Deflationary collapse and the Reflation Cycle to Come.

[Thorn]

28 minutes ago, wish I could afford one said:

Of course no advice being offered.  I'm not licensed to extort advise.  Just the musings of some random middle aged bloke on the internet.

I like your thinking that WICAO is not a reference to houses/homes.  In that case it should be WICAT - one orange tree, one lemon tree and one olive tree.  Garden heaven.

Sorry yes not Advice it’s all my own DYOR for the record.

But still you are responsible for me getting the bravery to start and for the magic that is now happening to my fund. The divis go back in instead of paying for the IFA lad’s tie and BMW.

Less bewildered thanks to you, Durhamborn, Sancho Panza and I am reading every book and online resource that I can.

good to have started.

[Thorn]

26 minutes ago, CanAffordWontPay said:

Thanks for sharing WAICO. Reading your book, website and a few other sources really gave me the impetus to get on and do it myself. I just need to start pushing the buy button now. Easier said than done though. Would be easier to do if I was only starting out with new money, however after consolidating some pensions and ISA's etc I'm finding that initial entry a difficult emotion to overcome.

As WICAO says, it’s all DYOR for us all... but What about this as a starting place...are there things you would like to have in there no matter what in ten years? If yes, maybe that’s a good place to start buying. 

 

 

[durhamborn]

9 hours ago, Sancho Panza said:

A stunning read.I love the guys work.

Some pearls.

' Being human, many investors don't want to participate in anything until they see others doing likewise '

' In my opinion, historic parallels are much more important than reasons. '

He is a fantastic contrarian and it is money well spent joining his subscription service.Over the long time iv known Steve's work he has made me a lot of money by showing up areas of huge undervaluation.

I was running the US jobless claim numbers through a few things and noticed the last time they were as low,a recession hit within a year.

I noticed in my portfolio this week the bond proxies/defensives id bought did very very well.Currency drives most things.

[The Spaniard]

Excellent thread, thanks to all contributors.

For my SIPP and S&S ISA I have a rather lazy 'strategy', buying and holding large global equity investment trusts, re-investing dividends along with new money.

Examples are SMT, ATST, FRCL, BNKR, WTAN.

I am investing for old age, with around a ten year time horizon.

Any comment, please?

I fully understand that any observation will NOT be financial advice, just internet chat.

 

[CanAffordWontPay]

25 minutes ago, wish I could afford one said:

If you're struggling to get started might be worth Pound Cost Averaging In over a longish period.  I believe back testing shows that it's not on average the most effective way because markets tend (but of course not always) to reach new highs.  It should lead to less variability in outcomes though - the extreme negative variability being the GFC <insert other major event here also> occurs the day after you move 100% of your cash into investments.

Of course not advice...

This is what I'm leaning towards with the bulk of the funds. Splitting across quarterly purchases with additional new money. 

2 minutes ago, Thorn said:

As WICAO says, it’s all DYOR for us all... but What about this as a starting place...are there things you would like to have in there no matter what in ten years? If yes, maybe that’s a good place to start buying. 

 

 

It's a good suggestion (for me at least) and something I'm going ahead with in regards to a couple of asset classes/individual shares etc. Equity indexes, on the other hand, is where it's proving a little more challenging to overcome. But time in the market... etc etc 

[durhamborn]

35 minutes ago, CanAffordWontPay said:

Thanks for sharing WAICO. Reading your book, website and a few other sources really gave me the impetus to get on and do it myself. I just need to start pushing the buy button now. Easier said than done though. Would be easier to do if I was only starting out with new money, however after consolidating some pensions and ISA's etc I'm finding that initial entry a difficult emotion to overcome.

Its always the case isnt it.I have set up several portfolios for family members with individual shares and its almost the law that the first few will continue down so the portfolio is red for a good while.I actually set one up for my dad who sold his Asian fund over the last twelve months and im about 60% invested now.The first stock i bought was Royal Mail at £4.06 and he was complaining it was down for quite a while as was Drax.That portfolio is doing very well now,outperforming FTSE 100,250 and small cap by a very wide margin.Given its leaning towards reflation dividend payers for income and defensives who gain from falling sterling (Imperial etc) im very happy.Im of the opinion that slowly building up positions in out of favour stocks/sectors that will gain from the cycle over time is the best approach.If it all has to go in at once then asset allocation is key and WICAOs book would be a very good port of call.The only way i would differ is i wouldnt hold any corporate bonds,only treasuries.

