Credit deflation and the reflation cycle to come.

[No Duff (troll)]

59 minutes ago, ForeverBlowingBubbles said:

One thing i don't quite understand....

Well asked as I have all the same questions and concerns.

[No Duff (troll)]

1 hour ago, DurhamBorn said:

The reason i hold IBTL in my portfolio is as a hedge.If a deflationary credit event happens the rush into the dollar and US long dated bonds will be huge.The long end has the liquidity.It could see 30% gains and perhaps 50% for a sterling investor.If my equities go down 40% and IBTL kept me level,through a huge market correction thats a fantastic position.

As ever its part of a balanced portfolio.I also hold a good sized position in gold miners.Shorter dated bonds dont interest me,mostly as too much messing around from the CBs there,but they would do well in a credit deflation,just not as well as longer dated.

Im not sure on currencies at the moment.Iv done very little work on them lately as they all hit my targets and i used those targets for making dollar asset buys (like IBTL) though there might be some short term Euro strength.

However from the macro work we have been doing  we see the Euro zone as a disaster and one that will be hit very very hard in a debt deflation,much harder than the US.I wouldnt hold Euros myself.Sterling,US$ and PMs.

Its a very personal thing,and every person is different,but as a pretty easy answer to anyone ide say have some PM exposure.

Yes,and its balanced so should protect most portfolios.

Nice to see your growing (written) emphasis on overall balance and the potential upside mitigation some of these asset classes might offer.  Plus a solid answer in terms of drivers and possible numbers/orders of magnitude. 

It's almost like preparing a trap and waiting for it all to come to you - so much better than chasing what's hot today, especially for those who have been on the sidelines and need to get back in.

[No Duff (troll)]

FYI, new NS&I bonds now available.  3 to 5 years and 1.5% to 1.95% return.  DYOR.

[Funn3r]

@C-gull I agree with Durhamborn's thoughts and I would do similar in your position. I would stay liquid in cash ready to buy a house when the opportunity presented itself, but with a bit of hedging just in case. A lot depends where you are on the age spectrum though. 

I know it's annoying having to suck up pathetic interest rates paid out to you by a savings account but the boot will be on the other foot if you can pickup somewhere nice to live for a reasonable (as opposed to today's unreasonable) price. 

[A_P]

7 minutes ago, No Duff said:

FYI, new NS&I bonds now available.  3 to 5 years and 1.5% to 1.95% return.  DYOR.

I may be mistaken but I thought I read recently they slashed the £1m limit down to £10k or something like that. If that's the case hardly worth the hassle for locking it away for 3+ years.

[Funn3r]

Still unsure about IBTL/IDTL v.  some other dollar exposure. I have a dollar current account which doesn't pay any interest but is free and at the moment I am bunging dollars in there. 

What worries me is the dates of the bonds in IDTL. Do I expect 30-day bonds to default? No. But 30-year bonds who knows. Does the fact that you are holding treasuries in this sort of wrapper fund mean you can just buy and sell whenever you want? 

[No Duff (troll)]

16 minutes ago, Admiral Pepe said:

I may be mistaken but I thought I read recently they slashed the £1m limit down to £10k or something like that. If that's the case hardly worth the hassle for locking it away for 3+ years.

£10k here £10k there, a bit for me, a bit for her.  Soon adds up Moneybags! ☺️

PS.  Early withdrawal with penalty.

PPS.  True, not for everyone though.  DYOR.

[harp]

56 minutes ago, No Duff said:

Totally agree on that and being mortgage free. 

Re. housing, I bought cheaper where I wanted to live and rented for work.  What the accountants call "matching".  Brilliant move given I quit the job a few years later.

I created a new portfolio asset class some time ago called "hard assets" for these very reasons.  I did not think about the leverage potential to cover other lossess so that's a nice thought.

I've also created an income generating portfolio class of screened (FCF, payout ratio, etc) shares.  Moving from ETFs to holding the top 3 of each instead.  Bonds are problematic, except the NS&I ones.

Then just cash (e.g. NS&I) and foreign currencies and a few investment trusts (as a bit of competition) and a trading account (dormant as I now find this element a bit of a bore and my life more productive elsewhere).  

