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Credit deflation and the reflation cycle to come.


DurhamBorn

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Agent ZigZag

Good to read your up DB

My ISA is breakeven although the Miners is largely to thank for this. i took £10k profit a week or so ago from the miners to buy other shares and will probably do the same amount later this year as I expect the miners to still roar on.

The shares I really want to buy and get a stronger position in is the oil majors namely Shell and BP,. BAE  systems and maybe a SEA fund ie shipping are also on my radar but the time is not right for these at present.

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26 minutes ago, DurhamBorn said:

I tagged the recent bottom on it for a nice sized stake.I have to keep a close eye on the fact i have BAT as well and might need to trim one to keep them under a certain size of portfolio.I might sell some BAT,they are up 23%+ divi in a few months.

Lots of movement in most stocks iv been buying.Some like Centrica down 38% before divis,others up 50% like Go Ahead,Many that are down are up 15% from bottom ladder buys,others drifting lower.Profit warnings are everywhere now.My portfolio is up about £60k this year,mostly gold miners,.I had hoped PM gains would cover -16% down in my porfolio if every ladder hit on reflation/value stocks,but they should cover -22% now.Very happy with that.Iv taken more profits in the PMs now.

Iv got many stocks that hit bottom ladder points,and many that hit four out of five.Others still only on second and third points.Gambling stocks have been hitting points and are mostly at ladder two now.

Happy with the way things are playing out.Key will be how many parts of portfolio keep falling heavily after all ladders bought.Given a lot have already re-based divis etc.

Car sales should start to drop next,and insurers might start to feel the heat.

Interesting.  Looks like you may have bought BATS around 21 Jan this year to hit 23%+ which was exceptional timing.  Most of my purchases were at intermediate lows in 2018, with a final one at the same time.  That's a limitation with my approach - I can pick a weekly low well but things can still go lower over the longer term!  One high yield portfolio is still up though so works on the average.  The other is a bit newer and is in break-even.  Alas, I missed out on getting to the maximum 4% holding on some targets as their price has raced ahead so have either bought alternatives (e.g. DLG instead of RSA) or am waiting. The waiting is always a surprise - how often a run away stock eventually comes back down to a buying range.  Patience and defo a game for a long term steady Eddy!  Wish I had been doing this stuff earlier with time on my side to buy at the lowest of the lows (e.g. use monthly data) but such is life!  But I did do that with PMs (not the miners) and am reaping the benefits now.  

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Guyana, ooh-na-na
Half of my cash is in Guyana, ooh-na-na
I keep some Wesdome and Yamana, na-na-na
Oh, but my SIPP is in Guyana
My wife will go bananas
Guyana, ooh-na-na..

Guyana published their numbers yesterday and they finally managed to sell above costs :P $1325 realised price at $1323 AISC, woot-woot! Still some way to go before it reaches the 2019 guidance and it might be difficult to get there with grades getting lower... and lower... and lower... However, they deserve credit for managing to get those costs down despite lower grades and their production is still within guidance.

One to watch for sure. With gold firmly above $1400 they should start generating cash flow even at their current sustaining costs. Also, they have finally disposed of their CEO so there's potential for another NewGold-worthy turnaround if they get the right replacement. I've got a sizable position, currenly under water - of course :) 

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9 minutes ago, Agent ZigZag said:

......The shares I really want to buy and get a stronger position in is the oil majors namely Shell and BP.....

Same here but after a nibble they ran away from me price wise so I'm waiting for a pull back.  May go international to see if there are better buys there.  Also surprised to see Wood Group (John) come up as a possible buy (technical and yield wise) given the poor state (?) of its financials.

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sancho panza
50 minutes ago, Democorruptcy said:

Just looking at the updated HL research:

E&P wasn't down as much as Business, -89%! Maybe some write downs etc shifted into there? Only 2% less Business energy supply customers.

Disc: I don't own any but keep thinking I should buy again.

