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Drip Feeding Into The Stock Market

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I have an unusual attitude. I'm not saving up to spend in my retirement. I think I'm beyond that level already. Instead, I am building up wealth in excess of my personal needs.

I believe we are going to have a technological revolution based on genetics, nanotechnology, robotics and machine intelligence. I think a lot of our health problems, like ageing will at least be delayed, and I want to have the capital to be deeply involved in a new era of growth, creativity and opportunities.

So yes, I have a very long view. :-D

you might like these then, except they have quite high AMC of 1%:

Legal & General Global Health and Pharmaceutical Index Trustsupplied

Legal & General Global Technology Index Trust

http://lt.morningstar.com/z6k3gp19vg/snaps...6;$ONS_164

http://lt.morningstar.com/z6k3gp19vg/snaps...6;$ONS_164

you can get most index trackers at reduced annual management charges in existign fund supermarkets thru, among others, clubfinance.co.uk, effectively about 25% off the advertised AMC

Edited by Si1

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Also, to bring it back to drip feeding, the point is not to have any brilliant future insight, but just to be along for the ride, no matter what the outcomes are, and accept it is essentially unpredictable.

Not quite sure I see the point of drip feeding. Sounds too much like an informational free lunch to me.

If you think the investment is a long term buy, then just buy it, now, with all your allocated money.

If there was a no-brainer way of beating the instantaneous market price down then the price wouldn't be the price. Pound cost averaging costs you the time it takes to drip the full amount into your chosen vehicle.

It is of course a different matter if you do not have all your money ready, and are simply investing as you earn...

Edited by mirage

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Yes mirage, my strategy is a mess, but I'm just playing around.

In essence, this is just a little experiment with a bit of unused income, and a little hedge in case my main bet is wrong. I am only dripping it in because I have a bit of unallocated regular cashflow and because of UK ISA limits.

My main bet, with the bulk of my assets is on general deflation, including equities, so I am holding that stake out of the market. When I think equities are cheap enough, I will go all in - no dripping.

I don't think I need to be precisely right on timing. It's as if I got out in 1929. As long as I am reinvested by the 1970s, I don't much care if I got back in the the mid 1930s or 1940s. My main care is to miss out on the current bout of wealth destruction. This little drip is just a tease to make myself start really watching what's happening. (I also don't think it is too wealth destructive, because long term I think equities are undervalued even now, given the future I foresee. It's just human nature to want them even more undervalued, if I think that is coming up soon, which I do.)

Drip feed seems sensible and spreads the risk I would say, but I'm no investor

I have been reconsidering things of late currently about 90% in cash 10% stocks (all on GBP, I know :rolleyes: )

So the risk is all eggs in one basket. I do need about 50% of that money about £100K for a new extension on the house (better than divorce) end/start next year but the remainder needs looking at again and a spread of bonds (govt, not sure about UK though), shares etc seems more appropriate now. A little bit of gold too if price drops enough, sold through fear at low point last year :o

I like these threads, provides some serious contrary thought to the consensus view here which is needed IMO

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Not quite sure I see the point of drip feeding. Sounds too much like an informational free lunch to me.

If you think the investment is a long term buy, then just buy it, now, with all your allocated money.

If there was a no-brainer way of beating the instantaneous market price down then the price wouldn't be the price. Pound cost averaging costs you the time it takes to drip the full amount into your chosen vehicle.

It is of course a different matter if you do not have all your money ready, and are simply investing as you earn...

de[ends opn whether you believe in the efficient markets hypothesis over the shortish term...

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Hargreaves Lansdown don't have the Vanguard funds yet. However the HSBC trackers are quite cheap, and I think their fees are going to get cut again in November and they're quite liquid funds.

I prefer the various monthly equity income funds available, as I like getting the frequent dividends out of them. Schroeder's Income Maximiser and the Premier Optimum Income fund are also nice as their covered call strategy is paying decent dividends in this volatile market (and they're yielding ~ 10-15% at present).