The trick I found to all this is to visualise your end state (or series of states), such as retirement, and work backwards to now, doing the sums as you go.  And when I say "visualise" I mean the whole thing, not just the money.  Just like doing a financing plan at work - you plan to finance something specific, not just do a plan.  Only then can you have the "right" portfoilo.  People ask what portfolio they should have rather than what portfolio they really need.  A subtle but profound difference.  And that sort of stuff about a bond:equity split to match your age - pure cr*p in my opinion, unless your analysis happens to lead you there.

There are no get quick schemes or any way to avoid some work.  Thankfully, some great things out there like Monevator, Retirement Cafe, Lemon Fool.  The key is not to get bogged down in the details. Get the asset classes and allocations right and you're almost there - the specifc stocks add relatively little on average (that's more akin to trading).

The planning journey is the most important part as it educates you to all the moving parts and shows up the falsehoods you are probably harbouring.  

Oh, and I like a bit of offshore (non UK) where possible just to mitigate a bit more risk.

+1
Fail to plan, plan to fail...

[A_P]

1 minute ago, No Duff said:

£10k here £10k there, a bit for me, a bit for her.  Soon adds up Moneybags!

"£10k here £10k there, a bit for me, a bit for her"....http://bankaccountsavings.co.uk/

Hardly moneybags, just saying if NS&I has/had a USP of protecting £1m in their fixed bonds, however, now are only offering £10k seems they've shot their main USP down. Each to their own....DYOR as you say. Not my cup of tea though

[sancho panza]

On 10/06/2018 at 13:18, Castlevania said:

I may be wrong, but I thought this was a policy response to the housing crisis? Build student flats (which can be built to a much lower standard in terms of space, build quality etc than proper flats and with no need for social housing provision, so cheap). Get all the students to move into them and free up the old student housing for actual families. It seems like a good idea to me.

My hometown is a student town, and following a big push to build more purpose built student accomodation, a lot of the housing in the town which previously had accomodated students were empty. The landlords were very vocal in lobbying for asylum seekers to move there. A few did. There’s still a lot of empty lets though.

That was what happened in Leicester when the students got rehoused and an area I'd lived around a long time became somewhat more 'edgy' to live in,to the extent that we left.I'm the son of an immigrnat married to an immigrant,so I'm not against immigration.But what's happened to chunks of our inner cities has to be seen to be believed.

Our politcal class have a lot to answer for and why 495 of Leicester -allowing for 30,000 students-voted Leave.

On 10/06/2018 at 14:13, Wheeler said:

I was playing around on the FRED (St Louis Fed) website trying to understand how GDP, money supply and velocity, and interest rates interacted when I noticed the following:

1. If you look at the difference between 10 year and 2 year treasury bond yields then the 10 year ones drop below the 2 year just before the start of a recession. I think this is what is referred to as a yield inversion,  a term I'd heard before but not really understood what it meant.

2. In the other recessions since 1980 the velocity of money increased prior to the recession and fell during and after. The falls aren't apparent in the 1970 and 1974 ones though.

3. The velocity of money has been decreasing since the 2008 recession but hasn't bottomed out yet and the 10 year yield hasn't dropped below the 2 year one yet. 

My guess (and it is just that) is that we have another 9-12 months before the recession hits the USA.

I'd welcome any comments or corrections as I don't really understand this and I might be completely off track.

 

 

I think there's a danger using M1 velocity due to the fact that it doesn't include time deposits and other liquid assets that M2 does.M2 has had a couple of upticks but over the longer term it's never been lower-I've tried to copy n paste the chart but I can't.

Just to add velocity is a output/money supply as outlined in link.Big mistake of CB's psot 2008 was to assume that velocity would stay constant with money supply increases.Second mistake was to assume that people would spend more as interest rates were driven down.As I've posited on ToS, all they really achieved was to get the indebted spending more.The people they wanted to spend more ie the savers actually appear to have reined in spending somewhat.

You couldn't make it up.

https://www.google.com/search?q=how+to+calculate+velocity+of+money&ie=utf-8&oe=utf-8&client=firefox-b

 

https://fred.stlouisfed.org/series/M2V

1 in terms of yield inversion-we've had discussions before about how much we can trust this measure this time given the vast treasure chest of bonds that the Cb's are sat on.As you say though,the direction of travel is heading that way.

