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Credit deflation and the reflation cycle to come.


DurhamBorn

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18 hours ago, Ponty Mython said:

.....My own feeling is that TA of individual PM miner stocks is bollocks....

Oh, I feel a nice little research project coming on!.....

I've tried trading GDX in the past using TA but gave up, having had too many false buy signals. But maybe a bit of yin and yang in that when you get it right you make tons, which maybe offsets the losses (as opposed to more turtle like trades).  I'll re-assess (something to always do as findings and assumptions do change in this game) but moving on to my conclusion at the time to trade the constituents for a better result (discussed some months ago)....

I'll take a group of miners and run them through my momentum based TA system for buys and see.  Probably not sells as that's more subjective, etc but I'll see.  My system isn't anything special other than it's a system rather than hormones, bias, etc but it should act as a fair TA proxy.  So which stocks to consider.......

Maybe a good start would be a subset of @sancho panza's recent list:

20 hours ago, sancho panza said:

Some relief from the ramp.Poss start of teh pull back?

image.png.d986ca6ee961433b558632bf060ac407.png

image.png.c5172b981b966e151b25f3a58177b2ae.png

Any other candidates?

PS: May take a little while as I have another life outside of this malarkey!

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15 minutes ago, Castlevania said:

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

I see my mistakes as the cost of doing business - a bit like "continuing professional education"!  The key is to not overspend!  I took a £450 loss last week on one small trade.  I made sure it hurt, so that it was not seen as just internet money, by contrasting it with a recent lumber order for a similar amount and considering the transformation that amount of lumber will make.  It was the cost of being reminded to stick to my system.  I went back over the trade and saw that although I had a good overall concept, I had no justification putting on the trade at that time.  Success requires both the idea and the timing.  I broke a rule and got spanked.  Fair dues.

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On 18/07/2019 at 14:26, janch said:
3 hours ago, DurhamBorn said:

Like i said at the start of the thread here and the other place,we have entered a distribution cycle.....

Just to point out a similar liquidity risk, albeit maybe a lesser one, of ETFs and similar collective instruments.  As Jim Puplava has pointed out in Financial Sense, there are only a few ETF providers out there so what happens if a lot of people sell their ETFS at the same time?  This scenario has not really been tested (given the relatively nascent growth in ETFs).  Who is going to buy them or even their underlyings?  Liquidity could also dry up somewhat.  Smart money may just wait on the sidelines for a huge discount before buying.  Or worse, aggravate matters with some shorts.  And bond funds are arguably even worse in such a scenario as the fund may need to liquidate longer term bonds well before redemption at a significant "discount", severely impacting the forecast yields to maturity. 

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DYOR, form your own view, take a ticket.....but sometimes worth looking at the very long term picture....

Capture.thumb.PNG.2c4872cca1d69ea35df70876f2d43b5e.PNG

Monthly gold price in GBP (USD is in orange).

Again, a bit like a very long term cup and handle chart pattern.

The MACD and stochastics have very rarely been aligned like today.

But then maybe we have the mother of all put downs!  And then there's a chance of a pullback, even a test of the all time high.

Looking at the comparative with the USD, etc - and people wonder (immigration, etc besides) why Tescos etc are putting up prices and people have got no money!

Capture1.thumb.PNG.dfc9d028a9d8873bec2d9ca642033b7e.PNG

Gold is averaging a 12% return in GBP (more than all other currencies) per year!  Silver similar but with more volatility. 

The FTSE100, ex-div has managed 4% (really?) in the same period.  Interestingly, the FTSE100 yield last year was at a seven year high (range: 3.46% to 4.68%).

The FTSE100 v Gold performance suggests a useful partial negative correlation ("down v up" or "up v up" with only one "down v down" year).

Interesting to look at other asset classes, but goes to show how overall and over the longer term asset allocation is critical, unless you're a great market timer!

