Credit deflation and the reflation cycle to come.

[DurhamBorn]

3 hours ago, Funn3r said:

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? 

Yes,the liquidity is huge.I dont intend to hold them forever.I wouldnt want any once we finish this cycle.I see them as a hedge against a big credit deflation.

[DurhamBorn]

2 hours 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?

Iv dusted off my Cityindex account and im thinking about it.I reckon input inflation is still running up and prices have now stuck or are falling.Margins first to go down,then stock that wont shift followed by working capital problems.Their balance sheets are all still strong,but that can turn quickly.Crest Nicholson might be my first port of call balance sheet has about £24 million cash on it it think,thats low if things start to stick.

[Lavalas]

Is Cityindex a good place to investigate shorting? To be honest shorting sounds like it might be beyond my risk profile/budget but I’d like to learn, thank you.

[Lavalas]

I had wondered about the HDGE etf but we’re locked out of that one along with GDXJ Detc.

[DurhamBorn]

4 minutes ago, Lavalas said:

Is Cityindex a good place to investigate shorting? To be honest shorting sounds like it might be beyond my risk profile/budget but I’d like to learn, thank you.

It is,but i wouldnt advise anyone shorts anything unless very very experienced.They are leveraged products with costs.I very rarely use them myself.Im tempted by the house builders,but even if i did it would be a very small amount of my portfolio.Probably best we keep the idea of shorting anything off the thread in case people read it and then go off and open up shorts with 20x leverage 

[Cosmic]

14 minutes ago, Lavalas said:

I had wondered about the HDGE etf but we’re locked out of that one along with GDXJ Detc.

HL still not letting you get GDXJ? I've got some recently on AJBell, as well as GDX. Can't get SIL (Global X Silver ETF) though. May give them a ring about it as I have a few K uninvested in my ISA. Don't want to pull it out, as soon as things really kick off I'll need the allocation... hopefully this year!

[Inoperational Bumblebee]

16 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. 

Absolutely - I was most against taking on more debt when we started looking to move. Thankfully, the wife seems to trust my judgement and we've managed to buy something in our new location for what we sold our current one for.

34 minutes ago, Lavalas said:

I had wondered about the HDGE etf but we’re locked out of that one along with GDXJ Detc.

17 minutes ago, Cosmic Apple said:

HL still not letting you get GDXJ? I've got some recently on AJBell, as well as GDX. Can't get SIL (Global X Silver ETF) though. May give them a ring about it as I have a few K uninvested in my ISA. Don't want to pull it out, as soon as things really kick off I'll need the allocation... hopefully this year!

I've also recently bought GDXJ on AJBell. It's listed on the LSE so went through just fine. @Cosmic Apple, please update with AJBell's response about SIL if you do call.

[Lavalas]

31 minutes ago, DurhamBorn said:

It is,but i wouldnt advise anyone shorts anything unless very very experienced.They are leveraged products with costs.I very rarely use them myself.Im tempted by the house builders,but even if i did it would be a very small amount of my portfolio.Probably best we keep the idea of shorting anything off the thread in case people read it and then go off and open up shorts with 20x leverage 

That’s very wise and I appreciate your conscientiousness, cheers.

19 minutes ago, Cosmic Apple said:

HL still not letting you get GDXJ? I've got some recently on AJBell, as well as GDX. Can't get SIL (Global X Silver ETF) though. May give them a ring about it as I have a few K uninvested in my ISA. Don't want to pull it out, as soon as things really kick off I'll need the allocation... hopefully this year!

Not when I last tried a few months ago. First they said I could on the phone only then when I tried I couldn’t and there was s lot of back and forth before a final No. not that bothered with GDXJ now as I’m in with some of the individual stocks but would be good to have the option - let us know how you get on.

[MrXxx]

7 hours ago, eek said:

I can. Prices are still at 2004 prices as they are still being driven by BTLers. I seriously think there is a strong chance of 20%-30% falls in the future once BTLers seeking their 5-6% return disappear... 

Fair comment...I don't know the NE that well and what with S24 and HB drying up it may make a 'rush for the door'

 

9 hours ago, afly said:

I would think SE will drop to within max earnings of most people (which is still a 40-50% drop). The middlings would need to fall 10-30% and the bottom of the market, already within earnings area, to fall 10%ish. 