2 as mentioned bfore there's a slight uptick in M2 velocity over the last few quarters but I think the hsitorical low in M2 is of more significance.

I'm also wary of judging this recession by previous ones.As I've posted before there's a theory that there are two types of recessions-inventory and credit.In inventory recessions companies build too much and then sell it cheap.In credit recessions,we see decreases in broad money supply aas banks rein in credit.The last time we had a credit recession was the Geat Depression which featured a significant debt deflation and which features what has been called Fisher's paradox ie that the more debt is paid down,the more people/companies default.

3 It'll be interesign to see what happens to M2 over the next year as to whether it has bottomed.

 

On 10/06/2018 at 17:03, DurhamBorn said:

Money supply growth has been slowing, the yield curve is not far from inverting, the Fed is tightening, loan growth is slowing, consumer credit defaults are rising and credit spreads, though still historically very low have turned upwards.These are all late cycle signals and that a recession will follow. With the leverage in the system (including derivatives), the economic and market reversal are both likely to come very fast when they finally arrive. In other words, we can go from optimism to pessimism and from a consensus scenario of steady as she goes to gloom in a hurry. We might yet see the biggest bear market since the war.

After that i think a wealth creation cycle will begin.The right assets will make people big profits.There is a chance though we go straight to reflation.I see it as unlikely,but possible.Its why im long PMs and their miners now.

Picture paints a 1000

On 10/06/2018 at 19:30, RedCoat said:

Great to see this thread move here and continue to flourish, I have been lurking (with the occasional post) on the other site for a few years now but agree that a topic like this requires people to be able to speak freely and reply at will. Many thanks to everyone who has contributed so brilliantly.

@DurhamBorn @sancho panza (and anyone else with an opinion!), I recall reading on the older thread, Sancho, your goal portfolio for a few years into the reflation cycle, and I found this very informative and useful. Similarly I was interested to see, DB, you stating you were ~16% in PM miners with no plans to increase this. I understand that you are very much concerned with wealth preservation as well as profit, but I am wondering what either of you would suggest in terms of a portfolio weighting for those at the very start of both their working and investing life? Go balls deep in PMs, their miners and then also heavy on big oil/telecoms when the time is right? I guess I'm asking what you would do if you were 20 again or advising any of your kids that age!

As said previously,I'm in for the debt deflation,I'm unsure on what will follow and when.Ultimately 'the last credit recession was ended after ten years by WW2'-I'm misquoting Steve keen there but he said something similar.

I always try and buy value.At the moment there appears little of value.A sensible idea might be to split your pot into 25 portions.

Currently good value stocks imho

Centrica,Vodafone,Telstra,SIng tel,Nat Grid(I don't own but will start averaging in under 750 but I could live with them now),Nutrien,Goldcorp,Barrick.Depending on your position it might be worth using the ETF's to spread your risk in an asset class-I don't buy ETF's but if I was starting out,I think they might make a sensible choice.

With the rest I'd keep my powder dry and wait for some value and keep learning.Eg BP-we own-but there's no way I'd pay over £4-50 to add any more.

re posting old portfolio

Key Sectors

 

Big oil/Energy-10% weighting
Shell, BP, ENI, Total, Statoil, Repsol

Utilities-15%-political risk could create some absolute bargains. 
Centrica, National Grid, SSE, United Utilities, Engie, Enel, Iberdrola, PPL, Veolia

PM's
Goldies 15%-with a focus on those with scale and with ops in relatively stable jurisdictions, and taking a leveraged punt on the spot price via the SA miners
Barrick, Newmont, Yamana, Goldcorp, Anglogold Ashanti, Kinross, GoldFields, New Gold, Novagold, El Dorado, SIbanye
Silvies-5%
Pan American Silver, Pretium Resources, Hecla Mining, Couer Mining, Tahoe Resources, First Majestic.
Platinum-2% -inherent political risk in Zim.
Imapala, Amplats. 

