iv sold around 40% of my miners,but i had nearly 6 figures invested and i made 2 years net salary and 6 years living expenses in two months.I had 22% of my portfolio + 100% of my salary going into my SIPP for 10 months into PM stocks.Il end up with 10% in silver miners probably by October.My aim is and has been to re-position my portfolio ready for the next cycle.I already have enough to retire and have a decent income (on my lower needs than most) already,so im not aiming for huge increases in wealth.Its hugely important to be hedged though as we transition cycles.Plus there is a very good chance generational wealth could be made in the miners so iv already got a few marked out that im going to ride all the way to 2027 from here.Iv taken profits in most of those,but intend to hold the rest.

Iv very happy with how we have all done.A lot of work went into things,and it proved very rewarding.

which ones would you ride all the way to 2027 DB, what criteria do you apply to shortlist them

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21 minutes ago, Bobthebuilder said:

I would like to see them try and get 25KW off a standard house 60amp main fuse. They have been saying this for years with no alternative to gas.

Simply, no gas = no combi boilers.

No argument from me, but they never let details get in the way of a good plan.

5 minutes ago, Cattle Prod said:

I put BAE in my SIPP a few months back. I feel safer that it's there, strangely, like my very own destroyer patrolling my other stocks :-)

My BAE has done nothing since late 2017

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sancho panza
6 hours ago, DoINeedOne said:

Jesus just popped into Waitrose for a pizza and few beers as i want to chill out and watch a film and all the staff were cuddling each other with some older ones in tears

Looking confused was told that the store is closing and they were only told yesterday when the press release came out

The press release says they are closing 7 stores with up to 700 job losses 

https://waitrose.pressarea.com/pressrelease/details/78/NEWS_13/11349

Bromley, Oadby and Wollaton are being acquired by Lidl the party acquiring Sandhurst has asked not to be named at this time. 

Quite sad to see really the older ones have probably spent most of their lives working there

I live in Leicester not far from the Oadby Waitrose.They recently shut another one about four miles from Oadby.Sainsbury's are currently shutting a few locals in the area(when they're charging £5 for the Options hot choc drink I can see why)

Don't know whether it says more about Waitrose that it can't compete in Liecester or Leicester that it can't sustain a single Waitrose store.

I think it's the former if my trips into John Lewis with Mrs P have taught me anything.Lot of floor space,lot of staff,very few customers.

Will be in the 'collapse' thread soon

3 hours ago, Castlevania said:

I set price targets and if they are reached I re-evaluate, whilst trying to not be overly greedy when prices are up and fearful when they are down. Investment psychology is a difficult business.

 

Avoding greed is a biggie.I still hear the echo of the people who laughed at those who sold  techies halfway up the bubble in the milenium.Still remember seeing those guys a year later and they'd lsot everything.

23 minutes ago, Cattle Prod said:

@sancho panza I hope you don't mind if I chip in. @Bear Hug graph is very interesting.

For starters, the only way to reduce carbon emissions and not collapse civilisation till new technologies take over is by displacing coal with gas. It will be the growth fossil fuel for decades. It is plentiful, and getting cheaper. We are still finding huge new fields of it, which is much rarer in oil these days. I'm very passionate about gas for the broad benefits, and because the first field I discovered was gas!

The US gas graphs are interesting because they show the peak and decline of shale oil as much as gas growth. The gas growth will be coming from old shale oil wells - as the pressure is drawn down gas comes out of solution and eventuslly that's all you're left with.

I wouldn't touch that ETF Sancho, as some of those companies will lose more on oil than they'll gain on gas. I'd just avoid shale patch companies. 

Its harder to find small gas focussed companies with big upside. You need to find them where the fiscal terms are good, as otherwise you need large scale and massive developments. The UK north sea is still very profitsble for gas. But that reflects hardly any left. Perenco is making a fortune milking the last of it, but they are private. You should see their offices. Rare art and Michelin star chef.

Noble is a good company. In the med also is Energean, quoted on the FTSE (discl. I own). Good assets good people, gas heavy. Of the majors I think Shell is best positioned though ENI and BP have been shifting to gas too. I own BP and alot of Shell, still waiting to buy ENI.

Hope this helps.

 

Lots of questions here CP.First of all,jsut to clarify my position,I believe we're going to see the dollar weaken over the next year.My view is that this will be a positive for a lot of commodity stocks.

