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Credit deflation and the reflation cycle to come.


DurhamBorn

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1 hour ago, BadAlchemy said:

I'd highly recommend going back and reading through the thread as much as you can. It's all in here. A wealth of discussion and knowledge from some top brains. Not advice or buying tips, of course, and "DYOR" is the oft used phrase. I've just been catching up on the last 30 pages or so. Took me a few days to absorb but very well worth it. There is plenty of discussion on the miners and reflation stocks within.

This place is an education I am badly in need of :)

has educated me too and still is, I try and take in as much info form all fronts:)

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13 minutes ago, Harley said:

Others?

I've currently only got 14 so far in what I hope will become my income portfolio, aiming for 20 though split across 5 rough sectors, with 2 in each sector. Again I am looking for each of these to be no more than 5% of my overall portfolio.

Can I ask why you would only have 1 in each sector? My thinking is a sector could do well, but an individual stock may underperform for some reason and could be propped up by it's twin.

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31 minutes ago, Harley said:

For me, my aim for my income portfolio is 25 with 4% of portfolio value in each holding and no duplicate sector holdings unless that 4% gets too large in £x terms or the price of a holding precludes further purchases (and I buy a substitute). 

I currently have about 19 holdings, hence the need to expand my net.  I may have to view small caps and/or foreign stocks differently from my current UK large caps to get to 25 with that sector rule.

My balanced portfolio has different rules as it is currently ETF based, although I may use funds and trusts too.  I choose ETFs to limit a holding in any one beyond £x and in total beyond £x for a given provider. 

My asset allocation rules also determine the number of my holdings.  I have four asset classes and then allocate within these (e.g PMs allocated down to gold and silver, bonds and equity down to region, etc).  So maybe 20 atm, maybe more as I invest more and hit those £x ceilings.

Others?

Interesting. Do you plan on re-weighting if for example one pick doubles in value? 

How closely do you follow the stocks once purchased? Buy and forget? Pour over the financial statements in detail?

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Bad 3 weeks for FTSE 100. Three red candles in a row. It's rare we get 4 red candles in a row (circled in blue). We've seen 4 in a row once in each of the last 4 years. Are we going to make it 4 in a row next week?

LCG_Trader.thumb.png.ff2fd6700758ce27b9a7ad9a8c1b496e.png

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steppensheep
38 minutes ago, CVG said:

Interesting. Hard to imagine a 33 year old being in charge of a bank. I never really u derstood how this crosselling is supposed to be such a goldmine. I can see there'll  be some savings, but dont see how they can be what you bet the bank on.

Im a customer, so itll be interesting to watch.

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26 minutes ago, steppensheep said:

Interesting. Hard to imagine a 33 year old being in charge of a bank. I never really u derstood how this crosselling is supposed to be such a goldmine. I can see there'll  be some savings, but dont see how they can be what you bet the bank on.

Im a customer, so itll be interesting to watch.

Age doesn’t necessarily bring wisdom 

Remember the guy who used to be in charge of the coop bank ? 😜

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Democorruptcy
1 hour ago, CVG said:

Maybe bad news for margins at larger firms?
 

Quote

 

The Artha app is a chance for First Direct to 'own the relationship' with its customers, he says – effectively making the bank a personal finance manager to those who sign up. 'We can see how you are spending your money,' Gordon says. 'If you've got your money with this utility provider, and if you give us consent through open banking, we can make a recommendation to say: you know what? It would be cheaper if you switched that.

'I think we can also play in that service space because we have a relationship with you that is deeper than a product relationship, which speaks to us curating your needs.'

By way of example, a British Gas customer (to pick a company at random) might get an alert telling them to switch to a rival because they're paying too much.

 


 

 

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2 hours ago, Ma2 said:

Can I ask why you would only have 1 in each sector? My thinking is a sector could do well, but an individual stock may underperform for some reason and could be propped up by it's twin.

Good question.  Yes, I would prefer two in each sector for the reason you mention but I also manage my partner's portfolio so put the other one there!  . for example, one has BP and the other has RDBS.

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Democorruptcy
2 hours ago, Harley said:

For me, my aim for my income portfolio is 25 with 4% of portfolio value in each holding and no duplicate sector holdings unless that 4% gets too large in £x terms or the price of a holding precludes further purchases (and I buy a substitute). 

I currently have about 19 holdings, hence the need to expand my net.  I may have to view small caps and/or foreign stocks differently from my current UK large caps to get to 25 with that sector rule.

My balanced portfolio has different rules as it is currently ETF based, although I may use funds and trusts too.  I choose ETFs to limit a holding in any one beyond £x and in total beyond £x for a given provider. 