[wish I could afford one]

14 minutes ago, durhamborn said:

Its always the case isnt it.I have set up several portfolios for family members with individual shares and its almost the law that the first few will continue down so the portfolio is red for a good while.I actually set one up for my dad who sold his Asian fund over the last twelve months and im about 60% invested now.The first stock i bought was Royal Mail at £4.06 and he was complaining it was down for quite a while as was Drax.That portfolio is doing very well now,outperforming FTSE 100,250 and small cap by a very wide margin.Given its leaning towards reflation dividend payers for income and defensives who gain from falling sterling (Imperial etc) im very happy.Im of the opinion that slowly building up positions in out of favour stocks/sectors that will gain from the cycle over time is the best approach.If it all has to go in at once then asset allocation is key and WICAOs book would be a very good port of call.The only way i would differ is i wouldnt hold any corporate bonds,only treasuries.

Full disclosure: 6% of my portfolio is corporate bonds.  All ISXF which is a corporate bond ETF which excludes financials.  It currently yields 2.8%.

[Majorpain]

1 hour ago, The Spaniard said:

Excellent thread, thanks to all contributors.

For my SIPP and S&S ISA I have a rather lazy 'strategy', buying and holding large global equity investment trusts, re-investing dividends along with new money.

Examples are SMT, ATST, FRCL, BNKR, WTAN.

I am investing for old age, with around a ten year time horizon.

Any comment, please?

I fully understand that any observation will NOT be financial advice, just internet chat.

 

Are you happy with the returns?  Its important to remember that what may work for other people may not work for you, in particular if they are investing in sectors they work in and understand.  The one thing that i can say about your allocation is that i hold 20% of my wealth with WTAN, they have done very well since they were bought 15+ years ago but i expect them to get hit in any deflationary selloff.  The next cycle will be one in which active manager models should(!) outperform the passive index funds that have become so popular these days so i have no plans to sell, but will be watching closely how they respond.

I am currently 50% Govt Bond, 30% ETF and 20% Goldies/equities which im planning to hold until this thing hits.  Its a when not an if from my research, so i missed out on the DOW to the moon rally over the past year, showing timing is not without risks!  Its also an allocation that lets me sleep well at night, financial gain is not worth risking my mental health over.

[chronyx]

1 hour ago, durhamborn said:

Its always the case isnt it.I have set up several portfolios for family members with individual shares and its almost the law that the first few will continue down so the portfolio is red for a good while.

Ain't that the truth DB! In my case, SSE and NG have finally ticked upwards though

[wish I could afford one]

I've mentioned many times that one of the pillars of my investing strategy is to ruthlessly minimise total investing expenses.  Today my wrapper (ISA, SIPP, Trading Account) and product expenses run to 0.22%.  This means I shun active investment products which in theory have the potential to outperform the market.  The question then becomes do they?

Some musings I've just prepared on the topic might be of interest to some HPC'ers.

[harp]

Long time member (2008) but first post. Just felt the need to say thankyou to DB and others for the content of this thread. I never took much notice of it until the middle of Feb when I did the 'boxset' version which took a couple of days!
It really gave me a kick up the a**se. I've never bought a share in my life and always thought it was for rich people but decided to join HL (never heard of them till this discussion) and start researching shares. I know you all say DYOR, but this thread WAS my research and continues to be my main source.
So on the back of all the above and having £100k doing nothing but sitting in a rubbish paying savings account  I jumped in from around Feb 20th to around mid March. All the shares I bought seemed to be still going down and have been for quite awhile. I bought Drax, Sirius, Imperial, Go-Ahead, Centrica, SSE, Stagecoach, Glaxo, Nat Grid, Vodaphone.
It seemed luck was on my side! They have all done very well since then but I'm aware this could change and watch like a hawk trying not to hit the sell button when they go down for a day!!! Overtrading I think it's called?
Either way, a huge thankyou to all concerned.

[wish I could afford one]

21 minutes ago, harp said:

Long time member (2008) but first post. Just felt the need to say thankyou to DB and others for the content of this thread. I never took much notice of it until the middle of Feb when I did the 'boxset' version which took a couple of days!
It really gave me a kick up the a**se. I've never bought a share in my life and always thought it was for rich people but decided to join HL (never heard of them till this discussion) and start researching shares. I know you all say DYOR, but this thread WAS my research and continues to be my main source.
So on the back of all the above and having £100k doing nothing but sitting in a rubbish paying savings account  I jumped in from around Feb 20th to around mid March. All the shares I bought seemed to be still going down and have been for quite awhile. I bought Drax, Sirius, Imperial, Go-Ahead, Centrica, SSE, Stagecoach, Glaxo, Nat Grid, Vodaphone.
It seemed luck was on my side! They have all done very well since then but I'm aware this could change and watch like a hawk trying not to hit the sell button when they go down for a day!!! Overtrading I think it's called?
Either way, a huge thankyou to all concerned.

