Deflationary collapse and the Reflation Cycle to Come.

[Sancho Panza]

57 minutes ago, Fence said:

Nice and sound thanks.  Personally, I'm leaning towards a bit of the nice and secure NS&I bonds for my "essentials" retirement pot and a share based income fund for my upside.  I've ran it through a model suited to my personal circumstances at it seems to work for my level of risk, required return, etc.  Probably not suited for others though.  I was lucky to buy NS&I inflation linked certificates back in the day and they are now great to have in my portfolio.  They roll over at expiry at bu**er all plus RPI but are great as a cash element for the future "essentials" pot.  Means I can more comfortably invest in that share based income fund.  I've looked at bonds (retail bonds, PIBS, gilts, etc) and am not seeing much value at the moment.  My worry is the risk of a 1% rise in interest rates and the serious damage that could have on returns.  Personally, I'm tempted to wait until prices stabilise - i.e. more clarity on interest rates (about which I also question the view they will go up - maybe more going up so they can come back down again when needed!).  BTW, just bought my second book - "Living off Your Money (Michael McClung)" and am limbering up for the avalanche of data and stress testing my current strategy!  All part of my approach of working backwards from my retirement to today to work out what I need to be doing now (not sure many people do it that way!). 

Below site good for fixed income

https://www.fixedincomeinvestor.co.uk/x/default.html

53 minutes ago, Fence said:

I believe that's the essence of the HYP (high yield portfolio) strategy - don't worry about capital values as long as your personal yield is maintained. I quite like the idea.   

Problem is as per previous discussion on here that there's some large cap big payers with 1.2 divi cover.

[Fence]

Meanwhile, in a distant universe, hasn't gold in Sterling (blue) held up well recently (June 2016+) given the appreciation of GBP:USD:

Edited February 21, 2018 by Fence

[Sugarlips]

Nucleur fusion by 2025

https://www.forbes.com/sites/kensilverstein/2018/02/12/nuclear-fusion-could-be-a-silver-bullet-and-just-around-the-corner/#8da2f4a37475

Is there a  ground floor opportunity for hpcers with a 10+ yr investment horizon here and if so whats the angle?

This plus Elon Musks progress with solar and batteries, exciting times for science dead ahead, ( so long as tptb dont stifle progress..)

[payoyo]

5 hours ago, Sugarlips said:

Nucleur fusion by 2025

https://www.forbes.com/sites/kensilverstein/2018/02/12/nuclear-fusion-could-be-a-silver-bullet-and-just-around-the-corner/#8da2f4a37475

Is there a  ground floor opportunity for hpcers with a 10+ yr investment horizon here and if so whats the angle?

Nuclear Fusion is always on the horizon.

[Patient London FTB]

AA fulfilling your prediction today @durhamborn

Dividend slashed, shares down 30%

Edited February 21, 2018 by Patient London FTB

[durhamborn]

11 hours ago, Thorn said:

Looking at a lot of FTSE 250 shares and  right enough many seem to be well down already from their tops.

Lots look like a terrible idea at the moment- Kingfisher.

Are you keeping cash at hand and tracking individual shares down to a level you see as value? 

Yes i am and im starting to average in to some.I will probably buy in 4 stages.I think they will all get whacked again in a sell off,but many im after are down 50%.Im interested in the transports and telcos mostly at the moment.I think a lot of UK domestic companies are well along their bear markets.Low debt/decent free cash,and high dividends are what im looking at mostly.

[durhamborn]

50 minutes ago, Patient London FTB said:

AA fulfilling your prediction today @durhamborn

Dividend slashed, shares down 30%

Yes about time,i doubt any equity will remain in the company at some point.Shocking that Woodford put his clients into that at £2.50+,they arent a buy at any price for me.

Lots of talk of why they are down,investment blah blah.The real reason is debt.£2.7 billion of it on a profit of £350million.Their only hope is stop all divis and divert all free cash flow to debt repayment.

[durhamborn]

8 hours ago, Fence said:

Certainly several well known good yielding names are now hovering at prices close to the 2008 precipice and some have even fallen back into it (or never got out of it)!

For example:

Most domestic facing have been hit very hard.If you take a company like Go Ahead Group,they are at a price now they were in 2004.

Its right across the market among the mid tier stocks.Some of course (AA,outsources etc) are toast,but many others will do ok out of a reflation and im happy to start to average in a few.