 With ETFs I just find asset class that looks good value and then deconstruct the ETF using the charts and financial data for the indivdual stocks

Talking with a family member last night,we're sizing up some big oil purchases to add to current holdings with a view to selling them in a year before the dollar starts firming up.

Natural Gas looks good value .Do you think it's jsut beetter to stick with big oil and leave the US smaller oilies/gas companies alone?

I'm presuming there are very few pure gas plays out there?

Also,if it's hard to get exposure to the natural gas side then maybe using OIH ETF as a proxy ,you can pick up companies like Halliburton/Schlumberger,using the old shovel sellers/gold miners analogy?

Are there any alternative way you could get exposure to the sector that you can think of?

Always welcome your industry specific knowledge.

Also,is there any particualr reason that that section of the market FCG/PSCE has had such a torrid few years?

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41 minutes ago, Bobthebuilder said:

I would like to see them try and get 25KW off a standard house 60amp main fuse. They have been saying this for years with no alternative to gas.

Simply, no gas = no combi boilers.

That's what a heat pump will do.

The problem with them is that their ability to pull off that trick diminishes as the temperature goes down (ie, at the point you need the trick to work).

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sancho panza
34 minutes ago, Cattle Prod said:

I've stocked up on OIH and XES as diversifiers

Just spent ages writing my questions then find you've answered already ,,....:ph34r:

30 minutes ago, Talking Monkey said:

which ones would you ride all the way to 2027 DB, what criteria do you apply to shortlist them

good question

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Bobthebuilder
1 minute ago, dgul said:

That's what a heat pump will do.

The problem with them is that their ability to pull off that trick diminishes as the temperature goes down (ie, at the point you need the trick to work).

Ive been installing boilers and heating systems for over 25 years, the guy who trained me 50 years in the business, hotels, etc.Heat pumps, biomass air exchangers all great ideas, none beat gas.

300 litre gas fired comercial cylinders can re heat in under 15 minutes, try doing that with a heat pump.

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sancho panza

Someone mentioned a fund had shut it's doors

https://wolfstreet.com/2019/07/19/another-uk-fund-just-slammed-its-doors-shut-on-investors/

Another UK Fund Just Slammed its Doors Shut on Investors

by Nick Corbishley • Jul 19, 2019 • 19 Comments • Email to a friend

This time, a fund liquidity crisis traps institutional investors, including pension funds.

By Nick Corbishley, for WOLF STREET:

Less than a week after the Bank of England issued a warning about the systemic risks posed by illiquid investment funds, news has surfaced that another run-on-the-fund caused fund managers to suspend withdrawals: This time, it’s M&G Investments, the fund management arm of UK insurance giant Prudential, that has suspended withdrawals from one of its property funds.

The move come into force last month and was apparently triggered by a rush to the exits from a number of big clients, most of whom are large pension funds.

Restrictions were also placed on certain withdrawals from the Prudential UK Property fund, which feeds into the M&G fund. According to The Daily Telegraph, around 8,000 people have money in the fund, of whom around 5,000 – those aged less than 55 – will not be able to access their funds until the restrictions are lifted.

“Our customer base consists of large pension funds which invest with us for the very long term,” M&G said. “Some schemes that have been invested with us in this fund since the 1970’s are de-risking, which is why it is now in temporary deferral.”

This flurry of redemptions — a classic run on the fund — has forced M&G’s property fund to sell properties in its portfolio, which include British retail parks, offices and industrial property, to raise enough money to meet withdrawal demands. These are not exactly liquid assets and they can take months, if not longer, to offload at prices above bargain basement level, which is why M&G has suspended withdrawals for clients for up to six months.

“Occasionally we put withdrawal requests on hold for this type of fund, which enables us to get the best price we can for property we are selling within it,” M&G said.

This is not the first time M&G has had to suspend withdrawals from one of its property funds. In July 2016, amidst the turmoil that roiled UK markets immediately following the Brexit vote, the M&G Property Portfolio, a £4.4 billion fund, was one of six commercial real estate (CRE) funds that opted to temporarily suspend redemptions as a flood of investors rushed for the exits.

In total, M&G looks after £321 billion of assets on behalf of six million customers. The property fund itself has around £660 million of assets, down from £760 million two years ago, and is aimed exclusively at institutional investors such as pension funds.

M&G’s latest move has evoked comparisons with Neil Woodford’s decision at the beginning of June to ban redemptions from his Equity Income Fund, preventing hundreds of thousands of investors, including public pension funds, from being able to access their money. Like the managers of many other open-ended funds, Woodford offered clients the possibility of yanking out their funds at just about any moment while pouring money into assets that could take weeks or months to sell in an orderly fashion.