Welcome to DBs great thread harp.  The best on HPC IMHO.  If I'm reading your post correctly it sounds like you have £100k invested in 10 shares.  In doing that are you aware of the downside risk from lack of diversification (of course it could help you in the other way as well) you are  taking?  How would you feel if one of those went and did a Carillion?  All of a sudden you're £10k (assuming you own them in equal measure) down and questioning if this investing lark is for you.

[Thorn]

1 minute ago, wish I could afford one said:

Welcome to DBs great thread harp.  The best on HPC IMHO.  If I'm reading your post correctly it sounds like you have £100k invested in 10 shares.  In doing that are you aware of the downside risk from lack of diversification (of course it could help you in the other way as well) you are  taking?  How would you feel if one of those went and did a Carillion?  All of a sudden you're £10k (assuming you own them in equal measure) down and questioning if this investing lark is for you.

Good point hello Harp it’s some craic all this but this thread has become a second home. In between flicking at it I just keep mulling. I didn’t know anything before about pensions SIPPs ISAs or investments. Same as you it’s been a move to HL and pretty much got the same shares there, plus pms, miners. Went for IBTL and some property funds too in the end. Went for some individual DOW shares to hold for the longterm - Martin armstrong might be right if there is a flight to them, and hopefully they will pay divis longterm...but now keep thinking I will mainly add trackers from here on just because of fees. And you never know when the crash will hit. But the dividends have started to trickle in and it’s magic to see. Before they would all have gone to the IFA but now they will all be reinvested and with new money to be added they should compound over time even through crashes. This thread is like tools- a shovel and a sieve for a goldmine. 

I have sort of blended DB’s picks and also been following WICAO’s idea of minimize fees and spread around trackers and they are doing well too.  

Reading something every day here. Like here, I never understood what they meant about the Yen was a safe Haven. Trying to figure it out though to help understand the macro trends. Feels good.

[harp]

10 minutes ago, wish I could afford one said:

Welcome to DBs great thread harp.  The best on HPC IMHO.  If I'm reading your post correctly it sounds like you have £100k invested in 10 shares.  In doing that are you aware of the downside risk from lack of diversification (of course it could help you in the other way as well) you are  taking?  How would you feel if one of those went and did a Carillion?  All of a sudden you're £10k (assuming you own them in equal measure) down and questioning if this investing lark is for you.

Thanks WICAO. As I've said I'm pretty new to this but get what you are saying. I'm really on a steep learning curve and was looking at your website (your link above) and bought your kindle book last week but have yet to get reading.
If you mean by diversification I still have other cash sitting around to take advantage of any oppotunities plus I've bought some silver and gold coins.
But share/fund wise it was £100k split into those shares. There was plenty of warning of carrilion (I think) before they went t*ts up? So hopefully the companies I've chosen above are good / sound defensive ones. But any advice on further diversification on equities in this current enviroment is welcome.

[chronyx]

5 hours ago, durhamborn said:

He is a fantastic contrarian and it is money well spent joining his subscription service.Over the long time iv known Steve's work he has made me a lot of money by showing up areas of huge undervaluation.

I was running the US jobless claim numbers through a few things and noticed the last time they were as low,a recession hit within a year.

I noticed in my portfolio this week the bond proxies/defensives id bought did very very well.Currency drives most things.

Is the paid subscription suitable material for amateurs? (I.e. me ?)

[harp]

13 minutes ago, Thorn said:

Good point hello Harp it’s some craic all this but this thread has become a second home. In between flicking at it I just keep mulling. I didn’t know anything before about pensions SIPPs ISAs or investments. Same as you it’s been a move to HL and pretty much got the same shares there, plus pms, miners. Went for IBTL and some property funds too in the end. Went for some individual DOW shares to hold for the longterm - Martin armstrong might be right if there is a flight to them, and hopefully they will pay divis longterm...but now keep thinking I will mainly add trackers from here on just because of fees. And you never know when the crash will hit. But the dividends have started to trickle in and it’s magic to see. Before they would all have gone to the IFA but now they will all be reinvested and with new money to be added they should compound over time even through crashes. This thread is like tools- a shovel and a sieve for a goldmine. 