 

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leonardratso

i pulled out of an LANDG property fund a few years back a day before they placed a block on redemptions, was part of my work pension, id paid in some other smaller pensions to consolidate and they let you place them elsewhere away from the default pension block, i had read that a redemption block may have been in the offing at the time so i withdrew it to cash (albeit landg g17 cash fund), phew, dodged a bullet there, wasnt much money and the fund allowed redemptions a few months later, didnt check the prices on redemption resumption but i think it was quite a bit lower. Anyway, the crooks of the problem was the pricing of the fund units, how were they arrived at? did they just value the (illiquid) assets and then divide the 'perceived' value between the number of units they had? i think they had a run at the time or maybe decided that the assets werent actually priced right and so had buggered up the unit pricing, the assets were large shopping malls (UK) or parts of and commercial property that landg owned or had a stake in, a load of old shit to be honest, it made very little profit and i went with their newton funds instead with the cash in the end. They really fucked up last year when they outsourced their system and i was able to buy a gold and silver fund into my pension, however the wankers noticed and reversed my buy back into equities, i had some extremely stern words with them changing my pension decisions without asking me, i threatened to go elsewhere, but in the end i lost interest and just told them i thought they were a bunch of useless shisters.

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2 hours 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.

Or are you just lucky with timing? Looks like every asset class is having a bumper year.

novelinvestor-asset-class-returns-1h-201

Is it worth the hard work or best to forget about it...or even die ? xD

https://www.businessinsider.com/forgetful-investors-performed-best-2014-9?r=US&IR=T

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6 hours ago, Castlevania said:

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 :)

 

The Large Russia company ETF RSX is doing quite nicely this year as well. I used to buy it until the UK dealers stopped me!

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3 hours 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.

+1. I for one like some others have mentioned am a complete RANK amateur.  Definitely in the camp of thinking I'm good (lucky!) at finding a good internet forum.

Going forward I may make an effort to get a grip on investing.  Previously read long and the short of it which I recommend and should probably go back to read - it's by no means an education but quick concise book that I liked with psychology involved if I recall.  I still have a tome of a book by FT called something like introduction to investing that I was kindly gifted almost a decade ago but not read an iota of :/

I kid myself sometimes that if nothing else I'm playing monkey in the the idea of monkey with the pub

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7 hours 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.

Couldnt agree more Harley and its vital advice.I make plenty of mistakes myself,mostly around timing not selection,hence why i focus more and more on a road map and buy in ladders.That takes away a lot of the problems timing.I time,but its less critical to me.Iv learned the hard way over 30+ years of investing that the key is to make capital and slowly build it into blue chip shares when they are undervalued and collect the dividends for a long time.

Iv seen a lot of comments about being down on Centrica etc.Im down on Centrica yet it doesnt even register to me.I own 2% of my portfolio in it and im down about 27%.Harmony delivered 6x in profit the loss on Centrica.Royal Mail im down 24%,but im up 53% on Go Ahead,thats before dividends.Down 5% on Card factory,up 23% on BAT Tobacco (again).These numbers have no meaning to me.Im building out a portfolio for the next 10 years and the question to me then is simply this.Has it delivered above inflation.Thats first.2nd is has it outperformed a FTSE 100 tracker.Most of my biggest winners have had big fat reds next to them during the buying period.That is normal due to the fact im a macro contrarian in that i buy sectors and companies that are hated,but my macro road map says should have an easier cycle ahead,or their discounted cash flow should deliver above average dividends.

The ultimate aim of investing should be to secure cash flow from dividends to retire on and perhaps some slight capital selling.I see a long term dividend of 6% + 3% increases in it as success and thats what i aim for.During this cycle turn i sold BAT at £50,bought HMY at $1.54,sold some HMY at $2.24 and bought back BAT at £24 that i will no hold for 8 years +.Busy at the moment,but in a year or so its likely il go whole years with maybe 2 or 3 buys or partial sells,or maybe no trades at all.In basic terms,if someone made £2k profit on HMY,nothing wrong with selling, splitting that profit 3 ways,buying Imperial Brands,Royal Mail and Stagecoach and collecting the dividends for the next 20 years and ignoring the short term movements.

