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Guest KingCharles1st

I M Beginning To Notice Something- Markets Are Changing

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Guest KingCharles1st

I have noticed a sort of "stabilisation" in the business world over the last month. The people still in businesss are preparing themselves for a new reality, of less orders on their books, of less expense, of less profit, of generally less of everything.

These people, the ones that have so far survived, are now pretty unlikely to be the demographic who go and put everything on red or black.

Tomorrows market place is going to be LOW RISK

Housing is now HIGH RISK

Banking and Investment is HIGH RISK

Oh dear oh dear oh dear

Are we going for Stagflation now....?

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I have noticed a sort of "stabilisation" in the business world over the last month. The people still in businesss are preparing themselves for a new reality, of less orders on their books, of less expense, of less profit, of generally less of everything.

These people, the ones that have so far survived, are now pretty unlikely to be the demographic who go and put everything on red or black.

Tomorrows market place is going to be LOW RISK

Housing is now HIGH RISK

Banking and Investment is HIGH RISK

Oh dear oh dear oh dear

Are we going for Stagflation now....?

No, the bankers and the government are going to make you take risks on (with the odds stacked in their favour) one way or another.

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Housing is low risk with Government backing under the Asset Purchase/Protection Scheme, £260Bn or so in the Moody report on LLoyds.

Under the agreement Lloyds will place £260bn of assets into the Asset Protection Scheme, focusing on those assets where there is the greatest degree of uncertainty about their future performance. Lloyds will pay a participation fee of £15.6bn to the Treasury in capital, more details of which are set out in the term sheet accompanying the Lloyds press release issued today. The agreement will mean that in the event of a loss, Lloyds will bear a first loss amount after existing impairments of up to £25bn. In return Lloyds will make additional lending commitments totalling £3bn of mortgage lending and £11bn of business lending over the next 12 months. A similar lending commitment has been made in respect of the subsequent 12 months but this will be reviewed to ensure it reflects economic circumstances at that time.

http://www.hm-treasury.gov.uk/press_23_09.htm

Edited by Tom Peters

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Guest KingCharles1st
No, the bankers and the government are going to make you take risks on (with the odds stacked in their favour) one way or another.

No- they can't make the people who don't need to. These people will now sit back and watch the spectacle unfold at their leisure.

Talking of spectacles- where has he got to?

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Guest KingCharles1st
Housing is low risk with Government backing under the Asset Purchase/Protection Scheme, £260Bn or so in the Moody report on LLoyds.

So does that make it a sound investment vehicle then?

Would YOU?

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I have noticed a sort of "stabilisation" in the business world over the last month. The people still in businesss are preparing themselves for a new reality, of less orders on their books, of less expense, of less profit, of generally less of everything.

These people, the ones that have so far survived, are now pretty unlikely to be the demographic who go and put everything on red or black.

Tomorrows market place is going to be LOW RISK

Housing is now HIGH RISK

Banking and Investment is HIGH RISK

Oh dear oh dear oh dear

Are we going for Stagflation now....?

Interesting observation.

I suspect that you are in touch with people closer to the "real economy" than I am.

Many people that I know are implicitly the first derivative of the "real economy" and quite highly leveraged. Their experience is the opposite of what you have observed. Their businesses are struggling and they expect things to get worse. Their survival is dependent on the employment rate which is a lagging indicator.

In a way, they confirm your overall view. The risk averse people in the world are not going out on a limb in current circumstances. The risk takers are susceptible to lagging indicators and are unable to take risk at the moment (and will be unable to do so until their balance sheets are repaired which will be a very slow process).

All told, the prognosis for the medium term is not good : slow growth, risk aversion from those who can take risk, no risk taking ability from those who are ordinarily inclined to do so and the threat of inflation from QE.

Overall, stagflation is a good call.

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Guest KingCharles1st
Interesting observation.

I suspect that you are in touch with people closer to the "real economy" than I am.

Many people that I know are implicitly the first derivative of the "real economy" and quite highly leveraged. Their experience is the opposite of what you have observed. Their businesses are struggling and they expect things to get worse. Their survival is dependent on the employment rate which is a lagging indicator.

