Deflationary collapse and the Reflation Cycle to Come.

[harp]

I wonder if DB would be interested in starting an Investment Club. 20-30 members or so chipping in a lump sum then a monthly amount? If so I'm in!

[durhamborn]

2 hours ago, TonyJ said:

GBP is continuing its fall today, which is turning out to be precipitous. I wonder how low it can go before the BoE feels the need to intervene, with either talk or action (the former being its usual MO)?

My sterling work 15 months ago was up from $1.22 to $1.41 then down to $1.00.I havent done any work on it since though as i used the $1.39 level as my staircase level to move into treasuries and some shares that benefit most from falling sterling.I doubt much has changed.

Edited April 30, 2018 by durhamborn

[DoINeedOne]

19 minutes ago, harp said:

I wonder if DB would be interested in starting an Investment Club. 20-30 members or so chipping in a lump sum then a monthly amount? If so I'm in!

Whilst the info he has posted here is great and certainly got me off my ass and putting money into different areas mostly miners for the minute but I would support a paid newsletter 

[hurlerontheditch]

can't beat my momentum system, similar to Andreas Clenow's methods. back testing it runs at around 14% per annum CAR with a max draw down of 18%, obviously the last 18 months have been out of this world

 

[durhamborn]

30 minutes ago, harp said:

I wonder if DB would be interested in starting an Investment Club. 20-30 members or so chipping in a lump sum then a monthly amount? If so I'm in!

Im just an ex factory worker harp,not an investment guru.I just happen to of met someone when i was young who took me under his wing due to a simple act of kindness from me and taught me some fantastic macro forecasting skills.To be blunt he was (and still is) the best (or one of the best) at long term macro calls.

What needs to be remembered though is macro strategists jobs isnt to stock pick.In the 80s and early 90s my friend would drop his macro forecasts onto the head traders desk at an investment bank.That trader would then pass the details on to his stock picking teams.Their job was to pick the stocks based on who the macro signals favoured.An investment bank would often pay less notice of those than say a pension fund.Pension funds look over a longer timescale,and thats why my friend stopped working for the big investment banks (even thought they wanted his work) and worked for pension schemes instead.

He now does very little work as he is retired,but manages a few funds for charities that are close to his heart.He actually told me that most investment houses now employ people he calls "macro tourists".He says they half understand where we are going,but have no clue on how we get there and are very very dangerous.He also think most of the big investment banks ignore any forecast over 12 months as they trade on momentum.

Im very happy to share my thoughts here under the do your own research not investment advice mantra and im very pleased to say that every single person who has contributed to this thread has done so in an open and friendly manner.Im sure that will continue,and im sure we will all learn from everyones input.

[CanAffordWontPay]

56 minutes ago, harp said:

I wonder if DB would be interested in starting an Investment Club. 20-30 members or so chipping in a lump sum then a monthly amount? If so I'm in!

I saw Thorn shared the monveator website before but they have an investment type club http://monevator.com/the-slow-and-steady-passive-portfolio-update-q1-2018/. Also some ready-made portfolios http://monevator.com/9-lazy-portfolios-for-uk-passive-investors-2010/ to suit most tastes and styles. Well worth going through this section http://monevator.com/category/investing/passive-investing-investing/ though just to get your head around it all.

Personally, I've used a combination of this thread, WAICO's book/website and Monevator to come up with my own portfolio and picks to suit my tastes. 

[harp]

14 minutes ago, durhamborn said:

Im just an ex factory worker harp,not an investment guru.I just happen to of met someone when i was young who took me under his wing due to a simple act of kindness from me and taught me some fantastic macro forecasting skills.To be blunt he was (and still is) the best (or one of the best) at long term macro calls.

What needs to be remembered though is macro strategists jobs isnt to stock pick.In the 80s and early 90s my friend would drop his macro forecasts onto the head traders desk at an investment bank.That trader would then pass the details on to his stock picking teams.Their job was to pick the stocks based on who the macro signals favoured.An investment bank would often pay less notice of those than say a pension fund.Pension funds look over a longer timescale,and thats why my friend stopped working for the big investment banks (even thought they wanted his work) and worked for pension schemes instead.

He now does very little work as he is retired,but manages a few funds for charities that are close to his heart.He actually told me that most investment houses now employ people he calls "macro tourists".He says they half understand where we are going,but have no clue on how we get there and are very very dangerous.He also think most of the big investment banks ignore any forecast over 12 months as they trade on momentum.