My asset allocation rules also determine the number of my holdings.  I have four asset classes and then allocate within these (e.g PMs allocated down to gold and silver, bonds and equity down to region, etc).  So maybe 20 atm, maybe more as I invest more and hit those £x ceilings.

Others?

So you have an income portfolio, a balanced portfolio and use asset allocation. Do you mean if we call your whole pot 100%, the income and balanced portfolio are part of the asset allocations presumably 25% equities not separate to that?

I suppose it's only fair I should mention my aims and rules. My aim is to make some money and not to go skint. I don't have any rules, I just let my gut decide if something represents value or not and when to buy or sell. I currently have one fund and a few shares but have no idea what the totals might be in the future.

In all the time I've been gambling I've never had a betting bank, or followed much heralded staking systems. I've just had money lumped together. I wouldn't like to limit myself to say 4% on something I thought was a cert and at the same time have 4% on something I didn't like as much.

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58 minutes ago, steppensheep said:

Im a customer, so itll be interesting to watch.

Me too. But they have made a complete hash of their new online system. Probably spent too long worrying about how to detect my electricity bill and redirect me elsewhere. This is always the problem when you forget about the basics, e.g. how to clearly present debits, credits and balances. 

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2 hours ago, Castlevania said:

Interesting. Do you plan on re-weighting if for example one pick doubles in value? 

How closely do you follow the stocks once purchased? Buy and forget? Pour over the financial statements in detail?

More good questions (i.e. things I think about and keep under review) . 

Yes, I would re-weight but maybe only annually.  Unfortunately not a problem (bar a few) as I'm still in the accumulation phase.  Indeed I would be worried if any popped too soon as this is meant to be a steady Eddy type portfolio.  I'm in the accumulation phase because I recently changed my income portfolio from ETFs to individual shares and was anyways holding too much cash given I will soon need the income (and been suffering from erosion via inflation).  I resisted the huge urge to panic buy to play catch-up with the rising market, realising my financial plan gave me time (1 to 2 years) to accumulate with a so-so system that aimed to buy the weekly lows.  I'm so pleased I did.  It constantly amazes me how all apparent one way bets eventually end and a buying chance presents itself.  Like sitting here now waiting for bond prices to correct (for my balanced portfolio).  I'm sure there's more pain for me ahead but I have some bond funds for now until the correction.

I like to fire and forget as over-trading kills performance and I once left a similar portfolio alone for about 2 years and it did just fine without me!  I look at the portfolio share charts (and the ones on my watchlist) each weekend after the close (about to do that now) for any buy signals and to ensure I'm comfortable with things overall.  I've become very resilient!  I also look for buy signals on all FTSE350 shares each week to see if any should go into my income or trading accounts.  I always review financial statements (Morningstar) before buying any new income shares but only look at those yielding 4% to 5% or more. I posted a list of the sort of things I look at a few days ago.  I major on the cash flow statement but look at other things too.  I can read a set of financial statements very well but also know their limitations!  I do not obsess about ratios, etc.  The trigger is price (and yield for the income ones) first and then the supportive financials.  That takes time though as such "deals" are rare and time is not my friend.  There is a Pareto effect - more like 80% of what I need from a 20% review of what's available.  After all, I have a life!

Thanks for the questions.  Writing it down makes me think it through and validate things better.  And someone may point out something silly or better!

 

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@Harleythanks. It’s interesting to see how other people do stuff, and I’m always open to good ideas I can steal :) 

Once you’ve bought something do you closely follow their financial results? It’s this part that I like to do but I’m finding difficult with the number of holdings that I have. When I had half as many it was quite easy to keep up to date and get a feel for the results, but I’m a bit concerned I’m spreading myself a bit too thin.

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35 minutes ago, Democorruptcy said:

So you have an income portfolio, a balanced portfolio and use asset allocation. Do you mean if we call your whole pot 100%, the income and balanced portfolio are part of the asset allocations presumably 25% equities not separate to that?

I suppose it's only fair I should mention my aims and rules. My aim is to make some money and not to go skint. I don't have any rules, I just let my gut decide if something represents value or not and when to buy or sell. I currently have one fund and a few shares but have no idea what the totals might be in the future.

In all the time I've been gambling I've never had a betting bank, or followed much heralded staking systems. I've just had money lumped together. I wouldn't like to limit myself to say 4% on something I thought was a cert and at the same time have 4% on something I didn't like as much.

I have an income portfolio (upside fund), a balanced portfolio (floor fund), and a trading portfolio/account (super upside fund!).

I first worked out how much I needed in each fund for retirement by reference to past expenditure, as adjusted for retirement.