I have sort of blended DB’s picks and also been following WICAO’s idea of minimize fees and spread around trackers and they are doing well too.  

Reading something every day here. Like here, I never understood what they meant about the Yen was a safe Haven. Trying to figure it out though to help understand the macro trends. Feels good.

Thorn, it's like information overload! The boxset reading of this entire thread in Feb gave me a few more grey hairs but it's amazing the information you take in and how most people aren't aware of what's coming. My next step was miners and IBTL. But going to start my S&S ISA with HL first. Not sure what to put in it for long term though!!

[wish I could afford one]

3 minutes ago, harp said:

Thanks WICAO. As I've said I'm pretty new to this but get what you are saying. I'm really on a steep learning curve and was looking at your website (your link above) and bought your kindle book last week but have yet to get reading.
If you mean by diversification I still have other cash sitting around to take advantage of any oppotunities plus I've bought some silver and gold coins.
But share/fund wise it was £100k split into those shares. There was plenty of warning of carrilion (I think) before they went t*ts up? So hopefully the companies I've chosen above are good / sound defensive ones. But any advice on further diversification on equities in this current enviroment is welcome.

"There was plenty of warning of carrilion (I think) before they went t*ts up?"  Be careful with that assumption.  A year ago Carillion opened at 222.8, 6 months ago somebody still thought they were worth 45.25 and we know what happened next.  Such tight holdings are for some but not for me.  I buy the market - it's diversification, diversification, diversification for me.  Buy a FTSE100 tracker and you get circa 100 companies (admittedly allocated via market cap meaning you'll be hold circa 7% in HSBC, 6% in Shell etc).  Then go deeper and wider (inc across countries) via the FTSE250, S&P500, Europe, Japan, Emerging Markets, Asia etc and before long you have a stake in literally thousands of companies.  I spend a lot of time in my book describing how I built a diversified portfolio so I won't repeat it all here given you have the book already.

[wish I could afford one]

7 minutes ago, harp said:

Thorn, it's like information overload! The boxset reading of this entire thread in Feb gave me a few more grey hairs but it's amazing the information you take in and how most people aren't aware of what's coming. My next step was miners and IBTL. But going to start my S&S ISA with HL first. Not sure what to put in it for long term though!!

Don't be discouraged and stay with it harp.  With time it will likely save you many thousands of pounds.  Of course it's likely it will also cost you some money in the short term.  It certainly did for me with the beauty of hindsight.  I'm still so glad I did it.  Knowledge really is power in this instance...

Edit: If you've started a S&S ISA with HL just watch what you're buying from a HL expenses perspective.  They can be both competitive and expensive depending on what you're buying.

Edited April 28, 2018 by wish I could afford one
Add HL detail

[harp]

1 minute ago, wish I could afford one said:

"There was plenty of warning of carrilion (I think) before they went t*ts up?"  Be careful with that assumption.  A year ago Carillion opened at 222.8, 6 months ago somebody still thought they were worth 45.25 and we know what happened next.  Such tight holdings are for some but not for me.  I buy the market - it's diversification, diversification, diversification for me.  Buy a FTSE100 tracker and you get circa 100 companies (admittedly allocated via market cap meaning you'll be hold circa 7% in HSBC, 6% in Shell etc).  Then go deeper and wider (inc across countries) via the FTSE250, S&P500, Europe, Japan, Emerging Markets, Asia etc and before long you have a stake in literally thousands of companies.  I spend a lot of time in my book describing how I built a diversified portfolio so I won't repeat it all here given you have the book already.

Cheers! I'll read the book before I do anything else. I guess when you started your journey for financial freedom things looked different then in terms of what is possibly coming? If it all plays out like DB and others say it will in the near future what would you change? Or what are you going to change about what you hold etc?

