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Credit deflation and the reflation cycle to come.


DurhamBorn

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3 hours ago, MrXxxx said:

Blimey, just as I was thinking I understood this financial malarkey (after lots of reading!) and was ready to put some `skin in the game` you highlight there is so much more to think about!

I was particularly interested in this statement, can you expand....do you mean a broad, index tracker ETF will be good as they will have greater liquidity over single shares OR the opposite?...also, if the latter, can the provider not split the ETF into individual shares in times of trouble and vary the components (or their weightings)?

Oh dear, please don't do or not do anything based on my ramblings!  DYOR, etc, etc.  The thing about malarkey is you never quite understand it!  I guess that's why it's malarkey!

Anyways, to clarify, I was highlighting a risk raised by Jim Puplava (Financial Sense) and co that there are a limited number of ETF providers who account for a large part of the market so who would they sell to if lots of people want to pull out of their ETFs at the same time (I guess a bit like the current Woodford problem, in terms of market liquidity issues).  Not that I don't own ETFs personally (I do!), just I like to spread the risk so am ramping up my individual share holdings (especially in my income portfolio).  I don't know if they can split up and sell the shares individually, etc.  The other reason I like to own some of the individual shares is I had one ETF that was a bit of a rag bag which seemed to provide yield at the expense of capital value.  Not their fault, just the ETF was based on mirroring the index it followed which included a few large dogs.  Index trackers have done well for a long time but that may, or may have already changed, so vigilance seems prudent.  Also, the premise of this thread leads to concerns about company cash flow, borrowing levels, etc and that would argue for a more granular approach to selecting investment opportunities.

But DYOR and make your own decisions please!  I guess there is no silver bullet so it's whatever we each feel comfortable with.

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10 hours ago, DurhamBorn said:

They will probably move it to 8 years before state pension age so 60.Probably not for a good while though.They already announced it going to 58 in 8 or 9 years,but havent put the legislation in yet.If things stand i should have 5 months to go into draw down at 55 before it goes to 58.Unless they taper,but last time it was a cliff edge when it went from 50 to 55.

Hmm, bit worrying. Although it was a cliff edge did they give much notice so that people a couple of years away didn't have to drastically change their plans. I'm four years away from 55, be very annoyed if they suddenly tried to make me work longer - especially as they're busy giving all my work to anybody cheaper from abroad.

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I've just been listening to the MSM this morning and think I should warn you all there's now talk of a global recession, gold has started going up in price, and bonds and sterling are reacting.  The Indicies were even down yesterday.  When was the last time that ever happened?   First time I heard all this from the MSM.  We should be fearful, start paying attention, and catch up.  I'm sure it's got nothing to do with politics (Brexit), especially as these are the impartial smart people.  You all really should spend less time on silly internet forums and be listening to the MSM instead.

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18 minutes ago, Harley said:

Oh dear, please don't do or not do anything based on my ramblings!  DYOR, etc, etc.  The thing about malarkey is you never quite understand it!  I guess that's why it's malarkey!

Anyways, to clarify, I was highlighting a risk raised by Jim Puplava (Financial Sense) and co that there are a limited number of ETF providers who account for a large part of the market so who would they sell to if lots of people want to pull out of their ETFs at the same time (I guess a bit like the current Woodford problem, in terms of market liquidity issues).  Not that I don't own ETFs personally (I do!), just I like to spread the risk so am ramping up my individual share holdings (especially in my income portfolio).  I don't know if they can split up and sell the shares individually, etc.  The other reason I like to own some of the individual shares is I had one ETF that was a bit of a rag bag which seemed to provide yield at the expense of capital value.  Not their fault, just the ETF was based on mirroring the index it followed which included a few large dogs.  Index trackers have done well for a long time but that may, or may have already changed, so vigilance seems prudent.  Also, the premise of this thread leads to concerns about company cash flow, borrowing levels, etc and that would argue for a more granular approach to selecting investment opportunities.

But DYOR and make your own decisions please!  I guess there is no silver bullet so it's whatever we each feel comfortable with.

ETFs generally hold a direct interest in the stuff concerned (might be the stock itself, might be derivatives of).  As such, if there is an outflow they'll just sell the underlying stuff to meet the outflow.  This is different to 'ordinary funds' where there is a fixedish number of shares -- in this case significant outflows result in the fund trading at much less than book.

The trouble with ETFs is if the underlying guarantor (or derivative supplier) goes bust or otherwise stops trading -- in this case the ETF will 'stop working' even though the underlying stuff is sort-of-okay (or, rather, the underlying might be down 5% but the ETF stops trading).

I had this happen to a small position (£500 or so) I held in 2008 -- cotton ETF I think -- where the market was fine but the ETF stopped trading.  This was a AIG related issue.  It eventually came back online (week or so IIRC), but it taught me an important lesson in counterparty risk.