[spyguy]

51 minutes ago, durhamborn said:

Yes about time,i doubt any equity will remain in the company at some point.Shocking that Woodford put his clients into that at £2.50+,they arent a buy at any price for me.

Lots of talk of why they are down,investment blah blah.The real reason is debt.£2.7 billion of it on a profit of £350million.Their only hope is stop all divis and divert all free cash flow to debt repayment.

Wooh! Not to fast with the at 350m profit ...

PE junk.

[Thorn]

Durhamborn are you still looking at same guidelines re gold and silver? 

[Houdini]

1 hour ago, durhamborn said:

Yes about time,i doubt any equity will remain in the company at some point.Shocking that Woodford put his clients into that at £2.50+,they arent a buy at any price for me.

Lots of talk of why they are down,investment blah blah.The real reason is debt.£2.7 billion of it on a profit of £350million.Their only hope is stop all divis and divert all free cash flow to debt repayment.

Woodford seems to have forgotten that debts need to be paid down and can't be rolled over forever... Mind you its hard to invest anywhere at the moment as few things display any value.

[Fence]

Although it's debatable how significant company pension deficits should be to investment decisions, it seems to be a potential hot topic area (particularly viz dividend payments) so I'm concerned enough to consider it in my selection criteria.  The following link provides quite a useful analysis of the topic:  https://www.jltemployeebenefits.com/our-insights/publications/ftse-reports.

[durhamborn]

20 minutes ago, Houdini said:

Woodford seems to have forgotten that debts need to be paid down and can't be rolled over forever... Mind you its hard to invest anywhere at the moment as few things display any value.

I thought the same.I think he is a very good stock picker,but he seems to ignore the debt in his new funds.Seems to base dividend growth on the fact the debt doesnt need to be repaid and will never see higher coupons being needed.

If a company has a value of £800 million and £200 million of debt at least equity holders can take a rights issue if needed to keep the balance sheet in check.When debts get above that though it starts to mean equity wipe out if things go wrong.I just dont understand how him and his team can ignore the debts on some of these companies balance sheets and the risk that creates,even at the least to the dividend.Its so bad its almost like he has been sucked in by private equity as someone to pass off their leveraged equity to.

[Democorruptcy]

45 minutes ago, Fence said:

Although it's debatable how significant company pension deficits should be to investment decisions, it seems to be a potential hot topic area (particularly viz dividend payments) so I'm concerned enough to consider it in my selection criteria.  The following link provides quite a useful analysis of the topic:  https://www.jltemployeebenefits.com/our-insights/publications/ftse-reports.

No wonder BT keep putting their prices up:

Quote

There are a significant number of FTSE 100 companies where the pension scheme represents a material risk to the business. 11 FTSE 100 companies have total disclosed pension liabilities greater than their equity market value. For International Airlines Group, BT and Sainsbury total disclosed pension liabilities are around double their equity market value.

 

 

[Dogtanian]

I think the telcos sound good going forward.  Big worldwide mobile operators like vodaphone and MTN sound especially good in so far as having a lot of potential global growth, with Africa included.

Anyone know what kind of pension position the above two are in? 

A few years ago I really wanted to park a small amount of money in south Africa.  At the time (2013) inflation was running very high, with standard bank interest saving rates being 7/8% I think.  Credit card rates were something like 20% iirc speaking with people who were having to find their businesses this way.  Anyway I should have have thought harder and realised I could have bought some RSA listed shares to get exposure there.  Not sure what environment now like... Think settled down politically somewhat with change of President.  The exchange rate buys 30% Rand's for pounds though.

[Democorruptcy]

1 hour ago, Dogtanian said:

I think the telcos sound good going forward.  Big worldwide mobile operators like vodaphone and MTN sound especially good in so far as having a lot of potential global growth, with Africa included.

Anyone know what kind of pension position the above two are in? 

 

Vodaphone

https://www.jltemployeebenefits.com/-/media/files/sites/employee-benefits/defined-benefit/reports/ftse/ftse100-december-2017.ashx?la=en-gb&hash=ED6419CD263FF6E1C3D484682376A2A2141059DA

[durhamborn]

2 hours ago, Fence said:

Although it's debatable how significant company pension deficits should be to investment decisions, it seems to be a potential hot topic area (particularly viz dividend payments) so I'm concerned enough to consider it in my selection criteria.  The following link provides quite a useful analysis of the topic:  https://www.jltemployeebenefits.com/our-insights/publications/ftse-reports.