I looked at possible asset allocation models for my floor fund and chose the Permanent Portfolio as this (IMO and for my circumstances) best suited the required risk-return profile for that fund.

My upside fund does not follow the Permanent Portfolio.  This fund is for upside expenditure so an equity income fund (plus a small trading fund) IMO, and for my circumstances, seems to best match the required risk-return profile. 

I have allocation rules, or rather risk management rules, for my trading account.  I'm only dabbling in that at the moment given my workload and I know from the past you need to be on such things 100% of the time.

When I say "portfolio" I mean all my assets.  So for example, I include a few premium bonds in my balanced portfolio, etc.  So not just SIPPs and ISAs.

Each of us has to do what we are comfortable with.  Only I found it actually took quite a while to find out what I was comfortable with!  I've probably tried them all but retirement beckons and it's all getting a bit serious!

For me, I felt a huge weight off my shoulders once I had a plan but it took many hard months to get there.  There were some great resources on the net which really helped and for which I'm forever grateful.

That is partly my motivation for posting - to validate and to try and give something back - but everything is just ideas for discussion - not advice - DYOR and decide what's right for you.

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21 minutes ago, Castlevania said:

@Harleythanks. It’s interesting to see how other people do stuff, and I’m always open to good ideas I can steal :) 

Once you’ve bought something do you closely follow their financial results? It’s this part that I like to do but I’m finding difficult with the number of holdings that I have. When I had half as many it was quite easy to keep up to date and get a feel for the results, but I’m a bit concerned I’m spreading myself a bit too thin.

Please see my other post.  Each to their own.  For me, the price/yield will tell me when to bother with the income shares as will any new (better?) candidates!  "Selection and maintenance of aim" and for me that's yield without material capital erosion.  I've looked at the historic data and for me (and just me!) I'm happy with the balanced portfolio for the rest.  I've been in and out of the markets a long time and found less is often more.  @A_P recently showed the benefits of a steady Eddy approach and there was a post before that about the dormant share accounts having the best performance.  Sure, you could do better if you timed the markets to near perfection but that's a massive case of survivor bias.  At least to me.  Anyways, I have a small trading account, a life, and a past to exorcise my need for excitement so I can leave the rest well alone!  I also only look at weekly data and once fully invested may even go to monthly data.  That just me though and it's fascinating how each of us individually deals with a problem which doesn't really have a "right" answer. 

PS:  I once, in my youth, legally hacked into a computer game program.  The clever author had left a message - "cheats never prosper".  Just kidding!

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1 hour ago, Democorruptcy said:

 

Quote

The Artha app is a chance for First Direct to 'own the relationship' with its customers, he says – effectively making the bank a personal finance manager to those who sign up. 'We can see how you are spending your money,' Gordon says. 'If you've got your money with this utility provider, and if you give us consent through open banking, we can make a recommendation to say: you know what? It would be cheaper if you switched that.

'I think we can also play in that service space because we have a relationship with you that is deeper than a product relationship, which speaks to us curating your needs.'

By way of example, a British Gas customer (to pick a company at random) might get an alert telling them to switch to a rival because they're paying too much.

 

Sure sonny, sure!

Peak Firstdirect?

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Bobthebuilder

First Direct like Arsebook and google now eh? When are these companies gonna start paying us for the use of our own data?

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sancho panza
7 hours ago, Harley said:

Not investing advice, DYOR, only for discussion purposes, etc.....

Momentum is just one signal and is no silver bullet but here's the monthly BT chart.

After a blip, still going down but maybe getting a lot closer to a bottom.

Currently about 67% down from last peak.

I opened a position at the Jun18 blip (had a weekly buy signal) but that's weekly data for you (a weekly low, but not a monthly one!).

Question is, can I (should I) wait until the monthly turns or do I get in probably earlier on a weekly buy signal?

Many of the usual suspects are like this one.

Capture.thumb.JPG.b8fb74e59c68fc99d5f75d47a289cde7.JPG

For long haul purchases,monthlies present a very clear picture of the action especially if you're ina sector that moves with or against the tide.Oil/commodities can sometimes follow their own rules and the whipsaw on monthlies can be devastating.

I learned a big lesson with CNA not to ignore the monthlies and head into the value trap ambush.Never stop learning

 

9 hours ago, DurhamBorn said:

Yes its everything hitting sentiment isnt it.Im an old grizzled contrarian and its worked very well for me over the years.Lots of these companies are the backbone of the UK economy.Government got a reminder last week when the lights went out what happens.I think the next government needs to think again and will.BT will be the first test of this i think.If they get a good deal to roll out fiber we will know.As you say its insane to kick the likes of Centrica and BT while pushing zillions into house builders building piles of crap.