Healthcare costs will rise in the next few years, that much is clear, but I am not convinced corporations will make more money out of it as cash poor governments will squeeze margins.

L&G also have an index linked and a normal gilt fund - they are also quite good cheap things to have in an ISA.

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Thanks for all the information DrGUID. Hargreaves Lansdown and Vanguard would be the dream ticket for me. That hope might be partly why I'm delaying starting for a few more months.

what do HL have over other funds supermarkets?

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> what do HL have over other funds supermarkets?

Good points:

* Top notch UK based support

* Massive range of funds and easy to move money between funds

* 0% initial fee on most unit trusts

* Nice online dealing site

* They send you loads of informative newsletters

* SIPP is really cheap

* Advice available

* Able to hold cash in ISA and SIPP

* Loyalty bonus

Not so good points:

* Expensive share dealing charges, so it's not great for swing trading

* 0.5% annual fee for holding some investments

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I'm a newbie to this, but they are always being recommended on web forums and by consumer experts. Given the times we are in, that makes them more likely to survive tough times. Of course, they are just intermediaries, and do not own your shares, but I wouldn't like to see my online buying and selling portal and ISA wrapper fold up into a fuzzy cloud of complicated bankruptcy unravelling and legal wrangling during stressful times in the markets.

Alliance Trust Savings do offer the Vanguard equity funds on their platform ;)

Not the debt ones though :(

The service on the phone is pretty good and charges are low :lol:

You can view and trade online :lol:

However anything involving ISAs and SIPPs involves lots of forms :(

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I'm a newbie to this, but they are always being recommended on web forums and by consumer experts. Given the times we are in, that makes them more likely to survive tough times. Of course, they are just intermediaries, and do not own your shares, but I wouldn't like to see my online buying and selling portal and ISA wrapper fold up into a fuzzy cloud of complicated bankruptcy unravelling and legal wrangling during stressful times in the markets.

Speaking as an H-L client ...

DrGuid's summary seems pretty fair to me.

However, there's one more consideration I should add. H-L got a (deservedly) good name by pioneering the "fund supermarket" model: bringing costs to investors down substantially from the outrageous levels of a generation ago. But that reputation may be backward-looking, as others are now seriously competing in the same space.

H-L is without doubt a solid choice. Whether it's a best choice is less clear.

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de[ends opn whether you believe in the efficient markets hypothesis over the shortish term...

The market's aren't necessarily efficient, but that is a different thing to there being a reliable strategy to lower cost and risk of purchases given that you think the long term direction of the market is up.

Edited by mirage

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Yes mirage, my strategy is a mess, but I'm just playing around.

For all we know that may be the best strategy!

In essence, this is just a little experiment with a bit of unused income, and a little hedge in case my main bet is wrong. I am only dripping it in because I have a bit of unallocated regular cashflow and because of UK ISA limits.

My main bet, with the bulk of my assets is on general deflation, including equities, so I am holding that stake out of the market. When I think equities are cheap enough, I will go all in - no dripping.

I don't think I need to be precisely right on timing. It's as if I got out in 1929. As long as I am reinvested by the 1970s, I don't much care if I got back in the the mid 1930s or 1940s. My main care is to miss out on the current bout of wealth destruction. This little drip is just a tease to make myself start really watching what's happening. (I also don't think it is too wealth destructive, because long term I think equities are undervalued even now, given the future I foresee. It's just human nature to want them even more undervalued, if I think that is coming up soon, which I do.)

I hope so too, though I don't place any great confidence in my predictive abilities, or motivation to act on any predictions.

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I think the current tumbling stock market makes a good point that instruments which can be long and short easily are better than the stock market - of course the stock market can be short too, but with more hassles than forex.

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Hi Noel

Slightly off topic, can I just say that you have inspired me to start drip feeding a fixed monthly amount into global equity markets, using an ISA, starting at some random moment in the next few months.