Telecoms-25%-some of these are already a bit beat up,scope for this weighting to be raised. Efficient way of accessing abstract markets.
Vodafone, MTN Group, Sing Tel, Telefonica Germany, Telefonica Brazil Telefonica, America Movil, Telstra, China Unicom, Veon, Turkcell, AT&T, Verizon, Orange, SK Telecom, NTT Docomo (ADR), Swisscom ,

Big Pharma-8%-again using Pharma as a forex hedge and for divi's.
GSK, Roche, Novartis, Sanofi,

Potash/Fertilzers-4%
Nutrien (merged Potash Sask and Agrium), Mosaic,Yara Intl,

 

 

 

DYOR natch......

 

On 10/06/2018 at 20:05, DurhamBorn said:

If i was 20 again my main concern would be building up cash so i could take advantage of house price falls.The quicker you get a home paid for and live rent/mortgage free the better.I would start building a portfolio though as well,maybe 30% of savings,and with that id be looking to buy the most likely to gain from the cycle (and the most under valued at the end of this one).Id be going PM miners,telcos,certain energy stocks etc.Id still want a balanced portfolio,but balance across inflation sectors.

My personal investing i try to aim for 9% compounding minimum.Its amazing the returns you can get from that.If Vod increase their divi at 2% going forward they should return that.Centrica would have to increase theirs by 0.7% a year on average,so if no increases for 5 years year six going up 4% would do it.Iv always seen the return as dividend + dividend growth and considered the full cycle.5 years minimum,but more likely 8+.Of course dividend cuts change things.

 

Compounding is the key.The other night,I showed Mrs P the power of compounding at say 5%.Sorry to insult anyone's intelligence but when you see what you can do over 20 years it's empowering I think.She was most impressed.Obviously,the more expereinced you are then 9% is an incredible result.I'll invest some more of my day off creating a picture below

Worth noting that to make the first 50% on your inital stake takes 10 years,second 50% takes 6 years and then third 50% four years................allowing for a little leeway .

Key thing is,if you're invested in inflation adjusted assets,you'll hopefully retire comfortably.

5%                                   9%

Year 1 £100                   £100

Year 2 £105                   £109

Year 3 £110.25             £118.81

Year 4 £115.76              £129.50

Year 5 £121.55              £141.15

Year 6 £127.63              £153.88

Year 7 £134.01             £167.73

Year 8 £140.71             £182.83

Year 9 £147.75             £199.28

Year 10 £155.14          £217.21

Year 11 £163.50          £236.76

Year 12 £171.67          £258.07

Year 13 £180.25          £281.29

Year 14 £189.26          £306.4

Year 15 £198.72          £333.97

Year 16 £208.66          £364.03

Year 17 £219.09         £396.79

Year 18 £230.04        £432.5

Year 19 £241.54        £471.42

Year 20 @5% £253.67 with income of £12.68

Year 20 @9% £513.84 with income of £46.25

 

 

[No Duff (troll)]

12 minutes ago, Funn3r said:

......What worries me is the dates of the bonds in IDTL. Do I expect 30-day bonds to default? No. But 30-year bonds who knows. Does the fact that you are holding treasuries in this sort of wrapper fund mean you can just buy and sell whenever you want? 

True.  Plus ETFs offen loan their stock to third parties, especially bonds to banks who want to de-risk to meet their capital requirements!  Alternative is buying the bonds direct, even a ladder, but that's more of a US possibility.  Also, you can hold bonds to maturity unlike funds faced with redemptions.

[Yellow_Reduced_Sticker]

13 hours ago, DurhamBorn said:

Thats great to hear.I actually enjoy the frugal life and dont feel like im missing out on anything.Iv worked with people who had huge mortgages and worked every bit of overtime.Hated work and worked all hours so they could go on holiday for two weeks and dream all year about it.Iv just come back from my rounds to the supermarkets near me at reduction time,all within half a mile.£50 worth of top quality food from Sainsbury for £12.£20 worth from Tesco £5.With £5 from the veg bloke at the side of the road tomorrow we will eat fantastic,healthy meals all week for £22.

Anything needs doing on the house,time to learn,buy the things from Gumtree (garage door £30 not a scratch on it last thing) and do it myself.My little van is fantastic.£800 three years ago it cost,spent a total of £180 on it in three years.So £6 a week its cost up to now.£24 a month.Over the road spend £500 a month on their two lease cars.Never seen them in day light from October until March,out at work.