Just had a long chat with family member re CNA.She -like a lot of people-was rattled by the news and the share sell off.For me,it looks like they're making the right decisons

Been through the report today

1) the move out of production should be welcomed alongside the focus on it's retial ops.Also,if they sell as the dollar weakens over the next year,could get a nice price for the assets.

2) Divi cut was well overdue.Should have happened last year imho

3) business down for the following reasons

image.thumb.png.93d71d649591670d8009183e2f806bb5.png

4 Some of the additional hits explained

image.thumb.png.3d3c702dc82f056188e2b89f33383e2e.png

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5) explanantion fo the rise in net debt

image.thumb.png.8a9512246c5cb08bae2b56eedf0d4766.png

6) Nuclear and E&P

image.thumb.png.ac2598d9469b04482085cdc3d154c2f6.png image.thumb.png.f639c0658b37766851e3e0ea065c3a8c.png

7)

 image.thumb.png.ca275d9a42f9339c68d7c16b510a6e15.png

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https://www.centrica.com/news/interim-results-period-ended-30-june-2019

 

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This is the link I mentioned yesterday to Brian Reynolds - I found it enlightening as to why the US market continues to go up despite worsening company fundamentals and the economy. He believes the individual states and mayor public pension schemes in the US are driving the stock market boom there, with its funds chasing a 7% plus return to cover unfund pension liabilities, then flowing into private credit funds who then lend to BBB rated corporations who then buyback their own shares leading to the stock market rising even though the economy and credit quality is deteriorating at the same time. He sees this going on for 3-5 years yet and a further 2 years from the UST 2-10 year yield curve inverting which I dont believe it has yet. Not sure this is my view but the scale of the funds flowing in to the markets via this route (before leverage is applied) in quite something. Worth a watch/listen if you have time.

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sancho panza
32 minutes ago, DurhamBorn said:

Centrica have done the right things,just behind the curve so taken the heat due to lack of speed.Likely they have put themselves up for sale and once the balance sheet is clean after nuclear and E+P go they will be taken out.Rough guess is expect £1.40+ a share bid then a counter bid.Not ideal,but one of a few dozen investments and see how things play out.Depends if big oil want a quick way into the EV charging space.They should of sold nuclear ages ago.Customer numbers went up May and June though,likely they are close to being price settors now.Ends of cycles are tough and its crucial people ladder in slowly and across a broad spread of areas/companies.

Was reading the CNA update as I was posting so missed your post.

I think they'll get taken out before they run.

Would add as well,that CNA are facing increasingly less competition in teh space where they are the biggest player

https://www.energyscanner.com/which-energy-suppliers-have-gone-bust/

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sancho panza
26 minutes ago, kibuc said:

Guyana, ooh-na-na
Half of my cash is in Guyana, ooh-na-na
I keep some Wesdome and Yamana, na-na-na
Oh, but my SIPP is in Guyana
My wife will go bananas
Guyana, ooh-na-na..

Guyana published their numbers yesterday and they finally managed to sell above costs :P $1325 realised price at $1323 AISC, woot-woot! Still some way to go before it reaches the 2019 guidance and it might be difficult to get there with grades getting lower... and lower... and lower... However, they deserve credit for managing to get those costs down despite lower grades and their production is still within guidance.

One to watch for sure. With gold firmly above $1400 they should start generating cash flow even at their current sustaining costs. Also, they have finally disposed of their CEO so there's potential for another NewGold-worthy turnaround if they get the right replacement. I've got a sizable position, currenly under water - of course :) 

We hold some Guyana.I'm holding all these smallies for some time until the bull matures.A lot of them will suddenly start becoming profitable if this continues

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42 minutes ago, DurhamBorn said:

Car sales should start to drop next,and insurers might start to feel the heat.

I heard this morning Vauxhall are doing £4k off new cars, and a local Ford garage had big banner outside advertising £3k off.

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15 minutes ago, Festival said:

........