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16 minutes ago, Starsend said:

Hmm, bit worrying. Although it was a cliff edge did they give much notice so that people a couple of years away didn't have to drastically change their plans. I'm four years away from 55, be very annoyed if they suddenly tried to make me work longer - especially as they're busy giving all my work to anybody cheaper from abroad.

Definitely on my mind as well. I'm 2.5 years off hitting 55 (unless I keel over before then - working too hard at the moment! Hence the reason for rarely posting). All of my pension monies currently in a cash SIPP which I have just shifted over to James Hay and will be dabbling in some shares and maybe a little bullion. When I hit 55 I am going to immediately draw down 25% tax free. Retirement plan currently mid 2023 (when I'll be 56). Big question - do I trust The Man and assume I can draw down on a yearly basis thereafter and avoid too much tax or will they change the rules of the game? Presumably the signals will be there over the next couple of years. 

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16 minutes ago, Harley said:

the other reason I like to own some of the individual shares is I had one ETF that was a bit of a rag bag which seemed to provide yield at the expense of capital value.  Not their fault, just the ETF was based on mirroring the index it followed which included a few large dogs.  Index trackers have done well for a long time but that may, or may have already changed, so vigilance seems prudent.

Selecting individual shares is fraught with similar issues.  

14 minutes ago, Harley said:

I've just been listening to the MSM this morning and think I should warn you all there's now talk of a global recession, gold has started going up in price, and bonds and sterling are reacting.  The Indicies were even down yesterday.  When was the last time that ever happened?   First time I heard all this from the MSM.  We should be fearful, start paying attention, and catch up.  I'm sure it's got nothing to do with politics (Brexit), especially as these are the impartial smart people.  You all really should spend less time on silly internet forums and be listening to the MSM instead.

Not good for your health or wallet. Lets not forget the FTSE All share was up 15% in the first severn months not included divs. Sitting on the fence back in 2016 could have been a costly mistake.

https://www.bloomberg.com/search?query=global recession

https://www.zerohedge.com/search-content?search_api_fulltext=global+recession&sort_by=search_api_relevance

https://www.bbc.co.uk/search?q=global+recession

image.png.0e99dad3969698809c04f26e1ffc287d.png

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27 minutes ago, dgul said:

ETFs generally hold a direct interest in the stuff concerned (might be the stock itself, might be derivatives of).  As such, if there is an outflow they'll just sell the underlying stuff to meet the outflow.  This is different to 'ordinary funds' where there is a fixedish number of shares -- in this case significant outflows result in the fund trading at much less than book.

The trouble with ETFs is if the underlying guarantor (or derivative supplier) goes bust or otherwise stops trading -- in this case the ETF will 'stop working' even though the underlying stuff is sort-of-okay (or, rather, the underlying might be down 5% but the ETF stops trading).

I had this happen to a small position (£500 or so) I held in 2008 -- cotton ETF I think -- where the market was fine but the ETF stopped trading.  This was a AIG related issue.  It eventually came back online (week or so IIRC), but it taught me an important lesson in counterparty risk.

OEICs create and destroy shares based upon investor inflows and outflows. If the OEIC components are listed and liquid this isn't a problem, the OEIC will sell some of its components to meet outflows and destroy the units. The issue comes (as we've seen with 'Woodford Equity Income' and property funds) when the assets are not liquid, such as unlisted firms and property - the OEIC needs to sell these to meet outflows which becomes a problem when it needs to do it quickly due to higher than usual outflows. ETFs operate in the same way except they are traded on a stock exchange.

An Investment Trust has a fixed number (relatively, they can create new shares but in the same manor as a PLC) of shares, high investor selling of the IT can lead to its share price being lower than its NAV (again Woodford provides us with a nice example with his 'Woodford Patient Capital Trust'). The opposite can happen if the Trust is in high demand the share price can be higher than the NAV - the trust is trading at a premium.

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54 minutes ago, dgul said:

I had this happen to a small position (£500 or so) I held in 2008 -- cotton ETF I think -- where the market was fine but the ETF stopped trading.  This was a AIG related issue.  It eventually came back online (week or so IIRC), but it taught me an important lesson in counterparty risk.

#MeToo.  A Commodity ETF and AIG.  Held on to it for years but it never recovered much.  Taught me to take care too.

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41 minutes ago, Sasquatch said:

Definitely on my mind as well. I'm 2.5 years off hitting 55 (unless I keel over before then - working too hard at the moment! Hence the reason for rarely posting). All of my pension monies currently in a cash SIPP which I have just shifted over to James Hay and will be dabbling in some shares and maybe a little bullion. When I hit 55 I am going to immediately draw down 25% tax free. Retirement plan currently mid 2023 (when I'll be 56). Big question - do I trust The Man and assume I can draw down on a yearly basis thereafter and avoid too much tax or will they change the rules of the game? Presumably the signals will be there over the next couple of years. 