The politicians will reap what they sow though.Forcing deflation down companies necks simply leads to higher inflation down the road.I doubt Labour will get anywhere near power.I work in a factory with 100% union membership and hardly any of them are voting Labour next time.Going remain will destroy Labour.Every Labour voter i know voted leave.

In simple terms institutions were happy to buy shares in BT at £4.50 to fund the EE buyout.We can start to buy them with two thirds off.If we are wrong then we are a lot less wrong than they were.

I agree Corbyn won't be PM.He's been damaged by his stance on Brexit/Anti Semitism/Venezuela etc.......I think Boris will romp home in terms of seats but with a small margin of the popular vote.Lib Dems/Greens move up but FPTP will hold them back for now.Corbyn was only competitive because of May and vice versa.Anyone with an ounce of emotional intelligence will struggle to lose to JC.

Democrats stand a better chance in teh US but their offering is likely to be only marginally better than Hilary.

Not taking a political position,jsut expressing an opinion.

 

1 hour ago, Democorruptcy said:

Maybe bad news for margins at larger firms?
 

 

As we've idscussed since day one of this thread,margin compression inbound.While away over teh w/e was given a heads up re this company from someone who is often an early adopter-techy type,sold his business recently to retire at 50-was raving about this bank.Basically,they cut margins on Forex to levels that are closer to the mid price than even the largest retail forex trades.Forex is normally fat margin for Barclays and HSBC.

Hence one of the reasons why I'm not sure negative rates will really feature for long in what's coming given they destroy what's left of the profits of High St banks.

Won't be long before there's very few banks on High St's.

Revolut ahs had some troubles but the rates he was quoting me for forex were unreal.

https://en.wikipedia.org/wiki/Revolut

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sancho panza
17 hours ago, DurhamBorn said:

Im expecting oil to get smashed lower this year or next.I have a ladder set in BP at £3.85 so that shows how bearish i am.I think we go under $40 minimum.I could be way out of course and a weakening dollar might send oil up,but not for me at this point.

I'm looking for a weak dollar trade here and figure oil looks like my best value bet given where Rio/AAL etc are.

Tricky timing it as oil looks likely to continue down for a while yet,cable looks good to move up-so waiting suits-but struggling to see when DXy will finally break to the downside.

As discussed with Cattleprod soem  oil/gas producers/services companies down 80% from peak already.

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14 minutes ago, sancho panza said:

For long haul purchases,monthlies present a very clear picture of the action especially if you're ina sector that moves with or against the tide.Oil/commodities can sometimes follow their own rules and the whipsaw on monthlies can be devastating.

I learned a big lesson with CNA not to ignore the monthlies and head into the value trap ambush.Never stop learning

 

I agree Corbyn won't be PM.He's been damaged by his stance on Brexit/Anti Semitism/Venezuela etc.......I think Boris will romp home in terms of seats but with a small margin of the popular vote.Lib Dems/Greens move up but FPTP will hold them back for now.Corbyn was only competitive because of May and vice versa.Anyone with an ounce of emotional intelligence will struggle to lose to JC.

Democrats stand a better chance in teh US but their offering is likely to be only marginally better than Hilary.

Not taking a political position,jsut expressing an opinion.

 

As we've idscussed since day one of this thread,margin compression inbound.While away over teh w/e was given a heads up re this company from someone who is often an early adopter-techy type,sold his business recently to retire at 50-was raving about this bank.Basically,they cut margins on Forex to levels that are closer to the mid price than even the largest retail forex trades.Forex is normally fat margin for Barclays and HSBC.

Hence one of the reasons why I'm not sure negative rates will really feature for long in what's coming given they destroy what's left of the profits of High St banks.

Won't be long before there's very few banks on High St's.

Revolut ahs had some troubles but the rates he was quoting me for forex were unreal.

https://en.wikipedia.org/wiki/Revolut

The corporate/markets arms of the high street banks have lost a huge amount of FX business to specialist FX brokers. Those fat margins are gone. The FX dealers at those banks are gone. It’s all going electronic and the margins with it. 

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sancho panza
9 hours ago, Democorruptcy said:

I can understand the sentiment being terrible in our 'usual suspect' stocks at the moment. It's not just the fear of them going bust in the cycle, it's fear of them being nationalised and a fair price not being paid to shareholders. If there were to be an election and Labour went all out Remain I think they might win, given the Tories and Brexit Party votes could split the Brexiteers. Part of the current drop in price is already due to governbankment interference, energy price caps, roaming charges cut etc. It seems the governbankment think it's a vote winner to kick utility companies to save people a few pence a week but funnel money into housebuilders to make people pay ££'s more for a shelter.