This is the link I mentioned yesterday to Brian Reynolds - I found it enlightening as to why the US market continues to go up despite worsening company fundamentals and the economy. He believes the individual states and mayor public pension schemes in the US are driving the stock market boom there, with its funds chasing a 7% plus return to cover unfund pension liabilities, then flowing into private credit funds who then lend to BBB rated corporations who then buyback their own shares leading to the stock market rising even though the economy and credit quality is deteriorating at the same time. He sees this going on for 3-5 years yet and a further 2 years from the UST 2-10 year yield curve inverting which I dont believe it has yet. Not sure this is my view but the scale of the funds flowing in to the markets via this route (before leverage is applied) in quite something. Worth a watch/listen if you have time.

Love it, thanks!

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Great thread this one everyone. So now I need to ask a few questions if I may:-

I have a sizeable sum currently spread across two cash ISAs.

I also have an even more sizeable sum sat in cash across a few bank accounts.

I want to get it spread about a bit across funds/shares/ETFs whatever. 

I've got little confidence having it sat in sterling. 

I'm currently out of work so have time on my hands, so what I'm hoping you guys can help me on is what broker/whatever to use to do this investing ?

I've currently looked at HL and ajbell. Can anyone advise if these are good, good app etc ?

Thanks in advance !

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2 minutes ago, Iamcynical said:

Great thread this one everyone. So now I need to ask a few questions if I may:-

I have a sizeable sum currently spread across two cash ISAs.

I also have an even more sizeable sum sat in cash across a few bank accounts.

I want to get it spread about a bit across funds/shares/ETFs whatever. 

I've got little confidence having it sat in sterling. 

I'm currently out of work so have time on my hands, so what I'm hoping you guys can help me on is what broker/whatever to use to do this investing ?

I've currently looked at HL and ajbell. Can anyone advise if these are good, good app etc ?

Thanks in advance !

Don't let the tail wag the dog. ignore the apps unless you're trading frequently but is that really what you want to do? There are good apps for tracking portfolios

It's been said many times over the thread. Work out what you're going to buy, when/how often and in what vehicle. Then choose the cheapest provider. Easy place to compare:

https://monevator.com/compare-uk-cheapest-online-brokers/

 

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43 minutes ago, Iamcynical said:

Great thread this one everyone. So now I need to ask a few questions if I may:-

I have a sizeable sum currently spread across two cash ISAs.

I also have an even more sizeable sum sat in cash across a few bank accounts.

I want to get it spread about a bit across funds/shares/ETFs whatever. 

I've got little confidence having it sat in sterling. 

I'm currently out of work so have time on my hands, so what I'm hoping you guys can help me on is what broker/whatever to use to do this investing ?

I've currently looked at HL and ajbell. Can anyone advise if these are good, good app etc ?

Thanks in advance !

My thoughts on providers:

. HL look particularly good for retirement stuff, good customer service, quite good stock data

. AJ Bell fair price, no nonsense, some good general investing information (including their Shares magazine and their podcasts)

. II, not so cheap anymore but can hold multi currency accounts (good for hedging sterling plus minimising international trading costs)

. All web sites different but OK.  I do not use apps (security concerns).

What I learnt personally (not sure you asked so apologies):

. Put the hours in with the data or pay someone else to do it or both.

. Take time to first define objectives and the strategy to achieve them.  For example, retirement investing versus income investing versus trading.

. Nail the appropriate asset allocations and risk profiles to support the above.

. Select the most appropriate investment vehicles (ETFs, stocks, investment trusts, etc) to achieve the above.

. Ensure tax efficiency but do not let tax considerations rule over everything else.

. Consider all forms of risk and mitigate where possible (e.g. maybe a few brokers, mix of investment vehicles, etc).

. Define an approach and systems to follow so the approach becomes methodological and routine rather than based on feelings or what was heard today.

. Select a limited number of good data and information sources for support (e.g. Morningstar for fundamental data).  Pay if necessary, but not always required.

. Learn to study charts and fundamental data (to a point, no degree level required).

. KISS and be realistic.

. Constantly review progress - learn, adjust, proceed.

. Boring is good.

. Be ready to walk a dog, kick a football, get a basketball.......

