Credit deflation and the reflation cycle to come.

[A_P]

49 minutes ago, Harley said:

Yes, a very interesting post thanks.  Would be interesting to see a UK one, or the US converted to GBP (eg. UK housing not looking so good in say USD, post real inflation, etc?).  Regardless, the investor returns was key - any explanation such as poor allocations, consistency, (lack of buy and hold), bad timing, etc?  That other post about returns being higher for those accounts doing nothing may be relevant here.  I certainly support the idea a sensible core asset allocation should be number one over the long term.  Sure, dabble a little bit, maybe even tilt at windmills, but steady eddy at the core.  Link?

PS:  https://portfoliocharts.com/

Really is the db's if you want to backtest such things, including in GBP.

https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets

The USD/GBP pricing really shows how much we've been screwed. I read a post the other day on TOS about pricing your salary in USD and compare over the years. It's not pretty.

[reformed nice guy]

@DurhamBorn 

I am sure everyone agrees that your reading of the precious metals market has been prescient and very helpful, and I thank you for that, but would you make any changes to your prediction if there was a so called black swan event?

For example, if China started a military occupation of Hong Kong or there was a serious military intervention in Iran.

Would that stop a fallback and just act to accelerate a rise in PMs? If it did occur, would you re-buy miners, even if they were above your recent sold price, on the assumption that they were going to rapidly increase?

[DurhamBorn]

36 minutes ago, reformed nice guy said:

@DurhamBorn 

I am sure everyone agrees that your reading of the precious metals market has been prescient and very helpful, and I thank you for that, but would you make any changes to your prediction if there was a so called black swan event?

For example, if China started a military occupation of Hong Kong or there was a serious military intervention in Iran.

Would that stop a fallback and just act to accelerate a rise in PMs? If it did occur, would you re-buy miners, even if they were above your recent sold price, on the assumption that they were going to rapidly increase?

No,nothing matters compared to $ liquidity,nothing.The road maps are designed to ignore noise.Remember i dont short,i try to look at where something should end up,not if it goes past.My gold call was around $1530/1560 top and we made it.I would re-buy the miners if all the other indicators say to do .i follow those,not events.Im more interested in the cycle turn now and how it plays out as the miners made me more capital than i had hoped for.The below shows the debt deflation in progress as liquidity dries up.What caused the below?.Fed tightening nearly 2 years ago.Always the Fed,always the long bond rate,the rest is just leads and lags and cross market flows.

"The Society of Indian Automobile Manufacturers (SIAM) said sales of cars to dealerships fell by 30.9% to 200,790 in July - the worst drop since December 2000.

The pace of the decline has accelerated in recent months as a liquidity crunch in India's shadow banking sector has dried up lines of credit to dealers and potential car buyers."

 

[sancho panza]

6 hours ago, BearyBear said:

GOLD has just reached the area of resistance at 1525-1550, will be interesting to watch how it plays out.

Commercials Sept 18 net long is a distant memory

longer term context,commercials net short most of a bull run,but yellow stuff could be due a pause.

5 hours ago, A_P said:

This is why an asset allocation with some T-bills/bonds smooths out some of the rides. 100% equities is for the young and those that can withstand the emotions over a long period. How did the S & P 500 TR do outside of the cherrypicked windows and not timing the market?

The graphs below shows how some poor sod would have done if they invested at peak and doesn't consider any additional contributions.

As a side note this is an interesting slide:

Do people here track their returns and if so how have you performed over the last twenty years?

Interesting charts.Thanks for those.

It's hard to track returns.As per my South African family,in dollar terms,they've been destroyed.

If you define everything in sterling terms it's easy to asses,but there's a chance you may be focusing on the worng thing

I take a long term view.We had an amazing 90's,00's,average last ten years.

With my short term trades,I really don't worry about my returns unless I'm clearly losing money trade after trade.Getting too ensanred in worrying about annual retunrs can affect your risk appettie unevenly.

I prefer to focus on reflecting on what we've done,what went right,what went wrong etc.