Since age 39 iv worked 3 to 5 hours a week for the tax allowance.When people talk about the pension age being pushed back and back i just laugh.I couldnt care less.I could carry on as i am now up until pension age if i closed my business tomorrow.I love investing and the security of that,but its not about the money,or what it can buy,its about time and freedom.This country is ran by the rich and elite to tax the middle,to give it to the benefit class,so it can then go up to the elite.That keeps the middle working forever,it keeps the rich rich and it stops the benefit class stealing the land back.The best defense against that for me was to opt out as quickly as possible while understanding the real drivers of an economy.

Whats coming will shock people to the core.This long cycle has made people think free money will always come.Benefits,HPI,MEWing,BTL etc etc.The destruction of leverage will wipe most of that away.The next cycle will be the first real reflation for 40 years,and most people will be so trapped by leverage that they can only suffer more and more pain through it.Only a very few,those liquid,and those invested in inflation loving assets will do well.Those going under through debts will be unable to buy anything.Those struggling to hold on (pretty much anyone with a 3+ x salary mortgage) wont understand whats hitting them.The irony is the most loved assets right now are the ones that will provide the most pain.The least owned and the most hated assets are the ones that will prosper.I just love how contrarian a cycle turn can be.

Just LOVING This..!

[sancho panza]

On 11/06/2018 at 10:12, DurhamBorn said:

If someone who goes to work 40 hours a week cant buy a two up two down terrace house (or rent one for less than 20% of their income)  your country and economy will collapse at some point.Of course what really happens is the market changes so that person can afford one,and thats exactly whats ahead.Everything else is noise.People buying a bubble prices stretching themselves to the limit on good salaries will be the worst hit.Its harsh as they work hard and cant pick and choose where they are in a cycle,but it doesnt change the facts.

Yep.

On 11/06/2018 at 10:36, macca said:

I hope your right.. I have friends that rent that think I’m mad.. live for today! But I see older people in poverty and don’t want to be struggling if I make it to retirement.. I also really want to leave my children in a better place than I find myself in.. So for them, I am very careful with money and I drill into them the importance of not wasting money on pointless material rubbish for a short term feel good hit! Getting a job with a return, not a 50k degree in something pointless.. 

I wish my parents had told me these things when I was growing up.. I missed the boat on cheap housing living for today, now I’m a parent I have greater responsibilities to ensure my children don’t do the same thing.. 

Also worth consdiering things like schooling etc adn the fact that if you leverage up and overpay for a house,you may end up losing it halfway through which would be equally disastrous.

Me and Mrs P rent a lovely house on a circa 3.5% gross yield in a good area.If we sensibly borrowed 2 times joint salary we'd be livng in the local warzone (well,maybe not,but not that far away)

I take the eldest Panza to Leicester market regularly to try and teach him some basics of trading commodities/qulaity vs quantity..He gets bored but he gets an ice cream with the savings we make.One day I hope he'll take over the reins and look after the family in his turn.My Grandad taught me that in each generation there will be at least one-we hope- with the ability to manage investments and that you have to focus control in their hands to survive.Hopefully,everyone will be able to but past experience taught him/me not.I'll be judged on my passing I guess in that respect.

23 hours ago, UnconventionalWisdom said:

This is what people I experience don't understand. They bought 15 years ago and have seen their house prices go through the roof. They say it would be best for me to jump straight in on an above average salary to buy a one bedroom flat. They can't comprehend that if all the money goes to fund bank debt, there's nothing left for the real economy. If things continue, there won't be any jobs left. 

I feel like a line Wolf in describing this in the non Internet world. Unfortunately, as you say, this collective assurance means relative high FTBers will jump in two feet forward to take on stupid levels of debt for a 2up 2 down. My colleague, mid 30s is doing this with his misses in the SE- it's like watching a car crash in slow motion. 

It's incredibly hard staying away from the herd but in the long term it makes an awful lot of sense.

 

That's why we all converge here in the spirit of freedom and learning and engae as we do.

I have friends as I've said who own cashflow negative BTL's, give me a blank look when I mention S24 and then lecture us on buying into the ponzi.Go figure...