In a way, they confirm your overall view. The risk averse people in the world are not going out on a limb in current circumstances. The risk takers are susceptible to lagging indicators and are unable to take risk at the moment (and will be unable to do so until their balance sheets are repaired which will be a very slow process).

All told, the prognosis for the medium term is not good : slow growth, risk aversion from those who can take risk, no risk taking ability from those who are ordinarily inclined to do so and the threat of inflation from QE.

Overall, stagflation is a good call.

Yes- very well thought out- I agree 100%

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Interesting thoughts - and tie in with frustrated cries of "banks must lend" coming from the dinosaurs.

Must be time to place more emphasis on venture capital, as an alternative to bank lending for businesses too small to issue bonds. Can we look forward to improved terms for VC investors, to bring more money in? Or would that be far too sensible? I'm thinking of things like improving liquidity by extending the tax breaks to the secondary market, provided the investor holds for the required term.

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Interesting thoughts - and tie in with frustrated cries of "banks must lend" coming from the dinosaurs.

Must be time to place more emphasis on venture capital, as an alternative to bank lending for businesses too small to issue bonds. Can we look forward to improved terms for VC investors, to bring more money in? Or would that be far too sensible? I'm thinking of things like improving liquidity by extending the tax breaks to the secondary market, provided the investor holds for the required term.

I am quite involved in the pre-VC market (aka angel investing).

It does feel like risk adjusted pricing is starting to return to levels that are interesting for the owners of capital.

I am guilty of sometimes forgetting that the recent bubble was pretty widespread across many asset classes. To date, most of them are adjusting to a fair (on a risk adjusted basis) level far more quickly than house prices.

While some might see this as supportive for house prices, my view is that all other asset classes will be more attractive than residential property which is actually bearish in the medium term.

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Are we going for Stagflation now....?

Not in my opinion. My reason is that stagflation remains a fear in the living mindset. To predict our future, we should anticipate something that people, on the whole, are not frightened by. In the near term, deflation seems most likely.

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Housing is low risk with Government backing under the Asset Purchase/Protection Scheme, £260Bn or so in the Moody report on LLoyds.

How so? Unless I've totally misread that, the asset wotsit scheme applies to 90ish percent of £260bn of existing assets, not new assets.

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Not in my opinion. My reason is that stagflation remains a fear in the living mindset. To predict our future, we should anticipate something that people, on the whole, are not frightened by. In the near term, deflation seems most likely.

An interesting point of view.

An alternate way of looking at the problem might be to consider exactly who has the power to make sure that their fears are not realized.

Fiscal and monetary authorities (governments and central banks) understand just how destructive deflation would be.

They are the only ones who have the tools to ensure that their fears are not realized. In the end, they could be powerless to prevent the manifestion of the unintended consequences of the utilization of their powers.

Individuals on the other hand, might fear inflation but they are powerless to prevent it.

Do you think that it is possible that fiscal and monetary authorities can prevent deflation while individuals' worst fears will be realized due to the power imbalance between individuals and authorities?

(Apologies for yet another inflation / deflation debate)

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I am quite involved in the pre-VC market (aka angel investing).

I'd be interested to find out more about that, particularly if it involves decent tax breaks. And if (as seems entirely possible) I lose my current job, I might take an interest in it from the other end, so to speak!

I've noted that VCTs cover a range of investments, and one of my investments last year was a VCT that explicitly does include genuine day-1 startups. But I've never found sources of information on pre-VC investment as such.

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I'd be interested to find out more about that, particularly if it involves decent tax breaks. And if (as seems entirely possible) I lose my current job, I might take an interest in it from the other end, so to speak!

I've noted that VCTs cover a range of investments, and one of my investments last year was a VCT that explicitly does include genuine day-1 startups. But I've never found sources of information on pre-VC investment as such.

I am going to sleep now.

If you want to PM me I will be happy to send you a few links and experiences that might help you get started or chase you away forever ........

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