 

 

[sancho panza]

25 minutes ago, DurhamBorn said:

No,nothing matters compared to $ liquidity,nothing.The road maps are designed to ignore noise.Remember i dont short,i try to look at where something should end up,not if it goes past.My gold call was around $1530/1560 top and we made it.I would re-buy the miners if all the other indicators say to do .i follow those,not events.Im more interested in the cycle turn now and how it plays out as the miners made me more capital than i had hoped for.The below shows the debt deflation in progress as liquidity dries up.What caused the below?.Fed tightening nearly 2 years ago.Always the Fed,always the long bond rate,the rest is just leads and lags and cross market flows.

"The Society of Indian Automobile Manufacturers (SIAM) said sales of cars to dealerships fell by 30.9% to 200,790 in July - the worst drop since December 2000.

The pace of the decline has accelerated in recent months as a liquidity crunch in India's shadow banking sector has dried up lines of credit to dealers and potential car buyers."

 

And that first sentence will probably be true for two more years at least.

 

Amazing drop in sales in India.

[sancho panza]

@JMD

I designed a system based on the Glasgow Coma Scale to try and help me sift through large amounts of companies.Obviously this is heavily DYOR,but I score them on their charts/profitability/balance sheet/FCF/sector-1 is poor value/high risk through 3 average to 5 for excellent value/low risk.Score is from 25.

Obviously,sectors vary in terms of financials eg utilities carry much more debt,so the parameters are fudgible,hence don't place too much on them,but it may give you an idea how I've sifted them.

Also,some companies have a revenue split that may include some non core sales eg Freeport mainly sells copper but often included in XAU/GDX etc.I exclude companies like Rio/BHP as they form part of blue chip portfolio elsewhere

If a chart isn't longer than 5 years,I normally score it a 3 unless it's clearly high/low risk

 

For potash,I went through component parts of Soil ETF.I genereally only consider anything above 17.I aslo tend to exclude anything that gets a 1 in any section.

Yara 17,Mosaic 17,Nutrien 18,Incitec 19,Israeli Chem 17,SQM 18,K+S 17,Interpid 17

After I've narrowed them down,I take a closer look.

 

[sancho panza]

On 08/08/2019 at 14:11, Barnsey said:

https://uk.reuters.com/article/uk-britain-economy-repossessions/home-repossession-claims-in-england-wales-highest-in-more-than-four-years-idUKKCN1UY1BU

 

Just seen my Savills short(decl) has gone deeply blue for the first time in month or two since placing

https://www.thisismoney.co.uk/money/markets/article-7336597/Savills-posts-drop-profits-Boris-Johnsons-die-Brexit-pledge-chills-market.html

Political and economic turmoil in Britain and Hong Kong have taken their toll on Savills' bottom line, its latest results show.

The average value of London residential property sold by Savills in the first six months of this year fell by 32 per cent to £2.1million.

Across its UK residential arm, Savills' underlying pre-tax profit fell by 44 per cent to £3.5million, against £6.3million at the same point a year ago. 

 

 

On 08/08/2019 at 14:43, Cattle Prod said:

Also, anyone into wood/timber in a future inflationary cycle? I love it as a product, and I think it'll gain share on cement like gas will on coal, especially if carbon pricing comes in. I have a Pictet wood fund in my SIPP, and am tempted to buy Weyerhaeuser in my ISA but am holding off as it got seriously blasted in the last crash. If that happens again I'll be going in, balls deep!

Thoughs are welcome. I personally enjoy cutting snd chopping timber so I may have biases to be checked.

I had a flick through the CUT ETF and found there was little of value for me ast the mo.Very interested longer term but sector looks pricey in terms of eanrings fro the part of the market cycle we're in.

[Harley]

2 hours ago, A_P said:

https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets

The USD/GBP pricing really shows how much we've been screwed. I read a post the other day on TOS about pricing your salary in USD and compare over the years. It's not pretty.

Thanks and 100%.  Really noticeable if you track things in various currencies, including gold.  And well before Brexit.  Poverty (for most) by stealth.  Oldest trick in the book, after clipping coins!