I might use Vanguard after reading in the FT about how their ultra-low cost model is storming the US, and try to construct a global fund, using public data about regional market capitalisations to weight my allocations in their various available funds. (I'm still too mean to pay an IFA to work it out.)

I suppose I just want to say thanks for the inspiration, and as an aside ask can you see any flaw in my plan, and, if you don't mind saying, do you invest globally, or just in the UK stock market?

I should point out that this is just a sort of "trial investment" for me - the main money under my control (apart from pensions) is set up abroad for deflation, with some PMs as a hedge. But global equities is where the whole lot is going when I think it is the bottom of the global depression that I think is unfolding (essentially when I'm sure I know whether fiat money and big government has survived or not, so I can plan properly).

worth a read

http://www.amazon.com/dp/0470112670/ref=no...wwinvestme00-20

http://www.gonefishinportfolio.com/asset-

allocation.html

these charge £50 plus vat pa - cant do individual shares though but have quite a few passive low cost funds and no charge for switches

dont know of any uk passives in metals yet :angry:

http://skandia.co.uk/solutions/useful_literature.asp

Edited by lowrentyieldmakessense(honest!)

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...

these charge £50 plus vat pa - cant do individual shares though but have quite a few passive low cost funds and no charge for switches

dont know of any uk passives in metals yet :angry:

http://skandia.co.uk/solutions/useful_literature.asp

If your looking for a fund that tracks the price of a particular metal then there are quite a few ETFs out there? Or have I misunderstood what you're looking for?

cheers Reggie

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Not quite sure I see the point of drip feeding. Sounds too much like an informational free lunch to me.

If you think the investment is a long term buy, then just buy it, now, with all your allocated money.

If there was a no-brainer way of beating the instantaneous market price down then the price wouldn't be the price. Pound cost averaging costs you the time it takes to drip the full amount into your chosen vehicle.

It is of course a different matter if you do not have all your money ready, and are simply investing as you earn...

That implies Warrren Buffet like knowledge of a company? I think Durch means buying a tracker fund, which is giving you exposure to the whole market? then you just need to ask, going forward, will there be a market? and can I trust the company who is running the fund? and maybe, will there be some growth in the future? I can answer 1 and 3 straight away in the positive (barring a Mad Max scenario; then, who cares where you have invested?) and as for 2, if the company is dodgy/insolvent in any way the next year or so will flush it out? and if you keep to the 50k limit you will get bailed out?

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If your looking for a fund that tracks the price of a particular metal then there are quite a few ETFs out there? Or have I misunderstood what you're looking for?

cheers Reggie

yes sorry

there arent any low cost index tracking funds in the uk for precious metal shares - on the skandia platform i referred to above

vanguard do an index in the US but not yet in the UK - although they have only recently come to the UK and already legal and general have reduced their charges for their passive funds

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Thanks for the interesting links and book (here is the amazon uk link) lowrentyieldmakessense(honest!).

well worth reading the gonefishinportfolio

http://www.investmentu.com/IUEL/2009/July/...ortfolio-2.html

The Gone Fishin’ Portfolio: The Best Low-Cost, Tax-Efficient Investment System

by Alexander Green, Advisory Panelist

Friday, July 31, 2009: Issue #1055

Seven years ago, I created The Gone Fishin’ Portfolio for The Oxford Club.

The goal was to develop a low-cost, tax-efficient investment system based on the only strategy to ever win the Nobel Prize in Economics.

The portfolio has generated high returns with low risk while doing a complete end run around Wall Street’s high-priced products, self-serving advice and mountain of fees. Yet it is so simple to implement that you can do it yourself in less than 20 minutes a year.

Still, a lot of investors just don’t get it.