Now, Woodford is desperately trying to offload his more illiquid assets, including his unlisted biotech investments, which are to be bundled into multiple portfolios for auction, as well as some of the assets he listed on the minuscule Guernsey-headquartered International Stock Exchange, which has barely any trading activity. In the meantime, another one of his funds, the Woodford Income Focus fund (WIFF), lost a third of its assets in June alone, as investors continue to abandon funds under his management.

Granted, there are big differences between the M&G property fund and Woodford’s Equity Income Fund. For a start, investors in the M&G property fund are institutional investors, which tend to be less vulnerable to volatility in investor flows, partly because they don’t offer daily trading. Also M&G is more upfront about the liquidity risks of investing in its property funds.

One big thing the two funds do have in common, though, is the glaring mismatch between the speed at which they can offload assets and the rate at which investors can demand their money back. And right now, with the risk of a no-deal Brexit arguably higher than at any other time since the 2016 referendum, UK-based property funds like M&G’s are once again coming under pressure.

M&G claims its recent decision to gate the property fund had nothing to do with Brexit, but investors in the UK are getting increasingly jittery as Halloween 2019 — the new date scheduled for British withdrawal from the EU — approaches, especially with the odds of pro-leave Boris Johnson being chosen to succeed Treason May as prime minister rising by the day.

The uncertainty surrounding Brexit has spooked property investors. Since late last year, waves of redemptions have hit UK commercial real estate funds. Between October 2018 and May 2019 the total amount of funds under management in the UK property fund sector tumbled 5.5%, from £32.5 billion to £30.7 billion, according to data provided by the UK Investment Association. According to the European Securities and Markets Authority (ESMA), real estate funds “have one of the highest shares of retail investors which, given potential liquidity risk, is a concern.” That’s probably putting it lightly. By Nick Corbishley, for WOLF STREET.

 

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Castlevania
17 minutes ago, Cattle Prod said:

Just had a peek at Gazprom. It did double in 2007, but unfortunately its already been ripping higher! Dammit, might have missed that. FT has them on a PE of 2.95 but I don't know what kind of PE that is.

FWIW I've been in a JV with them before. Somewhat black and white on subsurface issues (excellent scientists, but very maths oriented), but super professional. Always paid up, in full and on time. Unlike the Chinese, who constantly piss around. I wouldn't be blinded by western biases about investing in Russia. It was pointed out to me (repeatedly :-)) that Gazprom was a reliable supplier to Europe all through the Cold War. Which is true. Gazprom might be an arm of state that they use to threaten their former satellites, but they do not mess about with Europe.

Surely they needed the money? 

I’m quite happy with buying Russian natural resource companies. They trade at a big discount to similar companies in other jurisdictions, due to the perceived political risk which usually just means a higher dividend yield. I wouldn’t want too much exposure but can comfortably live with 5-8% of my portfolio being based there.

Talking about oil and gas one of my AIM tiddlers (Amerisur) just put themselves up for sale. I hope to make a nice gain there :)

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14 hours ago, Ponty Mython said:

My own feeling is that TA of individual PM miner stocks is bollocks - viz NGD and their hedging and AISC position, do they really correlate with the recent spring back? Better, in my view, to take a broader macro view, as espoused by the legendary @durhamborn.

Dunno about TA but there are definitely fundamental reasons why NGD ended up so low in the first place and could possibly end up back there. I think ignoring that across the PM minor space would be pretty foolish, macro bull or not.

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9 hours ago, Talking Monkey said:

which ones would you ride all the way to 2027 DB, what criteria do you apply to shortlist them

10x potential,not bothered how risky they are.So the likes of Harmony,Sibanye,the smaller silver miners etc likely il keep around 10% of my portfolio in them.Im already up more than that on having sold a lot.Iv sold some 3 times since 2016 including Endeavour,Harmony,Yamana,Eldorado,Sibanye etc.I still think there is big potential for a big fall back in the miners and if so i would go back up to 20% of my portfolio as the reflation cycle gets underway.

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Chewing Grass
8 hours ago, sancho panza said:

This time, it’s M&G Investments, the fund management arm of UK insurance giant Prudential, that has suspended withdrawals from one of its property funds.

The move come into force last month and was apparently triggered by a rush to the exits from a number of big clients, most of whom are large pension funds.