[A_P]

3 minutes ago, Harley said:

Thanks and 100%. 

np. There is some good stuff in the presnetation and on the website. Although did have to chuckle at this:

Quote

Really noticeable if you track things in various currencies, including gold.  And well before Brexit.  Poverty (for most) by stealth.

I took a quick comparison of two gold etf's this morning. GBSP is hedged and SGLN is in USD (i own) :

[dgul]

21 minutes ago, A_P said:

np. There is some good stuff in the presnetation and on the website. Although did have to chuckle at this:

I took a quick comparison of two gold etf's this morning. GBSP is hedged and SGLN is in USD (i own) :

What a difference 20 minutes makes...

[kibuc]

It was going well, until around 1.30pm we clearly started mining asteroids.

I can see futures at 1524, one spot ticker at 1498 and another at 1481, all at the same time. My Internet is too slow to cope.

[Noallegiance]

WTF just happened to gold spot?!

[A_P]

8 minutes ago, dgul said:

What a difference 20 minutes makes...

Oh you mean the gold price, not USD. I was looking to see what went on....

 

Not a bad thing as I have my quarterly buy coming up

[BearyBear]

18 minutes ago, Noallegiance said:

WTF just happened to gold spot?!

Probably this  https://www.forexfactory.com/news/940424-mofcom-china-us-plan-to-hold-talks-again 

 

[Majorpain]

Delays on some US/China tariffs till December, although in the grand scheme of things nothing major has changed.

The market was hooked on easy QE money, currently its hooked on trade talks and Trumps tweets.  Im not sure that's entirely healthy.

It certainly looks sprung for a relief melt up though, that gold move was vicious.

[kibuc]

21 minutes ago, BearyBear said:

Probably this  https://www.forexfactory.com/news/940424-mofcom-china-us-plan-to-hold-talks-again 

 

That's even better than mining asteroids! 

Can't believe they are going with that old chestnut again.

[Majorpain]

http://www.msn.com/en-gb/news/uknews/something-extraordinarily-bad-is-about-to-happen-huge-chinese-military-build-up-filmed-on-hong-kong-border-as-all-flights-cancelled/ar-AAFK1qj?ocid=ientp

China is going to go full Mao to stop Hong Kongers from giving the proletariat any ideas....

[BearyBear]

6 minutes ago, Majorpain said:

http://www.msn.com/en-gb/news/uknews/something-extraordinarily-bad-is-about-to-happen-huge-chinese-military-build-up-filmed-on-hong-kong-border-as-all-flights-cancelled/ar-AAFK1qj?ocid=ientp

China is going to go full Mao to stop Hong Kongers from giving the proletariat any ideas....

This will not end up well...

Btw. how was HK under British rule as I didn't really care..? Did they have any protests or were just happy...?

[JMD]

2 hours ago, sancho panza said:

@JMD

I designed a system based on the Glasgow Coma Scale to try and help me sift through large amounts of companies.Obviously this is heavily DYOR,but I score them on their charts/profitability/balance sheet/FCF/sector-1 is poor value/high risk through 3 average to 5 for excellent value/low risk.Score is from 25.

Obviously,sectors vary in terms of financials eg utilities carry much more debt,so the parameters are fudgible,hence don't place too much on them,but it may give you an idea how I've sifted them.

Also,some companies have a revenue split that may include some non core sales eg Freeport mainly sells copper but often included in XAU/GDX etc.I exclude companies like Rio/BHP as they form part of blue chip portfolio elsewhere

If a chart isn't longer than 5 years,I normally score it a 3 unless it's clearly high/low risk

 

For potash,I went through component parts of Soil ETF.I genereally only consider anything above 17.I aslo tend to exclude anything that gets a 1 in any section.

Yara 17,Mosaic 17,Nutrien 18,Incitec 19,Israeli Chem 17,SQM 18,K+S 17,Interpid 17

After I've narrowed them down,I take a closer look.

 

Thank you SP, very generous of you to take the time to share this.  

 

I do have a follow up question... To filter out the 'bad companies' and reveal the good, do you use any sites like the one below? Or do you manually collate your data?