[leonardratso]

3 minutes ago, wish I could afford one said:

"There was plenty of warning of carrilion (I think) before they went t*ts up?"  Be careful with that assumption.  A year ago Carillion opened at 222.8, 6 months ago somebody still thought they were worth 45.25 and we know what happened next.  Such tight holdings are for some but not for me.  I buy the market - it's diversification, diversification, diversification for me.  Buy a FTSE100 tracker and you get circa 100 companies (admittedly allocated via market cap meaning you'll be hold circa 7% in HSBC, 6% in Shell etc).  Then go deeper and wider (inc across countries) via the FTSE250, S&P500, Europe, Japan, Emerging Markets, Asia etc and before long you have a stake in literally thousands of companies.  I spend a lot of time in my book describing how I built a diversified portfolio so I won't repeat it all here given you have the book already.

i just bought it was some offer for the paperback, can i put it down as a business expense and reclaim the vat? hahahaha ill go through it with a fine tooth comb and will probably readjust if i see stuff i like. At the moment ive mainly pulled to cash, opened a premium bond acount for my daughter and started loading it up, my own is full. Its a poor investment but i like it because its liquid and it means that the cash isnt sat in a crummy 0.35% account (or even someone elses 0.35% account if it was TSB!). I would personally remove all the cash cos i dont really like the bank, not that anywhere else is any better but choices are limited i suppose.

[wish I could afford one]

2 minutes ago, harp said:

Cheers! I'll read the book before I do anything else. I guess when you started your journey for financial freedom things looked different then in terms of what is possibly coming? If it all plays out like DB and others say it will in the near future what would you change? Or what are you going to change about what you hold etc?

If you want a good book for UK investors I would recommend Tim Hale's Smarter Investing.  It's what a large portion of my strategy is unashamedly based on.  I would also recommend you spend a lot of time on monevator.com and I know s/he has recommended Lars Kroijer's Investing Demystified on occasion.

Yep when I started things indeed looked very different.  I started my journey in late 2007 so my introduction to DIY investing was the Global Financial Crisis.  At its deepest one of my ETC's actually blew up and went to zero before later reappearing after a rescue.

I follow this thread with interest but some of the guys are far more intelligent than me.  I'm doing nothing different than what I've essentially done since 2007 which has served me well and has allowed me to amass about £1.3M to date.

[wish I could afford one]

15 minutes ago, leonardratso said:

i just bought it was some offer for the paperback, can i put it down as a business expense and reclaim the vat? hahahaha ill go through it with a fine tooth comb and will probably readjust if i see stuff i like. At the moment ive mainly pulled to cash, opened a premium bond acount for my daughter and started loading it up, my own is full. Its a poor investment but i like it because its liquid and it means that the cash isnt sat in a crummy 0.35% account (or even someone elses 0.35% account if it was TSB!). I would personally remove all the cash cos i dont really like the bank, not that anywhere else is any better but choices are limited i suppose.

Good luck on your journey leonardratso.  It's great to see that as time progresses more and more HPC'ers are getting interested in this great thread.

[sideysid]

23 minutes ago, harp said:

Thanks WICAO. As I've said I'm pretty new to this but get what you are saying. I'm really on a steep learning curve and was looking at your website (your link above) and bought your kindle book last week but have yet to get reading.
If you mean by diversification I still have other cash sitting around to take advantage of any oppotunities plus I've bought some silver and gold coins.
But share/fund wise it was £100k split into those shares. There was plenty of warning of carrilion (I think) before they went t*ts up? So hopefully the companies I've chosen above are good / sound defensive ones. But any advice on further diversification on equities in this current enviroment is welcome.

Be careful with thinking about ‘getting out’ of individual shares at the right time. Bankers and brokers are paid lots of money to use contacts and methods to be privvy to any information before it gets out and have expensive hardware/software to trade a lot quicker than the average joe.

As already said here, the wider you diversify the better and leave smaller amounts for individual shares. DB has given some solid contrarian picks that should do well in any future financial storms due to having low debt, good company infrastructure etc. These are long term investments any any dividends should be re-invested.

[SOLZHENITSYN]

Quick question,

anyone know where I can access historical sector analysis data for the US, and if possible the UK? 

I want to take at look at long term (ideally back to 70’s) trends in Capital allocations between sectors and see how they vary with each other against things like bond rates, recessions, money flow etc..

ideally say for the US, the Capital assigned to each sector as an overall % of S&P500 market cap.....

 

cheers

Solz

[CanAffordWontPay]

17 minutes ago, wish I could afford one said:

Yep when I started things indeed looked very different.  I started my journey in late 2007 so my introduction to DIY investing was the Global Financial Crisis.  At its deepest one of my ETC's actually blew up and went to zero before later reappearing after a rescue.

1

Are you at liberty to say which ETC? I've seen from your 2017 breakdown that you're in 3 gold ETC's. Have you done this to split the risk? There's been a bit of discussion about the Gold/Silver ETC's on here. Subsequently, I've decided to avoid ETC's for the time being and go physical.