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7 hours ago, Harley said:

Just to point out a similar liquidity risk, albeit maybe a lesser one, of ETFs and similar collective instruments.  As Jim Puplava has pointed out in Financial Sense, there are only a few ETF providers out there so what happens if a lot of people sell their ETFS at the same time?  This scenario has not really been tested (given the relatively nascent growth in ETFs).  Who is going to buy them or even their underlyings?  Liquidity could also dry up somewhat.  Smart money may just wait on the sidelines for a huge discount before buying.  Or worse, aggravate matters with some shorts.  And bond funds are arguably even worse in such a scenario as the fund may need to liquidate longer term bonds well before redemption at a significant "discount", severely impacting the forecast yields to maturity. 

And who will manage to get new bond sales away when they need to in that scenario.One of the key things i see ahead is exactly that.Its why i think its crucial the companies you buy now have strong cash flow and a well spread debt profile.Vod should always get a bond away,but at what coupon?.Having the choice of not rolling over and paying from cash flow will be crucial.Bond funds will be terrible investments in the next cycle for the very reason you say.

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Castlevania
7 hours ago, Harley said:

Oh, I feel a nice little research project coming on!.....

I've tried trading GDX in the past using TA but gave up, having had too many false buy signals. But maybe a bit of yin and yang in that when you get it right you make tons, which maybe offsets the losses (as opposed to more turtle like trades).  I'll re-assess (something to always do as findings and assumptions do change in this game) but moving on to my conclusion at the time to trade the constituents for a better result (discussed some months ago)....

I'll take a group of miners and run them through my momentum based TA system for buys and see.  Probably not sells as that's more subjective, etc but I'll see.  My system isn't anything special other than it's a system rather than hormones, bias, etc but it should act as a fair TA proxy.  So which stocks to consider.......

Maybe a good start would be a subset of @sancho panza's recent list:

Any other candidates?

PS: May take a little while as I have another life outside of this malarkey!

That’s a list of US listed precious mining stocks. You could consider some of the London listed ones. Off the top of my head all the below are on the main market. AIM is full of miners, but is very much a crapshoot, where a lot are simply just crap.

Fresnillo

Polymetal

Hochschild

Centamin

Petropavlovsk

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Castlevania
27 minutes ago, DurhamBorn said:

And who will manage to get new bond sales away when they need to in that scenario.One of the key things i see ahead is exactly that.Its why i think its crucial the companies you buy now have strong cash flow and a well spread debt profile.Vod should always get a bond away,but at what coupon?.Having the choice of not rolling over and paying from cash flow will be crucial.Bond funds will be terrible investments in the next cycle for the very reason you say.

Vodafone seem to have been rolling over their debt to much longer maturities. 

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Talking Monkey
28 minutes ago, Castlevania said:

That’s a list of US listed precious mining stocks. You could consider some of the London listed ones. Off the top of my head all the below are on the main market. AIM is full of miners, but is very much a crapshoot, where a lot are simply just crap.

Fresnillo

Polymetal

Hochschild

Centamin

Petropavlovsk

Petropavlovsk absolutely cratered my god what happened

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Castlevania
7 minutes ago, Talking Monkey said:

Petropavlovsk absolutely cratered my god what happened

Took on too much debt when gold prices were near their USD peak. Plus they’re in Russia, and since then they’ve had board room coups. Yet despite that over the past three or so years share price wise it’s been a surprisingly boring stock.

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Talking Monkey
2 minutes ago, Castlevania said:

Took on too much debt when gold prices were near their USD peak. Plus they’re in Russia, and since then they’ve had board room coups. Yet despite that over the past three or so years share price wise it’s been a surprisingly boring stock.

Maybe a tiny punt then

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1 hour ago, Castlevania said:

Vodafone seem to have been rolling over their debt to much longer maturities. 

Exactly,and the right course,they are securing really low coupons at long range.Those bond holders are ending up passing their capital to equity holders,they just dont know it yet.