I just did a quick search so this is not a good example as its narrowly focused on the Nasdaq and not configurable.

https://www.nasdaq.com/symbol/ipi/guru-analysis/fool

I guess its well worth paying for a subscription based service to get all the bells and whistles - but probably only worth the fees if you are a regular trader.

So I was wondering - are there any inexpensive (free) online tools/calculators that can be used to help discover the type of reflation stocks discussed here on this thread? I'm thinking one that had some configurable metrics for say analysing debt/cash flow/balance sheet/etc... or is this asking too much; I assume harvesting all the info. from the company reports would mean there would have to be a charge made for all the work involved?   

[A_P]

3 hours ago, sancho panza said:

It's hard to track returns.As per my South African family,in dollar terms,they've been destroyed.

If you define everything in sterling terms it's easy to asses,but there's a chance you may be focusing on the worng thing

I take a long term view.We had an amazing 90's,00's,average last ten years.

With my short term trades,I really don't worry about my returns unless I'm clearly losing money trade after trade.Getting too ensanred in worrying about annual retunrs can affect your risk appettie unevenly.

I prefer to focus on reflecting on what we've done,what went right,what went wrong etc.

 

 

quite an interesting response, not what i would have expected given your trading and analysis you do. So do you not track your dividends at all? 

@Harley if you don't mind asking what do you monitor as i get the impression you would be one who would go to great lengths and have some sophisticated spreadsheets  

I'm capturing dividend/income from shares, pref shares/bonds plus a ftse all share income fund i hold. I like this as I can see the income building. Plus from April of this year I started capturing overall for all my portfolios with the majority being accumulation funds, trailing investor return (money-weighted return, internal rate of return) and trailing portfolio return (time-weighted return, comparable return)

[Majorpain]

1 hour ago, BearyBear said:

This will not end up well...

Btw. how was HK under British rule as I didn't really care..? Did they have any protests or were just happy...?

Protests were banned.

[BearyBear]

24 minutes ago, Majorpain said:

Protests were banned.

Really..?

Ups... 

 

[Harley]

2 hours ago, A_P said:

@Harley if you don't mind asking what do you monitor as i get the impression you would be one who would go to great lengths and have some sophisticated spreadsheets  

Oh dear, that obvious! 

I've tried it all and and am biased to the less is more side of things.  However, music to your ears given your recent post, I have one main spreadsheet which analyses the value of each holding in each account by asset class!

i subdivide accounts by floor and upside.  That way I know my asset allocations in total, by floor v upside, and by individual account.   I adhere to the Permanent Portfolio allocation for my floor so can see say my bond allocation across all floor accounts (e.g SiPP and NS&I).  I also analyse each account holding so I can control the percentage in each investment to control risk.

I update the spreadsheet as and when necessary but at least quarterly when I take snapshots of this data and plot summary data to see overall trends.  I look at my spreadsheet and the transaction data for the main accounts each weekend when I review the weekly data for all stocks on my watch list.  I have to update the spreadsheet if I get a buy signal for a stock to determine how much to buy to stick to my allocation rules.

I don't update my spreadsheet with trades (just the account balance) but log into the account weekly for their teview. Trades are on weekly data too.

I download bank statements to a spreadsheet, reconcile to receipts and analyse expenditure for control and forecasting purposes.   

I do a big review at the end of the tax year, seeing as I have to collate the data anyway.

So two spreadsheets plus a load of tax calcs and ad hoc analyses.

[Harley]

44 minutes ago, Harley said:

.....I've tried it all and and am biased to the less is more side of things.....

So as not to disappoint, I have some amazing spreadsheets from a while back which use amazing stuff to work out how much I need for retirement, etc.  A financial plan.  That tells me how much risk I need to take to retire (the amount needed coming from my expenditure forecast spreadsheet).  No-one seems to look at it that way, going for crude equity:bond split according to your age rules, etc.  I know my required floor and upside returns so can match those to risk appropriate investments.

[Noallegiance]

In other news, the US 2YR/10YR yields have not only caught parity today, but the 2YR yield has shot past the 10YR by 12 basis points. Three days ago it was 10 basis points the other way round.

Apparently, this inversion has correctly preceded every recession, market crash and depression without fail. Apparently.