17 hours ago, kibuc said:

Hi everyone,

Just popped in to thank everyone for this absolute gem of a thread, both on ToS before it went to dogs and as continued here. It's been an education I wish I had gotten at much earlier age, preferably instead of the periodic table and Polish interwar literature.

I have neither the skills to make even semi-accurate calls nor the discipline to act on them in a responsible manner, so I probably won't contribute much (if anything at all). However, should this thread move anywhere in the future, I hope someone will mercifully give me a ping.

I'm currently 100% in miners and enjoying the ride, with some major winners (Wesdome, First Majestic, Eldorado, Pretium) offset by sorry losers (Sibanye, Anglogold, Yamana). I have a significantly smaller pot than probably most of you guys, so I feel like I need to make bolder calls and not hedge against my own self if I intend to make this upcoming mess a truly life-changing event for me and my family.

You'd be surprised what you can contribute and probabaly know more than you realise you do.Everyone has their world and can relay what's happening on it in here.

16 hours ago, azzuri82 said:

Long-time lurker on Tos that read every page of the original thread over 3 days before landing here. Watching with interest as I figure out my next move. I'm 35, renting with partner and baby daughter and in the final stages of selling my business that's taken around 8 years to build.

Biz has been on a massive upswing as it relies on tourism, and the drop in the £ since the EU referendum has seen our turnover & profitability rise by 300% in 2 years, insane growth to manage, the last 2 years nearly killed me. I'm taking a well below BMV offer for the business as I just can't see how it'll be sustained (and due to very attractive 'entrepeneur's relief' tax rates of just 10%), hope to have around £500k in a few months to sit and wait and see what occurs over the next 2 years.

Hoping to just sit with most (80%) in cash/premium bonds, and the other 20% invest in shares/PMs.

Thanks to all for the enlightening read thus far.

 

 

Good time to sell.Biggest mistake I've seen small businesses make is not selling when they get offered a shedload.Keeping a share is a wise way tohedge any irrational boom hereafter.

[sancho panza]

14 hours ago, Admiral Pepe said:

I've been maxed out in premium bonds for 5 months, not won anything yet. I'll be pulling it out if I don't win anything on this next draw and park it in an easy access.

It's about the return of the money in a debt deflation,not the return on it.#the coventry #Hinkley&Rugby

13 hours ago, UnconventionalWisdom said:

One of my colleagues saw his house rise in value threefold so moved to a much bigger place and took on 2-3x the remaining mortgage debt a couple of years ago. Another colleague is about to do the same. I'm in disbelief that they haven't even considered that this could go wrong. All these years offered people the chance to pay off their debt quickly... Instead a lot (maybe most?) decided it's forever so loaded on even more. 

Utterly frightening,but that's what the CB's have created by distorting normal risk pricing.

[Yellow_Reduced_Sticker]

3 hours ago, DurhamBorn said:

Thats the sort of situation i see afly.50% in bubble areas,but more later in the cycle inflation adjusted.15%-30% in the expensive but not crazy areas then down more with inflation,and 10% to 20% in the cheap areas.

What needs to be remembered is those sorts of falls will make sure a lot of people are in negative/low equity and that in turn will make the re-mortgage hard.A lot will end up on SVR or whatever their bank will give them.

My guess is that pretty much anyone who used HTB is stuffed.

Indeed, and when it does happen that sponcy shit cameroon should be frogmarched to the guillotine!

[A_P]

1 minute ago, sancho panza said:

It's about the return of the money in a debt deflation,not the return on it.#the coventry #Hinkley&Rugby

Yep totally get that. Personally I would never stick my money in the likes of the Conventry etc. Having said that if HMG reneg on the FSCS, I think we will have bigger problems than worrying about £50k.  You won't see me scrounging around looking for the next cat to eat .

[sancho panza]

2 hours ago, No Duff said:

Please expand on that.  In your name?  If do, I've been considering the same but thought it could not be done or too expensive.  You can still do that?  Which broker?  All shares or just Centrica?  If not all, why only some and how did you choose?

There's only a few borokers doing Crest where it's held in your name.You can certificate FTSE100/250 cheaply.

Most shares these days are held in nominees which carries a risk,albeit small.

Just ask and pay the fee.
Foerign have to be held by Brokers.