A prime example is a Mr. Talmadge O’Neill. Posting a customer review of my book “The Gone Fishin’ Portfolio†on Amazon, he writes that the portfolio “is only going to give you the basic market return. Nothing fancy. We’re not talking endowment returns.â€

It’s true that the portfolio is nothing fancy. But he couldn’t be more wrong about the returns…

The Gone Fishin’ Portfolio Beats The S&P 500 Each Year

With far less risk than being fully invested in stocks, The Gone Fishin’ Portfolio has beaten the S&P 500 each year, gaining more than the market when it was up and declining less when it was down – even though the strategy requires no economic forecasting or market timing.

We even back-tested the portfolio through the previous bear market and back to January 1, 1998. (We can’t go back before then because one investment in the portfolio – inflation-adjusted Treasuries – were only created by the U.S. government in 1997.)

The annual results can be verified easily and independently. The Gone Fishin’ Portfolio has beaten the market, not just over the entire period but every year.

Is there any guarantee that this will continue to be the case in the future? Of course not. No strategy could possibly guarantee that.

Yet I know no other investment system that offers a higher probability of long-term investment success.

As for the Ivy League endowments, The Gone Fishin’ Portfolio has left them in the dust lately, too. And for one simple reason…

As Barron’s wrote recently, “For years, top university endowments at Harvard, Yale and Princeton were the envy of the investment world, thanks to the outsized returns they generated from significant investments in nontraditional assets such as private equity, real estate, hedge funds and commodities, and low exposure to U.S. stocks and bonds.â€

* Yet now the Harvard and Princeton endowments are down 30% for the fiscal year ended June 30, while Yale’s is down approximately 25%.

* What’s more, their real-world returns are probably much worse. Why? Many of their investments are in illiquid assets whose “estimated values†may not reflect today’s steeply discounted market prices.

* Yale and Princeton both have roughly half their endowment assets in these types of investments. Without a liquid market, it’s virtually impossible to value their portfolios accurately, especially in this market.

The Gone Fishin’ Portfolio Never Strays Into Illiquid Assets

However, The Gone Fishin’ Portfolio never strayed into illiquid assets like these. Although it is designed to generate superior long-term capital appreciation, there is nothing in the portfolio that can’t be liquidated at the close of any business day.

And while the market has had its ups and downs this year, The Gone Fishin’ Portfolio has gone on doing what it does best: In the first half of 2009, the S&P 500 declined 1.5%. The Gone Fishin’ Portfolio rose 11.3%.

We’re on track for yet another record year.

So, no, The Gone Fishin’ Portfolio hasn’t generated endowment-type returns lately.

But we can all be grateful for that.

Good investing,

Alex

and another one of his books

http://www.amazon.co.uk/gp/product/0470482...rd_i=0470112670

Product Description

Most of us devote a substantial percentage of our waking hours to making, spending and having more. This desire to accumulate is natural. But when a bigger bank balance – or the things it can buy – becomes our animating purpose, disappointment generally follows. In The Secret of Shelter Island, nationally renowned financial analyst and bestselling author Alexander Green explores the complicated relationship we all have with money and reveals the road map to a rich life.

The timing could hardly be better. After more than twenty–five years of virtually uninterrupted prosperity, the U.S. economy has hit a rough patch. Yet to the extent that downturns like the current one shake up the status quo and force us to re–examine our goals and priorities, they also offer enormous opportunities. The Secret of Shelter Island provides an ideal starting point. Drawing on some of today’s best minds and many of history’s greatest thinkers, it is both a much–needed source of inspiration and an insightful look at the role of both money and values in the pursuit of the good life.

The book is arranged around four central themes. In Part I, "A Rich Mind," Green explores such key questions as: How important is money in your life? What is it giving you? What is it costing you? In Part II, "What’s Most Important," he discusses how to calculate your real net worth—without using a financial statement. In Part III, "Attitudes of Gratitude," he offers powerful insights based on a deceptively simple philosophy of life. In the final section of the book "The Search for Meaning," he delivers a refreshing take on the universal principles that guide us all – or should. The Secret of Shelter Island is full of practical wisdom. More than just a personal philosophy, it is a profound and utterly modern commentary on timeless values, the search for meaning and what it means to be truly wealthy.