Desirability wont change, the hierarchy of most expensive to least would remain but the gaps between the regions shouldn't be the insanity we see now. The regional earnings just don't justify the disparity

 

 

Edit to add: this is what I would expect them to stabilise at after a crash. Lord knows what might happen during

 

This got me thinking...do people think it will gradually go down to a base level or (especially where there are lots of 'investment' BTLers) oscillate around a base and then finally settle?

[UnconventionalWisdom]

4 hours ago, kibuc said:

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 think it's a problem because they won't be able to get any good mortgage deals as they will have high LTVs.

[Thorn]

31 minutes ago, MrXxx said:

Fair comment...I don't know the NE that well and what with S24 and HB drying up it may make a 'rush for the door'

 

 

This got me thinking...do people think it will gradually go down to a base level or (especially where there are lots of 'investment' BTLers) oscillate around a base and then finally settle?

I think house prices bottomed out in 2012 after the GFC. Even if there was a rush for the exits it still takes a while for enough buyers to emerge as prices fall and for sellers to go bust and forced sales to go through their processes.

[UnconventionalWisdom]

5 hours ago, sancho panza said:

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

I also have a mate who can't fathom that btl isn't a good investment and encouraged me to get one. I tell him stuff I've learnt on TOS and get the same blank look. I then take aim with the socially immoral argument (needless to say, I don't see him often). 

This thread is not only compelling, but the breathe of fresh air that keeps us from following the herd when it feels completely wrong. The reasons here are well presented with facts and figures.... Much better than a shrug and a statement about lack of house building. 

[UnconventionalWisdom]

2 hours ago, Lavalas said:

That’s very wise and I appreciate your conscientiousness, cheers.

Not when I last tried a few months ago. First they said I could on the phone only then when I tried I couldn’t and there was s lot of back and forth before a final No. not that bothered with GDXJ now as I’m in with some of the individual stocks but would be good to have the option - let us know how you get on.

Gdxj also worked fine for me on AJ Bell. 

[Onsamui]

On 10/06/2018 at 13:13, 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.

https://www.vetr.com/posts/9272521995-How-are-US-Treasury-Bonds-and-the-Dollar-Correlated  FYOR

 

 

[Gordie Lastchance]

After making a hash of trying to join up last week, I've finally made it on to my first forum on the internets. I felt such a fraud looking in on some pretty amazing discussions (and so much excellent banter and humour) on here as some invisible/anonymous mousey-clicker. So here I am, warts an' all (no, not that kind!). I got here by following the secret code on ToS after wondering why such a busy thread had suddenly become dead. Boy is this one rockin'! I don't come with any investment credentials at all: I am a guy who bought into British Steel (go on, I can take it), a company exploring for oil off the Falklands (drain, money, down, lost - rearrange in order), a pharmaceutical company (lots of promises, holding worth sod all) and a technology firm (bought at 20p, now worth a tenth of that and falling). In the days of checking my holdings on Ceefax my shares were always that horrible red colour. I have a lot to learn (stating the bleeding obvious) and have learned quite a bit by following you folks here and at the other place. Thanks to this thread, and its cousin elsewhere, I have been able to find some darned interesting info (through links etc) I'd never have been able to lay my hands on out there in the scary web universe. And thanks to the assistance provided, I bought some silver coins as Christmas presents, something I'd never have done without your insight.

So it's "hi" from me. I'm not sure if I'll be able to contribute much except to be laughed at for my poor/non-existent investment skills.

Gordie

[sancho panza]

3 hours ago, DurhamBorn said:

It is,but i wouldnt advise anyone shorts anything unless very very experienced.They are leveraged products with costs.I very rarely use them myself.Im tempted by the house builders,but even if i did it would be a very small amount of my portfolio.Probably best we keep the idea of shorting anything off the thread in case people read it and then go off and open up shorts with 20x leverage 

Roger that.

There's a thin line between declaring your interest-something the contributors to this thread do- to ensure transparency when passing comment,and possibly encouraging people into areas they should leave alone.

Nothing worse than reading the 'pump and dump' forums.

1 hour ago, Thorn said:

I think house prices bottomed out in 2012 after the GFC. Even if there was a rush for the exits it still takes a while for enough buyers to emerge as prices fall and for sellers to go bust and forced sales to go through their processes.

I think we're nowhere near despair yet.

Admittedly,I've been wrong on UK house prices for 16 years,so probabaly not the best person to listen to.

Current house price in Leicester circa £200k,average local salary £20-25k.Even being generous that puts the bottom for house prices  here,between £50k and £75k.As I say though,I'm spectacularly worng when it comes to HPI.