PS: Agree with @A_P about sites like Monevator.com.  I read it a million times and it really helped me. 

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sancho panza
1 hour ago, Festival said:

This is the link I mentioned yesterday to Brian Reynolds - I found it enlightening as to why the US market continues to go up despite worsening company fundamentals and the economy. He believes the individual states and mayor public pension schemes in the US are driving the stock market boom there, with its funds chasing a 7% plus return to cover unfund pension liabilities, then flowing into private credit funds who then lend to BBB rated corporations who then buyback their own shares leading to the stock market rising even though the economy and credit quality is deteriorating at the same time. He sees this going on for 3-5 years yet and a further 2 years from the UST 2-10 year yield curve inverting which I dont believe it has yet. Not sure this is my view but the scale of the funds flowing in to the markets via this route (before leverage is applied) in quite something. Worth a watch/listen if you have time.

Super watch.Thank you.

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@sancho panza looks like they will.Its a shame really that what will be holding off the buyers will be the nuclear stake.Once that goes id expect a bid.If you notice the Ford deal or EV charging i think thats just the start.Ford will

1 hour ago, Festival said:

This is the link I mentioned yesterday to Brian Reynolds - I found it enlightening as to why the US market continues to go up despite worsening company fundamentals and the economy. He believes the individual states and mayor public pension schemes in the US are driving the stock market boom there, with its funds chasing a 7% plus return to cover unfund pension liabilities, then flowing into private credit funds who then lend to BBB rated corporations who then buyback their own shares leading to the stock market rising even though the economy and credit quality is deteriorating at the same time. He sees this going on for 3-5 years yet and a further 2 years from the UST 2-10 year yield curve inverting which I dont believe it has yet. Not sure this is my view but the scale of the funds flowing in to the markets via this route (before leverage is applied) in quite something. Worth a watch/listen if you have time.

Liquidity is everything,always will be and i think a lot of truth in the above in the US.QE of course caused a lot/most of the problems.The irony is the UK market has been avoided outside of a few stocks.My leads and lags indicator on sterling is showing its at or near the bottom now,even though everyone is saying its going down hard.One of the lead points of this thread is how important free cash flow and debt structure is going to be going forward.The companies that have strong free cash and can increase prices will thrive,those who cant will be destroyed.

The facts are inflation will be the way out of whats happened and only certain areas of the economy will be able to outrun that.Its why i much prefer a bus company to a car maker for investing in.I expected we would see PE ratios between 5 and 9 and thats exactly what we have across large parts of the UK market.Once the US follows that,and then gets an earnings shock on top down 70% comes into view.There is a good chance many UK stocks have already seen a large part of their falls.Time will tell.

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sancho panza
10 minutes ago, DurhamBorn said:

@sancho panza looks like they will.Its a shame really that what will be holding off the buyers will be the nuclear stake.Once that goes id expect a bid.If you notice the Ford deal or EV charging i think thats just the start.Ford will

Liquidity is everything,always will be and i think a lot of truth in the above in the US.QE of course caused a lot/most of the problems.The irony is the UK market has been avoided outside of a few stocks.My leads and lags indicator on sterling is showing its at or near the bottom now,even though everyone is saying its going down hard.One of the lead points of this thread is how important free cash flow and debt structure is going to be going forward.The companies that have strong free cash and can increase prices will thrive,those who cant will be destroyed.

The facts are inflation will be the way out of whats happened and only certain areas of the economy will be able to outrun that.Its why i much prefer a bus company to a car maker for investing in.I expected we would see PE ratios between 5 and 9 and thats exactly what we have across large parts of the UK market.Once the US follows that,and then gets an earnings shock on top down 70% comes into view.There is a good chance many UK stocks have already seen a large part of their falls.Time will tell.

1) I can see the bids dropping on hard when that happens and French/German shareholders picking up the profits.Unless one of the big oilies bids,which would make some sense given the drive for renewables.

2 ) To be fair,there's large chunks of the US market are already on their arse as well in the UK.