[sancho panza]

3 hours ago, DurhamBorn said:

As at 9.13 the biggest riser on the FTSE is Centrica,the biggest faller is Barratt and the biggest faller on the 250 is Crest Nicholson.House builders now will be seeing the end of the cycle where input costs are still going up,but the prices they can get have stuck or are falling.Soon their working capital will start being stuck in houses that arent selling.If HTB wasnt there i think we would be seeing big falls already.

My Barratts short is still out of the money.

Berkely down £1...............Taylor Wimpey proceeding nicely.Long bear campaign ahead and I'm only putting a toe in the door.You thinking about it?

[Castlevania]

32 minutes ago, sancho panza said:

My Barratts short is still out of the money.

Berkely down £1...............Taylor Wimpey proceeding nicely.Long bear campaign ahead and I'm only putting a toe in the door.You thinking about it?

Are you short Berkeley? I saw the below tweet from Henry Pryor which did make me think of them. Multimillion pound central London flats, sold years in advance. What could go wrong?

https://mobile.twitter.com/HenryPryor/status/1005096834115821571

 

[kibuc]

I'm not sure about Help-To-Buyers being in a particularly dangerous position. Debt forgiveness on the equity loan part is pretty much written into it, so they have a solid 25% or 45% (London) cushion before they get into negative equity. In fact, it even makes me contemplate buying on those days when I'm down and feeling desperate.

 

I used to predict two waves of HTB sell-off:

1. Recent HTB buyers selling after the crash to nullify their equity loan

2. People who buy after the crash and 5 years later realize their equity loan is linked to RPI. Yikes.

The only problem I see with (2) is that the initial interest rate in Year 6 is set at paltry 1.75% so might prove not to be significant in the grand scheme of things.

 

Leveraged BTL-ers are a different thing, it gives me a warm feeling in my stomach just thinking about what's coming at them.

[sancho panza]

53 minutes ago, Castlevania said:

Are you short Berkeley? I saw the below tweet from Henry Pryor which did make me think of them. Multimillion pound central London flats, sold years in advance. What could go wrong?

https://mobile.twitter.com/HenryPryor/status/1005096834115821571

 

Not yet.BKG still in an uptrend to me but really feel like frontrunning my chart entry point with a small punt just for sh1ts and giggles.Which just goes to show how easy it is to ignore your own advice on trading discipline.I already did it on TW,which is strangely doing better than my Barratts punt where entry point is passed.

Shorting is risky business in my limited expereince.

Must get on twitter and follow Henry.

 

DYOR etc.

[NogintheNog]

2 hours ago, Admiral Pepe said:

2 hours ago, No Duff said:

FYI, new NS&I bonds now available.  3 to 5 years and 1.5% to 1.95% return.  DYOR.

I may be mistaken but I thought I read recently they slashed the £1m limit down to £10k or something like that. If that's the case hardly worth the hassle for locking it away for 3+ years.

Hi All. Just arrived from ToS. I have to say I think the above is a big deal!

NS&I is both a government department and an Executive Agency of the Chancellor of the Exchequer....

What do they know we don't?

[NogintheNog]

Harry calls out deflation @1:55mins.

"We still haven't seen the deflation because of QE."

[DurhamBorn]

2 hours ago, Admiral Pepe said:

Yep totally get that. Personally I would never stick my money in the likes of the Conventry etc. Having said that if HMG reneg on the FSCS, I think we will have bigger problems than worrying about £50k.  You won't see me scrounging around looking for the next cat to eat .

The FSCS scheme will be fine,the government would be fighting a deflation and will print.If its the end of a cycle with inflation at 15% though they wont be able to print.Thats why its the end of the next cycle that might prove a wipe out.

[DurhamBorn]

3 hours ago, Funn3r said:

@C-gull I agree with Durhamborn's thoughts and I would do similar in your position. I would stay liquid in cash ready to buy a house when the opportunity presented itself, but with a bit of hedging just in case. A lot depends where you are on the age spectrum though. 

I know it's annoying having to suck up pathetic interest rates paid out to you by a savings account but the boot will be on the other foot if you can pickup somewhere nice to live for a reasonable (as opposed to today's unreasonable) price. 

The best time to be in cash in when it pays the least.Bit of contrarian thinking there