Only thing I think we can rely on is that they won't do anything that pisses off too many people in one go due to losing votes. Once you've started drawing your pension I reckon you'll be safe. I intend drawing my down at the tax allowance rate each year so I pay almost no tax. To change that they'd have to change the tax allowance for everybody or tax specifically pensions. Can't see them doing that as they'd lose millions of votes.

I've only recently started putting money into a SIPP, most of my savings are in other forms. It always put me off because of the constant twatting around by the Government with pensions, constantly seeking advantage. Only doing it now because I'm tired of paying loads of tax and I can start getting it back in a few years.

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Crikey, IBTL still storming ahead. Every day it rises a percent or two. Been thinking about taking profits for a while but I'm glad I haven't yet. If the fed go all smashy on interest rates then they could gain considerably more.

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reformed nice guy
4 hours ago, spygirl said:

I ant call tis at all.

Ive be chatting to Americans for ~25 years thru work. Chit chat always picks up failings - either layoffs, slowdowns or people going nuts for housing.

Im not getting any of the normal stuff youd expect - slowdown in employment or too much money in housing.

Theres the massive noise by QE/ZIRP, as well as Trumps tax cuts.

Seeing thru them, I see an economy thats still growing.

The US has reached a stage where a lot of 55+ have dropped out - willingly or unwillingly (health - they a lot of fat bastards, or opiods).

The US has put hte brakes on allowing floods of migrants to arrive.

Besides, the bulk ofthe migrants the US has picked up are, frankly, useless.

I waiting to be proved wrong but it doesn ot feel right.

Again, the effect of Trumps tariffs on China, which has took a *huge* number of jobs..There's been a huge change in mindset to US companies -they are looking to bring a lot of stuff away from coubntries that are perceived as threats un American.

Go back 20 years and the CxO could nto wait to shuft jobs abroad - some valid, some invalid.

Now the tone ofthe country is they are seen as traitors/non-American. Bits of this are CHina, as the US business have given up on it starting to consume.

 

 

To add further anecdotal evidence, I have family in America.

One is early 30s, divorced with a kid. He took 2 months off work to travel (Europe) and walked into a new job upon returning with a pay rise and working from home on a Friday. California, not particularly highly educated.

Another is early 60s. Tried to retire a few years ago but they threw money at him. Supposed to be retiring this year but hasnt done so yet. Works in oil, travels all over US.

Mid 20's female, married, no decent qualifications. Husband is an accountant, they moved to Texas and she doesnt have to work.

Early 30's female, recently married + kid, moved Arizona to Texas. Husbands job is so good that she doesnt think she will have to work again.

The reason that I add the above is that I havent heard equivalent here in the UK.

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1 hour ago, Starsend said:

Crikey, IBTL still storming ahead. Every day it rises a percent or two. Been thinking about taking profits for a while but I'm glad I haven't yet. If the fed go all smashy on interest rates then they could gain considerably more.

Yep,gold and those bonds in sterling have been fantastic.Iv been selling though the last few weeks everything thats done so well and im slowly buying stocks that are getting smashed,but only in certain areas.Someone should send this thread to the MSM xD.Lots of people throwing the towel in on a lot of sectors (telcos for instance),they are seeing recession now (late as usual) but dont see the reflation coming soon,leads and lags,always leads and lags B|

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2 hours ago, Harley said:

I've just been listening to the MSM this morning and think I should warn you all there's now talk of a global recession, gold has started going up in price, and bonds and sterling are reacting.  The Indicies were even down yesterday.  When was the last time that ever happened?   First time I heard all this from the MSM.  We should be fearful, start paying attention, and catch up.  I'm sure it's got nothing to do with politics (Brexit), especially as these are the impartial smart people.  You all really should spend less time on silly internet forums and be listening to the MSM instead.

Im selling them some of mine dont worry xD.

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5 hours ago, A_P said:

Are you not the pink MrXxx?

Pink MrXxxx?...sorry, not 'with you'?

5 hours ago, A_P said:

This was discussed quite early on in the thread if iirc.

Was it?...where?...Like to show me.....I have been reading this thread from the beginning and I don't remember seeing it (or Harvey's statement early on in the thread!).

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2 hours ago, Harley said:

Oh dear, please don't do or not do anything based on my ramblings!  DYOR, etc, etc.  The thing about malarkey is you never quite understand it!  I guess that's why it's malarkey!