 

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Question is - is it still worth buying CNA at their current price assuming the high chances of them being bought out?

DB? Your thoughts?

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Democorruptcy
3 hours ago, sancho panza said:

Just had a long chat with family member re CNA.She -like a lot of people-was rattled by the news and the share sell off.For me,it looks like they're making the right decisons

Been through the report today

1) the move out of production should be welcomed alongside the focus on it's retial ops.Also,if they sell as the dollar weakens over the next year,could get a nice price for the assets.

2) Divi cut was well overdue.Should have happened last year imho

image.thumb.png.161f81b9a67bc6ffa42243aa0187b7a2.png

 

image.png

 

Thanks.

I agree the divi cut should have come much earlier.

I see the business profits were down due to the US/nuclear.

I'm not sure what to make of customer accounts up but energy supply accounts down another 178,000

Switching to banks... Lloyds figures out today, including underlying profit £2bn and £1.75bn share buyback.

Quote

 

Second quarter underlying profit fell 9.1% year-on-year to £2bn

Underlying profits have been ticking along nicely, driven by effective cost control, increased loans to customers and greater exposure to risker, but higher retuning, loans like auto-finance and credit cards

The combination of nervous investors and strong operating performance has resulted in a bank trading on a 0.8 times book value, 20% below the five year average, and offering a prospective yield of 6.4%. That's despite a £1.75bn share buyback.

Impairments for bad loans rose by 53.5% in the quarter to £304m.

https://www.hl.co.uk/shares/shares-search-results/l/lloyds-banking-group-plc-ordinary-10p/share-research

 

 

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14 minutes ago, Barnsey said:

Dollar breaking out higher after 25bp cut

Also stopping QT 2 months early

"Underscoring its decision to ease policy across the board, the Fed also said it would stop shrinking its $3.6 trillion in bond holdings starting Aug. 1, two months ahead of schedule."

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14 minutes ago, stockton said:

Also stopping QT 2 months early

"Underscoring its decision to ease policy across the board, the Fed also said it would stop shrinking its $3.6 trillion in bond holdings starting Aug. 1, two months ahead of schedule."

Exactly, they're going to have to do quite a bit more to get that $ down!

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20 minutes ago, Barnsey said:

Dollar breaking out higher after 25bp cut

Its mad, Dollar is up because its only .25%, stocks down because they wanted .5%.

 

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sancho panza
4 hours ago, Democorruptcy said:

Thanks.

I agree the divi cut should have come much earlier.

I see the business profits were down due to the US/nuclear.

I'm not sure what to make of customer accounts up but energy supply accounts down another 178,000

Switching to banks... Lloyds figures out today, including underlying profit £2bn and £1.75bn share buyback.

 

I think the mismatch may well be in customers having multiple accounts.When you look at the sheer scale of their ops,300,000 is a drop in the proverbial ocean.

lloyds results proved popular..............I posted a while back that Barclays are not far above where I first bought them back in 1990 on my Grandads say so after I'd saved a few quid working as a security guard.

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41 minutes ago, Barnsey said:

Dollar breaking out higher after 25bp cut

And we get the pullback to end all pull backs.Feel lucky that we pretty much stayed out of this rally.Having said that,we'll be backing up the family pick up this time.

Even with 10% down Goldfields are still up circa 60% on our entry.I'll buy more under $4 but I'm not feeling the love is that strong.

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12 minutes ago, Majorpain said:

Its mad, Dollar is up because its only .25%, stocks down because they wanted .5%.

 

Surreal might be more apt.The Fed cutting with UB at near record lows,wage inflation ticking over and GDP buzzing really goes to show how protecting the 1%'s assets is their raison d'etre

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reformed nice guy
On 30/07/2019 at 13:30, reformed nice guy said:

I am hoping for a dip in the miners after the next Fed rates drop while everyone rushes into FAANG stocks and the like. Fingers crossed it happens.

Looks like I will be buying some miners over the next few days - unless anyone suggests that it might be too early?

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