 

 

[sancho panza]

Looks like price inflation with credit deflation looming.

Wolf goes into full on Shaun Richards mode.

https://wolfstreet.com/2018/06/12/dollars-purchasing-power-drops-2-9-in-may-from-year-ago/

'Even as “hedonic quality adjustments” perform miracles to repress surging new and used vehicle inflation.

Consumer price inflation, as measured by the Consumer Price Index, released this morning by the Bureau of Labor Statistics, jumped by 2.8% in May from a year ago, after having already jumped by 2.5% in April. It was the fastest year-over-year rise since February 2012:

Inflation is just a nice way of saying that the dollar is losing its purchasing power, and that income earned in dollars is buying less and less, an experience consumers go through when they buy stuff. The purchasing power of the dollar dropped 2.93% in May from a year ago, the fastest drop since November 2011. The chart below shows the index of the dollar’s swooning purchasing power:

The CPI without food and energy rose 2.24% from a year ago, after having already risen 2.14% in April.

These year-over-year percentage changes in the Consumer Price Index are slower than what consumers experience in terms of actual price increases. Here are two big examples of how this discrepancy is happening: prices of used vehicles and new vehicles.

The CPI for used cars and trucks fell 1.7% in May from a year ago (not seasonally adjusted), according to the BLS. This index has been falling much of the time during the last decade with exception of the “Cash for Clunkers” period and its consequences, which took a whole generation of often perfectly good older cars off the road, and thus actually raised prices on what was left (the spike in this chart from 2010-2012):

The chart below shows the actual index of used car- and truck-price inflation over the decades. Note that this CPI for used vehicles in May is at the same level as in 1994:

In reality, used cars and trucks cost a lot more today than they did in 1994. The big differences between reality and CPI are numerous adjustments, including most prominently “Hedonic Quality Adjustments.” When a model has quality improvements from one year to the next, the price index for that model is adjusted for the costs of these improvements, based on data provided by the automakers.

Quality improvements in vehicles include: Reliability, durability, safety, fuel economy, maneuverability, speed, acceleration, deceleration, carrying capacity, and comfort or convenience. Additional adjustments are made for added or deleted equipment.

This makes sense on some theoretical level, as vehicles have gotten a lot better over the decades. While consumers pay a lot more, they also get a lot more. That’s the theory behind extracting the costs of quality improvements from inflation data.

These adjustments lower CPI data compared to actual price changes that car buyers experience in reality. In reality, a five-year old compact car today costs a lot more than a five-year old compact car cost in 1994, and shoppers who want a five-year old car have to cough up the new prices and cannot buy anything with the amounts they were able to buy a five-year old compact in 1994.

The Manheim Used Vehicle Value Index gives us a different view without hedonic adjustments. It measures used vehicle prices as they’re established at auctions around the country. Turns out, on this basis, used vehicle prices jumped 4.9% in May from a year ago. At 134.2, the index is up 11% from January 2010 while over the same period the used vehicle CPI by the BLS fell 0.5%:

In the new vehicle department, a similar trend emerges: In reality, new vehicle prices have surged. In May, the average retail “transaction price” – after all incentives and discounts – per J.D. Power estimates, rose by about $1,200 from a year ago, to $32,380. That’s an increase of 3.8%.

And yet, believe it or not, the new vehicle price index by the BLS, thanks largely to hedonic adjustments, fell 1.1% from a year ago, and the actual index is about flat with March 1997:

Note the mystery: Both used vehicle and new vehicle CPI surged until the mid-1990s, though vehicle quality improved over those decades as well. Then, suddenly, new- and used-vehicle CPI began to flat-line. I believe this distortion has largely to do with how the hedonic adjustments have been tweaked since the mid-1990s to repress overall and “core” CPI.

Used and new vehicles matter in the overall CPI, with a combined “relative importance” of 7.1% of the total index. And these hedonic adjustments are applied to other products as well, such as TVs, cell phones, and myriad other things.

But there are at least two problems with these hedonic adjustments: One, if they’re even slightly aggressive, their impact is cumulative and ends up producing systematically understated inflation, which seems to be case in the new and used vehicle data; and two, over the years, consumers have to deal with a life in reality that gets more and more expensive as the items that perform the same function, such as a five-year old compact car, simply cost a lot more than they used to. If consumers often feel in their pocket books that the official CPI data is a hoax, these hedonic adjustments — however logical they may appear in theory — are a reason why they feel that way.'