Anyways, to clarify, I was highlighting a risk raised by Jim Puplava (Financial Sense) and co that there are a limited number of ETF providers who account for a large part of the market so who would they sell to if lots of people want to pull out of their ETFs at the same time (I guess a bit like the current Woodford problem, in terms of market liquidity issues).  Not that I don't own ETFs personally (I do!), just I like to spread the risk so am ramping up my individual share holdings (especially in my income portfolio).  I don't know if they can split up and sell the shares individually, etc.  The other reason I like to own some of the individual shares is I had one ETF that was a bit of a rag bag which seemed to provide yield at the expense of capital value.  Not their fault, just the ETF was based on mirroring the index it followed which included a few large dogs.  Index trackers have done well for a long time but that may, or may have already changed, so vigilance seems prudent.  Also, the premise of this thread leads to concerns about company cash flow, borrowing levels, etc and that would argue for a more granular approach to selecting investment opportunities.

But DYOR and make your own decisions please!  I guess there is no silver bullet so it's whatever we each feel comfortable with.

No worries Harley (DYOR)...I always do, and accept that we are all 'Big boys & girls' on here, so are personally responsible for out own decisions (and losses)...thanks for the clarification and the Puplava mention, I will go and check out his viewpoint; I often hear people repeating ETF's=bad, but often not explaining why. Splits=yes (as mentioned/confirmed later by someone else).

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10 minutes ago, DurhamBorn said:

Yep,gold and those bonds in sterling have been fantastic.Iv been selling though the last few weeks everything thats done so well and im slowly buying stocks that are getting smashed,but only in certain areas.Someone should send this thread to the MSM xD.Lots of people throwing the towel in on a lot of sectors (telcos for instance),they are seeing recession now (late as usual) but dont see the reflation coming soon,leads and lags,always leads and lags B|

Any particular stocks that you think are particularly good value at the moment?

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10 minutes ago, MrXxxx said:

Pink MrXxxx?...sorry, not 'with you'?

Was it?...where?...Like to show me.....I have been reading this thread from the beginning and I don't remember seeing it (or Harvey's statement early on in the thread!).

I won't dig through the the thread but it has been dsicussed a few times.

MrXxx - Here - https://www.dosbods.co.uk/profile/417-mrxxx/

Stopped visiting the day you joined.

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leonardratso
10 minutes ago, A_P said:

I won't dig through the the thread but it has been dsicussed a few times.

MrXxx - Here - https://www.dosbods.co.uk/profile/417-mrxxx/

Stopped visiting the day you joined.

what kind of witchcraft is this? Too many x's here.

was just having a doss thru HL, came across this when looking at merdian silver fund performance;

' This fund does not feature on our Wealth 50 list of what we believe are the best funds in each sector. If a fund is not within our Wealth 50 this is not necessarily a recommendation to sell. However, if you are thinking of adding to your investments we believe Wealth 50 funds are superior alternatives. '

I think  woodfords in that camp now.

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15 minutes ago, MrXxxx said:

No worries Harley (DYOR)...I always do, and accept that we are all 'Big boys & girls' on here, so are personally responsible for out own decisions (and losses)...thanks for the clarification and the Puplava mention, I will go and check out his viewpoint; I often hear people repeating ETF's=bad, but often not explaining why. Splits=yes (as mentioned/confirmed later by someone else).

I would look at JPs holdings as a broker as well. if memory serves me correctly when he was mentioned a year or so ago and found he was balls deep in them. If it's the same guy I'm thinking off. In line withthat I tend to find it goes, ETF's are bad if I don't like the holdings or sectors, ETF's are good if they do :D

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4 hours ago, Starsend said:

Crikey, IBTL still storming ahead. Every day it rises a percent or two. Been thinking about taking profits for a while but I'm glad I haven't yet. If the fed go all smashy on interest rates then they could gain considerably more.

B*gger!

Balanced portfolio, balanced portfolio, balanced portfolio, balanced portfolio, balanced portfolio, balanced portfolio,.....!

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3 hours ago, MrXxxx said:

.....I often hear people repeating ETF's=bad, but often not explaining why....

Oh, a little bit of this and little bit of that isn't so bad!  But a read of an ETF prospectus, apart from being torture, can raise a few potential concerns (like the chain of third parties as mentioned).  I'm just a tad worried about institutional risk, etc as we enter a rough patch so am cautious about such things.  I like to think I can do better than an ETF in some situations, where the holdings are accessible, but there are situations and a degree of risk tolerance that make a bit of such things OK for me.

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My ISAs just texted me to warn each holding is being taken out to the woodshed in turn, my SiPP is complaining about a lack of bonds, and my trading account is asking why I cancelled my FTSE short!  Not much luv out there.  I tried to explain you can't buy cheap if the price don't come down but they're not happy.  I'm trying to organise a group hug!

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1 hour ago, Harley said:

B*gger!

Balanced portfolio, balanced portfolio, balanced portfolio, balanced portfolio, balanced portfolio, balanced portfolio,.....!

I thought you were running HB's perma portfolio, eg 25% of bonds and 25% gold. You should be laughing your way to the bank right now. Or were you reluctant to use bond etf's?  

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