Disclosure: despite the above gnawing at me and making me thankfully exit the 'usual suspects' a while back, I've had to go back in this week at these prices and bought some CNA, BT VOD RMG what's a chap to do when stuff like CNA is 50% down from when I sold at 139 and a pension transfer landed in my account this week?

Worth pondering that Ashtead has doubl the market cap(£10bn) of CNA(£3.8bn),and Rightmove is larger with revenues of £400mn compared to CNA's £25bn.Just Eat £5.3bn PE ratio 131 lol...................................with all that competion looming on £1.24bn rev.......

BT market cap £16bn versus Experian £25bn on rev £3.8bn

There's quite a few I can see that'll likely fall 90%+ from here.And I really enjoyed your point re hosuebuilders msot of whom will be in the 90% club.

Decl-short RMV/BDEV/RDW/BKGH

Another problem is that a rising or falling oil/gas price could distort the overall FTSE perofmance given teh market caps of BP+RDSB

We could potnetially see FTSE stay flat from here with huge sector rotation 

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sancho panza
5 minutes ago, Castlevania said:

The corporate/markets arms of the high street banks have lost a huge amount of FX business to specialist FX brokers. Those fat margins are gone. The FX dealers at those banks are gone. It’s all going electronic and the margins with it. 

Cheers CV,any chance you know roughly when  that occurred?

 

The broking industry has lost loads of jobs in similar manner.Can't believe hwo good Hargreaves and Interatctive are for what you pay.As an old dinosaur when it comes to buying stocks,I've used a localish broker for years and they have only charged me a small flat fee since the millenium,but the functionality of these online portals has stunned me.Can't believe there's people still paying 1% a side  no limit.

 

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9 minutes ago, sancho panza said:

Cheers CV,any chance you know roughly when  that occurred?

 

The broking industry has lost loads of jobs in similar manner.Can't believe hwo good Hargreaves and Interatctive are for what you pay.As an old dinosaur when it comes to buying stocks,I've used a localish broker for years and they have only charged me a small flat fee since the millenium,but the functionality of these online portals has stunned me.Can't believe there's people still paying 1% a side  no limit.

 

The big shift has been post financial crisis.   Nimbler specialists without the rubbish infrastructure and costs of the incumbents ate a lot of their lunch.

Edit: it’s a similar thing with equity broking for small investors. My old man used to use Barclays. In the 90’s their share dealing service was one of the biggest in the country. Paid far more than I do now a trade, but did have his own personal broker at the end of the line who to be fair did well for him (got my old man to buy into the industrial miners back in the late 90’s). I get the impression the only people who still use Barclays are their historic customers.

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7 hours ago, DurhamBorn said:

I was the highest grade manufacturing technician at Glaxosmithkline,they had grades from 4 to 1,i was a 1.In affect a 1 set up and ran the plant making the active drugs.The other grades worked on packaging machines etc.We would have 2 guys me and someone else on a job making probably £2million a batch of drug.One mistake whole batch lost.I never lost a batch.The job was for QA,i said i wasnt a QA,but they werent bothered,they said they thought my experience was what they wanted.They have a new plant making medical products,not drugs,but wipes etc for surgery,so similar.Setting up and running a pharma plant is similar to building an engine.Its all about understanding getting everything set right,not making mistakes etc.I worked on Zantac and in a room about 30 foot by 30 we knocked out a billion pounds worth of drug a year.(thats making the tablets).

Fascinating job! Totally off topic (but perhaps related to manufacturing coming back from China),  I imagine their standards are high compared with stuff made in China. An example being after the licence on valsartan expired and there was then a big push to make it cheaply. I wonder how many other drugs are tainted but never found out? I understand that they only found the valsartan tainting by accident.

https://www.ncbi.nlm.nih.gov/pubmed/30945826

In early July 2018, it became known that a number of generic preparations containing the active substance valsartan could be carcinogenic. This news took caregivers and patients by surprise. Initially, a recall was initiated at the pharmacy level. A few weeks later, the recall was expanded to the patient level. The source of the contamination was a factory of the Chinese company Zhejiang Huahai Pharmaceutical, where the active ingredient valsartan is produced. It was found that batches from that factory had contained too high a concentration of N-nitrosodimethylamine since as early as 2012. The EMA estimates that if 5000 patients took the maximum dose of 320 mg of tainted valsartan tablets every day in the period from July 2012 to July 2018, there will be one extra case of cancer.

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