[sancho panza]

Shaun Richards on,bizzarrely,falling real UK wages today.

For me,one of the great scandals of the last 20 years has been the gross misrepresentation of the inflation experienced by ordinary people from the exclusion of house prices from both RPI and CPI,to the inclusion of sofas.

 

https://notayesmanseconomics.wordpress.com/2018/06/12/uk-real-wages-resume-their-fall/

'Today’s data

Let us start with wages.

Between February to April 2017 and February to April 2018, in nominal terms, total pay increased by 2.5%, slightly lower than the growth rate between January to March 2017 and January to March 2018 (2.6%).

That is not inspiring for the survey we looked at earlier although there is some better news if we look into the detail. This is because total wage growth was revised up to 2.5% in March which April matched. So the numbers are now holding on a monthly basis at a higher level than we though last month but they are not rising.

As ever many prefer to cherry pick the data as for example the So-Called BBC is using a sub set of the numbers.

Between February to April 2017 and February to April 2018, in nominal terms, regular pay increased by 2.8%, slightly lower than the growth rate between January to March 2017 and January to March 2018 (2.9%).

This poses a problem as bonus pay matters to many so why does it get ignored? For example if you get the number quoted for average regular pay of £484 per week would you ignore the £32 of bonuses? At a time of pressure on real wages surely bonuses are more important.

If we stick with cherry pickers it was a dreadful month for the Bank of England as it has guided us towards private-sector regular wages which rose by 3.2% in March and 2.5% in April! Ooops and time for that to be redacted and replaced by a new measure like the unemployment rate was in the first phase of Forward Guidance. On a 3 monthly comparison it only falls from 3% to 2.9% but the catch is that April will be in the next two versions of that.

Moving to real wages we see sadly yet more cherry-picking. From the official release.

Between February to April 2017 and February to April 2018, in real terms (that is, adjusted for consumer price inflation), regular pay for employees in Great Britain increased by 0.4% and total pay for employees in Great Britain increased by 0.1%.

They use the woeful CPIH for this which assumes that owner occupiers rent their property to themselves when they do not. Whereas if they used the CPI for example as the casual reader might assume then real wages fell by 0.1% if compared to total pay. Fan of the Retail Price Index or RPI will continue to see falling real wages.

This is a familiar issue and seems to be something of a never-ending story.

Employment and Unemployment

The number below continues to be rather stellar.

There were 32.39 million people in work, 146,000 more than for November 2017 to January 2018 and 440,000 more than for a year earlier.

This does confirm at least part of the recruiters survey above. Let me just point out for newer readers that this is a quantity measure not a quality one and we have already had an issue with the quality number called wages. As another example the definition of full-time employment is of the chocolate teapot variety in my opinion. We may be getting a hint of an issue here from this alternative measure.

but total hours worked decreased by 4.1 million to 1.03 billion. (the number of people in employment increased by 146,000)

Maybe this was an impact of the cold snap we got in February/March but it is a rare sign of weakness in these section of data as hours worked per full-time employee fell.

Meanwhile there was more good news on unemployment

There were 1.42 million unemployed people (people not in work but seeking and available to work), 38,000 fewer than for November 2017 to January 2018 and 115,000 fewer than for a year earlier.

We have had loads of forecasts that unemployment will rise in the UK and even sectoral examples of it ( Retail) but overall it continues to fall even though it includes the recent weaker period if we look at the GDP numbers.

Also I get asked on here from time to time about the residual sector in these numbers which has been improving too.

The inactivity rate (the proportion of people aged from 16 to 64 years who were economically inactive) was 21.0%, lower than for a year earlier (21.5%) and the joint lowest since comparable records began in 1971.

Comment

Let me open with  piece of good news which is that it looks like UK productivity is currently improving as we may not have had much economic growth in 2018 but it is divided by a falling number of hours worked.

That is something although if we switch to the Ivory Towers things are going from bad to worse. After all the Office for Budget Responsibility switched about 9 months ago to projecting weaker productivity growth. That is before we get to the output gap theories it and the Bank of England hold so dear. As unemployment falls below what the Bank of England considers to be the equilibrium rate wages should be soaring except when you climb out of its dark,dank and dusty bunker they are not growing at the 5% per annum suggested by the OBR back in the day.  Forward Guidance and all that.'