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Not quite sure I see the point of drip feeding. Sounds too much like an informational free lunch to me.

If you think the investment is a long term buy, then just buy it, now, with all your allocated money.

If there was a no-brainer way of beating the instantaneous market price down then the price wouldn't be the price. Pound cost averaging costs you the time it takes to drip the full amount into your chosen vehicle.

It is of course a different matter if you do not have all your money ready, and are simply investing as you earn...

With regards to funds, pound cost averaging is the best way (IMHO). Maybe if the fund drops in value a long way (re:- earlier this year), then an 'extraordinary' purchase is worthwhile. I did this with a high yield fund, x pounds per month and bought a top-up of y pounds in January. Which with hindsight was a little early, but who can time the market perfectly?

edit:- having trouble with pounds (£)... story of my life really :)

Edited by ReggiePerrin

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yes sorry

there arent any low cost index tracking funds in the uk for precious metal shares - on the skandia platform i referred to above

vanguard do an index in the US but not yet in the UK - although they have only recently come to the UK and already legal and general have reduced their charges for their passive funds

Oh... I understand now.

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Thanks for the interesting links and book (here is the amazon uk link) lowrentyieldmakessense(honest!).

just started reading this one

looks good so far

Enough: True Measures of Money, Business, and Life by John Boggle - founder of Vanguard

http://www.amazon.com/Enough-True-Measures...s/dp/0470398515

If you are wondering about the cause of the current market crisis, then you haven't been reading enough of Jack Bogle.

Because he certainly knows not only where, but why and how. For decades Jack has been communicating his disquiet in previous books, speeches, and public testimony. Years from now, when historians and investors dissect the economic and market meltdowns of 2008, they'll consult this slim, well-written volume.

In order to understand the intellectual and moral platform from which he surveys the economic wreckage, you need to know a little of his story. Bogle founded one of the world's great investment companies, the Vanguard Group. Most men in his situation would have levered such success into a multi-billion-dollar net worth; instead, he "mutualized" Vanguard, converting it, in effect, into a nonprofit organization whose only goal was to benefit its fund holders. From an ethical perspective, Vanguard is the only "investment company" worthy of that name. (As opposed to most financial firms, which are in fact "marketing companies" whose main purpose is to milk unwitting investors of fees and commissions.)

The answer to the conundrum of 2008 lies in the book’s title, "Enough," which is the punch line from a delightful Kurt Vonnegut/Joseph Heller story. Simply put, our nation has been suffering from decades of unchecked financial excess, for which we are now paying the piper: excess in investment company fees; excess in financial speculation masquerading as diversification and innovation; excess in the salaries of top executives; excess in salesmanship; and most importantly, excess in the role played by the financial industry in our national economy and national life.

Each of these excesses gets its own chapter, and each one is a tightly written gem. Chapters 2 and 3, which dissect out the frenzy of derivatives, structured vehicles, and layers of intermediation behind the recent collapse, alone justify the book's purchase price.

As Bogle states in the book's beginning, in the spring of 2007 the financial services sector--which, after all, produces nothing of substantive value--accounted for one-third of the earnings of the S&P 500. By the time you read this, this outsized influence will have shrunken drastically. Let Enough be your welcome to the brave new world; it will satisfy your curiosity, give you a sense of moral balance in this most materialistic of ages, and even plump up your investment portfolio.

--William J. Bernstein

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Hi lowrentyieldmakessense(honest!). I bought the 'Gone fishin' portfolio' book you recommended and just finished reading it.

A great book - many thanks. Yes, I too was really struck by the story of John Bogle of Vanguard - he is a sort of Linus Torvalds towering figure of the financial world in my mind. A mould breaker - a breath of fresh air.