Indeed.The transports it should be remembered though have large parts of the pension schemes where the government is liable for any deficits,they simply fund the ongoing pension costs while they have the franchise.Go Ahead for instance has a small surplus on its bus pension scheme.There is also the issue of gilt rates and what rules the pension schemes have.Many final salary schemes have maximum uplifts of 5%,so in a reflation where inflation might run at double figures liabilities can be quickly cut.Of course if there isnt a cap in place thats different.

[Dogtanian]

@Democorruptcy thanks!  Will have a read through looks very interesting and clearly written comparison for the FTSE ones.

[jonb2]

Calling DB, the mining expert

https://www.bloomberg.com/news/articles/2018-02-21/apple-is-said-to-negotiate-buying-cobalt-direct-from-miners

 

[Thorn]

Lots and lots of debt seems to be what makes up 2/3 of the stock market... if so, Debt deflation likely..? 

[DoINeedOne]

Centrica posts 17.4 percent fall in full year profit

Britain's largest energy supplier Centrica, which issued a profit warning in November, raised its cost efficiency programme target by 500 million pounds and said it would cut about 4,000 jobs by 2020.

The company, which also reported a 17.4 percent fall in full year operating profit, said the additional savings would take the total targeted costs savings to 1.25 billion pounds per annum by 2020.

The company said its adjusted operating profit fell to 1.25 billion pounds in the year ended Dec. 31, from 1.5 billion pounds a year ago, hurt by higher competition in North America and Britain.

Total consumer energy supply customer accounts fell 6.6 percent to 24.4 million, while in the business segment it fell 5.9 percent to 1.3 million.

Edited February 22, 2018 by DoINeedOne

[durhamborn]

1 hour ago, DoINeedOne said:

Centrica posts 17.4 percent fall in full year profit

Britain's largest energy supplier Centrica, which issued a profit warning in November, raised its cost efficiency programme target by 500 million pounds and said it would cut about 4,000 jobs by 2020.

The company, which also reported a 17.4 percent fall in full year operating profit, said the additional savings would take the total targeted costs savings to 1.25 billion pounds per annum by 2020.

The company said its adjusted operating profit fell to 1.25 billion pounds in the year ended Dec. 31, from 1.5 billion pounds a year ago, hurt by higher competition in North America and Britain.

Total consumer energy supply customer accounts fell 6.6 percent to 24.4 million, while in the business segment it fell 5.9 percent to 1.3 million.

Shares up 2nd highest risers on the FTSE (after a terrible year of course).Go Ahead Group the highest riser on the FTSE 250.Debt and free cash flow are the things that matter going forward,Centrica has cut its by £900 million and Go Ahead has cut theirs to 1.01 times with capital investment falling now just as we enter a reflation (ie perfect).Interesting Centrica are going to sell their nuclear business.I have no idea what it is worth,but probably a good move.They are also the 2nd biggest broker to business of energy in the US.That will be a hugely profitable business in the next cycle.Remember,the market always looks the wrong way at key inflection points.

Biggest fallers on the FTSE,the tobacco stocks.

[Barnsey]

Busy day today then it seems!

Centrica as above, along with many many others

U.S. Existing home sales saw their biggest fall since 2014

Zopa warning investors over loan defaults at higher rate than peak of financial crisis

Unilever possibly moving HQ to Rotterdam

Oil hitting a ceiling

Currency markets "look" like they are positioning for another big fall in SPX either today/tomorrow, probably nothing...

[jimmyblueeyes]

4,000 Centrica jobs in the UK to go by 2020?

Are the Tories still fixing the roof of the economy whilst the sun is shining ? Or is it now pissing it, tools are down and the old roof half-finished and covered in large swathes of old blue tarpulin flapping about in the wind ?

[durhamborn]

13 hours ago, jonb2 said:

Calling DB, the mining expert

https://www.bloomberg.com/news/articles/2018-02-21/apple-is-said-to-negotiate-buying-cobalt-direct-from-miners

 

Iv never looked into the smaller commods,at the moment i only want the PMs.Interesting for the next cycle though along with all other reflation assets.