[leonardratso]

35 minutes ago, Gordie Lastchance said:

After making a hash of trying to join up last week, I've finally made it on to my first forum on the internets. I felt such a fraud looking in on some pretty amazing discussions (and so much excellent banter and humour) on here as some invisible/anonymous mousey-clicker. So here I am, warts an' all (no, not that kind!). I got here by following the secret code on ToS after wondering why such a busy thread had suddenly become dead. Boy is this one rockin'! I don't come with any investment credentials at all: I am a guy who bought into British Steel (go on, I can take it), a company exploring for oil off the Falklands (drain, money, down, lost - rearrange in order), a pharmaceutical company (lots of promises, holding worth sod all) and a technology firm (bought at 20p, now worth a tenth of that and falling). In the days of checking my holdings on Ceefax my shares were always that horrible red colour. I have a lot to learn (stating the bleeding obvious) and have learned quite a bit by following you folks here and at the other place. Thanks to this thread, and its cousin elsewhere, I have been able to find some darned interesting info (through links etc) I'd never have been able to lay my hands on out there in the scary web universe. And thanks to the assistance provided, I bought some silver coins as Christmas presents, something I'd never have done without your insight.

So it's "hi" from me. I'm not sure if I'll be able to contribute much except to be laughed at for my poor/non-existent investment skills.

Gordie

dont think anyone will be that bothered about lack of experience, im pretty sure everyones been burned at sometime, i know i have, so dont put yourself down over it. Crack on and stay positive,  dont chuck the lot at it, keep some spends safe and have a good old gamble with everyone else.

[sleepwello'nights]

21 minutes ago, sancho panza said:

Looks like price inflation with credit deflation looming.

Wolf goes into full on Shaun Richards mode.

https://wolfstreet.com/2018/06/12/dollars-purchasing-power-drops-2-9-in-may-from-year-ago/

'Even as “hedonic quality adjustments” perform miracles to repress surging new and used vehicle inflation.

Consumer price inflation, as measured by the Consumer Price Index, released this morning by the Bureau of Labor Statistics, jumped by 2.8% in May from a year ago, after having already jumped by 2.5% in April. It was the fastest year-over-year rise since February 2012:

Inflation is just a nice way of saying that the dollar is losing its purchasing power, and that income earned in dollars is buying less and less, an experience consumers go through when they buy stuff. The purchasing power of the dollar dropped 2.93% in May from a year ago, the fastest drop since November 2011. The chart below shows the index of the dollar’s swooning purchasing power:

The CPI without food and energy rose 2.24% from a year ago, after having already risen 2.14% in April.

These year-over-year percentage changes in the Consumer Price Index are slower than what consumers experience in terms of actual price increases. Here are two big examples of how this discrepancy is happening: prices of used vehicles and new vehicles.

The CPI for used cars and trucks fell 1.7% in May from a year ago (not seasonally adjusted), according to the BLS. This index has been falling much of the time during the last decade with exception of the “Cash for Clunkers” period and its consequences, which took a whole generation of often perfectly good older cars off the road, and thus actually raised prices on what was left (the spike in this chart from 2010-2012):

The chart below shows the actual index of used car- and truck-price inflation over the decades. Note that this CPI for used vehicles in May is at the same level as in 1994:

In reality, used cars and trucks cost a lot more today than they did in 1994. The big differences between reality and CPI are numerous adjustments, including most prominently “Hedonic Quality Adjustments.” When a model has quality improvements from one year to the next, the price index for that model is adjusted for the costs of these improvements, based on data provided by the automakers.

Quality improvements in vehicles include: Reliability, durability, safety, fuel economy, maneuverability, speed, acceleration, deceleration, carrying capacity, and comfort or convenience. Additional adjustments are made for added or deleted equipment.

This makes sense on some theoretical level, as vehicles have gotten a lot better over the decades. While consumers pay a lot more, they also get a lot more. That’s the theory behind extracting the costs of quality improvements from inflation data.

These adjustments lower CPI data compared to actual price changes that car buyers experience in reality. In reality, a five-year old compact car today costs a lot more than a five-year old compact car cost in 1994, and shoppers who want a five-year old car have to cough up the new prices and cannot buy anything with the amounts they were able to buy a five-year old compact in 1994.