In the end, I cannot see how Vanguard, and competitors who model themselves on his revolutionary model, can fail to capture the whole fund market. It will be the end of many wasters in Wall Street and the City, and hooray for that.

While I was reading it, I jotted down some thoughts it provoked in me:

- "news" is designed to excite emotions and rash decisions The opposite of sensible, long-term, steadfast drip-feeding. (I would say 'an end even to HPC' here, but there is so much sensible, educational thought-provoking stuff here, even if you disagree with it, and carrying it through would ruin you, that I can't imagine anyone not benefiting from some exposure.)

- I personally can accept an all-stock portfolio, no matter how volatile, and don't need to include the stabilisers which drag down long-term returns.

- I am still market timing with my main savings fund - I have to by the very nature of its existence, and its current position outside of stocks. But my savings from income will be drip fed in.

- I will still wait until we are obviously after the bottom, to put in my main savings. (Like I said earlier - plumping for stocks in 1940 or even 1950, rather than 1933, would not have felt much different by the 1970s. With a decent stake, you would still end up very rich - just by different orders of magnitude.)

- Once in stocks I will stay in for good. (I will play the national lottery for any thrilling gambles. :lol: )

Thanks again to everyone on this thread, so far. It has opened my mind.

did you get the Enough book - you will like that one

and the gonefishin portfolio is so far ahead of the S&P500 - and the idea of being forced to sell something that has gone up and buy something that has gone down makes sense and should enable you to beat the market - if rebalancing can be done with minimal costs (free on the skandia platform i mentioned)

anyway repays the conquer the crash book you recommended in 2005

but hes wrong on gold

lots to be thankful for on hpc

some things

CGNAO for one - who led me to learn more about the monetary system and how it is manipulated and also to learn about the Dow/Gold Ratio

the daily reckoning that someone referred to many years ago and lots have come via that source such as Ron Paul which then led to researching Austrian Ecomics and the Mises.org library, Hayek Rothbard Von Mises etc

Fred Harrison on UK property cycles - read boom and bust in 2005 and thought he made a good case but that he had called it late this time (i thought we had peaked in 2005 - which is how i found the site) - but he was pretty much spot on

Tom Woods Meltdown is a good book also

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Durch,

You still keeping most of your cash on the sidelines??

This has also been my strategy but I am currently struggling to believe the strength of the rally over the last few months.

I have also just finished reading the 'Gone Fishin' portfolio and was thinking of giving it ago although most of the funds suggested do not seem to be available in the UK (or Hong Kong where I currently am).

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Cheers lowrentyieldsmakessense(honest!). I have difficulty with gold. I think it's probably because I had gold in the $400s and sold most of that in the $600s. Now it's painful to buy it back at over $1,000! (I know, logically it is all spilt milk, but I flinch.)

EDIT: I will buy when my intuition says to, but I am expecting another deflationary collapse and full blown panic at some point as sovereign risks start to fail, and forced liquidation of all sorts of assets. At which point I will probably buy silver.

yep me too

and yep i think silver will do better

hyperinflation doesnt happen with strong economies though and i think a currency crisis is likely within the next 12 months

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Alliance Trust Savings do offer the Vanguard equity funds on their platform wink.gif

Not the debt ones though sad.gif

The service on the phone is pretty good and charges are low laugh.gif

You can view and trade online laugh.gif

However anything involving ISAs and SIPPs involves lots of forms sad.gif

do Alliance trust still have this limitation?

The only fund manager offering a self-select ISA is Alliance Trust & Savings. Here, the first pounds 50 invested has to be in either of the manager's investment trusts - Alliance Trust or Second Alliance Trust. This holding has to be retained so that you can invest elsewhere in a range of FT-SE 350 shares, investment trusts gilts, corporate bonds and bond funds.

(from 1999!!: http://www.independent.co.uk/news/business/dont-draw-a-dud-at-the-picknmix-1112887.html )

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