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Castlevania
3 minutes ago, Talking Monkey said:

Maybe a tiny punt then

I’m in at just under 8p a share. I initially bought in early 2016. All the gold miners went to the moon in the next few months, apart from this dog. But then when gold’s been on the floor it’s not puked up it’s guts like a lot of other gold miners have. 

This is definitely not advice, but if you’re prepared to lose all your capital then by all means take a punt.

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Castlevania
4 minutes ago, DurhamBorn said:

Exactly,and the right course,they are securing really low coupons at long range.Those bond holders are ending up passing their capital to equity holders,they just dont know it yet.

Yeah. I was comparing the debt profiles of Vodafone to Telefonica the other week. And whilst what is disclosed in the financial statements isn’t as detailed as I’d like, Vodafone’s debt profile is from initial glance so much better. I still want to buy some Telefonica mind you.

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On Royal Mail my bottom ladder is up 18% even though im down on them.Id be happy if that was the bottom,but if not iv got another ladder in at £1.64p.This is what im interested in going forward.

https://www.royalmailgroup.com/en/press-centre/press-releases/royal-mail-group/royal-mail-starts-work-on-state-of-the-art-north-west-hub-as-part-of-network-extension/

The board was right to cut the dividend.This sort of investment is critical ready for the next cycle.RM will have good pricing power as the cycle gets going.The likes of Amazon will have very little control over what RM charge them,though people dont seem to understand that bit.My prediction is RM will outperform Amazon by 200%+ including dividends by the back end of the next cycle.So Amazon is $1950,RM £2.20 ,Amazon $980 billion market cap,RM £2.2 billion market cap.

3% hopefully of my portfolio if last ladder hit.If im down on if for years,couldnt care less.2028 is my road map target for it .

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1 hour ago, Castlevania said:

Yeah. I was comparing the debt profiles of Vodafone to Telefonica the other week. And whilst what is disclosed in the financial statements isn’t as detailed as I’d like, Vodafone’s debt profile is from initial glance so much better. I still want to buy some Telefonica mind you.

I think the sector (and the gambling sector) will see lots of mergers and will become cash cows for investors.It wouldnt shock me to see investors buying now seeing 20% dividends on their initial investment by 2028ish.Hated sector right now,but one i consider one of the bedrocks of my portfolio for the last 3rd of my life.

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11 hours ago, Thorn said:

GDXJ is around 39.49 and if it drops back to around 200 MA thats back around 30

DYOR etc obviously folks... but basically finally now thinking that selling some overboughts might be an idea. Feeling like a Very Slow Learner but reading aw widely as I can.  Spent the morning trying to figure out which pm stocks are most likely to suffer a pullback, in which case one option could be to sell or reduce some of them and wait and see if we bounce back up off 200MAs. Anybody else thinking similar?

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NogintheNog
1 hour ago, Thorn said:

DYOR etc obviously folks... but basically finally now thinking that selling some overboughts might be an idea. Feeling like a Very Slow Learner but reading aw widely as I can.  Spent the morning trying to figure out which pm stocks are most likely to suffer a pullback, in which case one option could be to sell or reduce some of them and wait and see if we bounce back up off 200MAs. Anybody else thinking similar?

I think the problem is no one knows where the market is going short term. I would not be surprised to see a pullback in the price of Gold and by definition the leveraged miners, with the minnows taking the brunt of the hit. That may not happen though, especially with the unpredictability of the world at the moment, gold may keep going on up. But can I be bothered to torture myself in making blind calls on gains I've made when they are not life changing amounts? (Which sadly they are not!)

I'd love to able to sell say Franco Nevada at the price now which is double where I bought at 4-5 years ago, and buy them back at 40% discount! If I had £100K worth of the stock I definitely would sell some of it. But with £5K's worth is it worth it? Especially as I think the price of these stocks will be much higher once we get through a credit deflation/reflation cycle.

Timing markets can certainly be profitable, but;
Timing markets can add significantly to risk profile.

PS. If the price of FNV was to drop by 40%, I'll double my holding! I don't think for one minute it will though!

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