Restrictions were also placed on certain withdrawals from the Prudential UK Property fund, which feeds into the M&G fund. According to The Daily Telegraph, around 8,000 people have money in the fund, of whom around 5,000 – those aged less than 55 – will not be able to access their funds until the restrictions are lifted.

A lot of 55-60 year olds are either a) that fucked off with where they work or have b) been advised to pull money out of final salary schemes (value above threshold or are unmarried with kids) that there is a rush for the gates.

This is especially true of some large company schemes and is obviously triggering liquidity problems for some of the funds they may use.

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1 minute ago, Chewing Grass said:

A lot of 55-60 year olds are either a) that fucked off with where they work or have b) been advised to pull money out of final salary schemes (value above threshold or are unmarried with kids) that there is a rush for the gates.

This is especially true of some large company schemes and is obviously triggering liquidity problems for some of the funds they may use.

Like i said at the start of the thread here and the other place,we have entered a distribution cycle.Remember as well what this means with the leads and lags.That money being pulled from property funds now,means less investment in property assets,meaning the price of rents will be stable as the next cycle unfolds.The key as ever is to get the asset cheap and not leveraged (or in property not too much leverage).Distribution cycles are very difficult to invest in,hence why trackers will likely do badly.Solid cash flow divi payers should outperform if they are exposed to sectors than can keep up with inflation.

 

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Castlevania
15 minutes ago, Chewing Grass said:

A lot of 55-60 year olds are either a) that fucked off with where they work or have b) been advised to pull money out of final salary schemes (value above threshold or are unmarried with kids) that there is a rush for the gates.

This is especially true of some large company schemes and is obviously triggering liquidity problems for some of the funds they may use.

Don’t a lot of property funds end up in fund of funds? I was especially pissed off when I realised that the default pension fund that my work pension was being paid into had 15-20% of the assets in U.K. commercial property. Loads of exposure to corporate and U.K. government bonds too. Absolute trash for anyone in their twenties or thirties.

I transferred it all into a SIPP a few years ago.

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Slight off topic , however, I couldn’t stop thinking of what have been discussed in this thread after bumping again in this video.

  Regards

M.C. 

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Talking Monkey
1 hour ago, DurhamBorn said:

10x potential,not bothered how risky they are.So the likes of Harmony,Sibanye,the smaller silver miners etc likely il keep around 10% of my portfolio in them.Im already up more than that on having sold a lot.Iv sold some 3 times since 2016 including Endeavour,Harmony,Yamana,Eldorado,Sibanye etc.I still think there is big potential for a big fall back in the miners and if so i would go back up to 20% of my portfolio as the reflation cycle gets underway.

The big fallback has been mentioned several times, is that big fallback most likely when the overall stockmarket bear is in full swing as it heads towards >50% down.

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3 hours ago, CVG said:

I was once looking up 'confirmation bias' and I was shocked by the number of cognitive biases that there are. Many apply to 'us' investors.

https://en.wikipedia.org/wiki/List_of_cognitive_biases

 

A timely post for any newbies who may be nicely up following DB et al advice.  Are you good traders or good at finding the right internet forums?  Take care out there or you risk being sucked in and spat out.  Nothing wrong with taking profits, especially covering your initial capital, and maybe investing some gains in buying (and reading!) a few books or attending courses.  Apologies if you're all seasoned pros but I've been at this game a long time and still make many dumb mistakes due to stuff like the above.  Bottom line, it requires bl**dy hard work to stay in this game over the longer term.

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Don Coglione
3 hours ago, Lavalas said:

Dunno about TA but there are definitely fundamental reasons why NGD ended up so low in the first place and could possibly end up back there. I think ignoring that across the PM minor space would be pretty foolish, macro bull or not.

I couldn't agree more about NGD! I fully understand why its share price dropped to where it did, what makes less sense to me is why it has bounced back so high and so quickly.

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Castlevania
18 minutes ago, Harley said:

A timely post for any newbies who may be nicely up following DB et al advice.  Are you good traders or good at finding the right internet forums?  Take care out there or you risk being sucked in and spat out.  Nothing wrong with taking profits, especially covering your initial capital, and maybe investing some gains in buying (and reading!) a few books or attending courses.  Apologies if you're all seasoned pros but I've been at this game a long time and still make many dumb mistakes due to stuff like the above.  Bottom line, it requires bl**dy hard work to stay in this game over the longer term.

Yep. Well said. The most important thing I’ve learnt is to learn from your own mistakes. 

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