The Manheim Used Vehicle Value Index gives us a different view without hedonic adjustments. It measures used vehicle prices as they’re established at auctions around the country. Turns out, on this basis, used vehicle prices jumped 4.9% in May from a year ago. At 134.2, the index is up 11% from January 2010 while over the same period the used vehicle CPI by the BLS fell 0.5%:

In the new vehicle department, a similar trend emerges: In reality, new vehicle prices have surged. In May, the average retail “transaction price” – after all incentives and discounts – per J.D. Power estimates, rose by about $1,200 from a year ago, to $32,380. That’s an increase of 3.8%.

And yet, believe it or not, the new vehicle price index by the BLS, thanks largely to hedonic adjustments, fell 1.1% from a year ago, and the actual index is about flat with March 1997:

Note the mystery: Both used vehicle and new vehicle CPI surged until the mid-1990s, though vehicle quality improved over those decades as well. Then, suddenly, new- and used-vehicle CPI began to flat-line. I believe this distortion has largely to do with how the hedonic adjustments have been tweaked since the mid-1990s to repress overall and “core” CPI.

Used and new vehicles matter in the overall CPI, with a combined “relative importance” of 7.1% of the total index. And these hedonic adjustments are applied to other products as well, such as TVs, cell phones, and myriad other things.

But there are at least two problems with these hedonic adjustments: One, if they’re even slightly aggressive, their impact is cumulative and ends up producing systematically understated inflation, which seems to be case in the new and used vehicle data; and two, over the years, consumers have to deal with a life in reality that gets more and more expensive as the items that perform the same function, such as a five-year old compact car, simply cost a lot more than they used to. If consumers often feel in their pocket books that the official CPI data is a hoax, these hedonic adjustments — however logical they may appear in theory — are a reason why they feel that way.'

I'm sure you're right. My anecdotal perception is different. When I was in my early twenties there is absolutely no way I could afford a new car. Closest I got was a three year old Escort Mexico for £600 with 60k on the clock. Wish I'd kept it, that's another story. These days anyone can drive a new car from as little as £100 a month. 

How does that tie in with your factual report above that new vehicles are more expensive now?

[Cosmic]

17 minutes ago, sleepwello'nights said:

I'm sure you're right. My anecdotal perception is different. When I was in my early twenties there is absolutely no way I could afford a new car. Closest I got was a three year old Escort Mexico for £600 with 60k on the clock. Wish I'd kept it, that's another story. These days anyone can drive a new car from as little as £100 a month. 

How does that tie in with your factual report above that new vehicles are more expensive now?

When bought the old fashioned way (i.e. actually buying the item, with cash) they certainly are.

VW Polo, base model.

6th gen £13855

5th gen £11970 (2009)

4th gen £7995 (2002)

[Gordie Lastchance]

23 minutes ago, leonardratso said:

dont think anyone will be that bothered about lack of experience, im pretty sure everyones been burned at sometime, i know i have, so dont put yourself down over it. Crack on and stay positive,  dont chuck the lot at it, keep some spends safe and have a good old gamble with everyone else.

Burned? I got cindered! Ok, not great sums of money (although every penny's a prisoner to me), but I seem to be so darned unlucky. I have so many "I should have bought that one" shares which I'd had an eye on but rocketed when I didn't buy them. I was so tempted last year to have a try again (after an 18-year break from share buying) - this time a North Sea oil company. Didn't do it. I researched it. The little doubt devil on my shoulder said "don't". But in seven months it's doubled. Aaargh! But thanks for your comforting words, leonardratso.

[leonardratso]

8 minutes ago, Gordie Lastchance said:

Burned? I got cindered! Ok, not great sums of money (although every penny's a prisoner to me), but I seem to be so darned unlucky. I have so many "I should have bought that one" shares which I'd had an eye on but rocketed when I didn't buy them. I was so tempted last year to have a try again (after an 18-year break from share buying) - this time a North Sea oil company. Didn't do it. I researched it. The little doubt devil on my shoulder said "don't". But in seven months it's doubled. Aaargh! But thanks for your comforting words, leonardratso.

youve survived to fight anoher day, sounds like a win to me.

[Gordie Lastchance]

1 minute ago, leonardratso said:

youve survived to fight anoher day, sounds like a win to me.

If you've any spare glassware in your kitchen cupboards, would you kindly send some my way. It sounds like yours are always half-full! I'm so glad I persevered with signing up here. Cheers!

[sleepwello'nights]

40 minutes ago, Cosmic Apple said:

When bought the old fashioned way (i.e. actually buying the item, with cash) they certainly are.

VW Polo, base model.

6th gen £13855

5th gen £11970 (2009)

4th gen £7995 (2002)

and as a percentage of average earnings?