Im very happy to share my thoughts here under the do your own research not investment advice mantra and im very pleased to say that every single person who has contributed to this thread has done so in an open and friendly manner.Im sure that will continue,and im sure we will all learn from everyones input.

I understand DB. Well this thread has certainly woke me up and I'm reading as much as I can from all different sources. Trouble is most of those sources can't see 'it' yet. Or don't WANT to see 'it'. But please keep those thoughts coming along with everyone else! Great stuff.

[harp]

3 minutes ago, CanAffordWontPay said:

I saw Thorn shared the monveator website before but they have an investment type club http://monevator.com/the-slow-and-steady-passive-portfolio-update-q1-2018/. Also some ready-made portfolios http://monevator.com/9-lazy-portfolios-for-uk-passive-investors-2010/ to suit most tastes and styles. Well worth going through this section http://monevator.com/category/investing/passive-investing-investing/ though just to get your head around it all.

Personally, I've used a combination of this thread, WAICO's book/website and Monevator to come up with my own portfolio and picks to suit my tastes. 

Yep, seen those articles. Problem I have with old articles or books etc, is they base their strategy on fairly normal market conditions, going up going down sort of normal,hands off etc.

BUT what could be coming is what I'm interested in and how to make the best of a terrible crash and to take advantage of it. There's some good stuff around which is new and current. Talk is a once in a lifetime crash. There's always opportunity in a crisis. And I/we should be better positioned than most hopefully. 

[Sancho Panza]

 

13 hours ago, Bricks n' mortar said:

I think of Asda as the quintessential pile high, sell cheap operation, while Sainsbury are halfway to Waitrose.  Asda's not doing so well, at the end of the deflation cycle.
After a collapse though, a lot of newly-poor consumers looking for cheap baked beans, and a return to the big shop after payday.

Asda used to dominate the price sensitive end of the market,as Sidey says below,not any more.

 

I agree Sainsbury's are halfway to Waitrose with virtually a completely different demographic.The logic is that they'll cut costs.Experience says they'll lose some of their more affluent shoppers.

All in all,this will be a real positive for Aldi/Lidl,M&S and Waitrose

6 hours ago, sideysid said:

Asda has lost a lot of ground to Aldi and Lidl. Plus the quality is better too. I think Sainsburys will lose on this merger going into financial headwinds.

The other reason the ‘big shop’ is falling out of favour, is simply demographics. Millennials are mostly either renting/bought smaller flats/properties or sharing. That means less fridge/cupboard space and more day to day shopping.

I think that’s also why we are seeing the likes of Carpetright and the DIY sector in trouble too. More to come in the future as BTL dries up due to s24. Tiles, bathroom, kitchen suppliers should all start going too.

Excellent point on the way the 'Big shop' has gone out of the window for younger people.I'd never thought of the aspect you raise-relating it to fridge size/sharing but it's makes perfect sense.

The local Co ops/Sainsbury's/Tesco's are doing really well.

Sainsbury's would have done better investing in an Aldi lite version on similar footprints to Aldi.

5 hours ago, TonyJ said:

FYI I made a list (from articles) indicating which sectors' share prices, which tend to do well and which badly in a rising IR environment. The only problem being, we do not know if we are in a rising or falling IR environment.

Good

Financials

Consumer discretionary

Materials

IT

Industrials

Energy

 

Bad

Utilities

Telecoms

REITS

Consumer staples

Health

You have to consider the reasons rates are rising as well and whether that makes comparison possible.

If commerical rates are rising due to credit risk then that's entirely different to them rtising as a result of CB's fighting price inflation.

Apples and pears etc.

 

Edited April 30, 2018 by Sancho Panza

[UnconventionalWisdom]

42 minutes ago, harp said:

Yep, seen those articles. Problem I have with old articles or books etc, is they base their strategy on fairly normal market conditions, going up going down sort of normal,hands off etc.

BUT what could be coming is what I'm interested in and how to make the best of a terrible crash and to take advantage of it. There's some good stuff around which is new and current. Talk is a once in a lifetime crash. There's always opportunity in a crisis. And I/we should be better positioned than most hopefully. 

+1! People are reluctant to go into investing with normal strategies in normal market conditions. What Wicao and DB offer is their opinions and gets people thinking about strategy-noone us talking about a get rich quick scheme and it is fascinating hearing their different view points. 

[Sancho Panza]

18 minutes ago, TonyJ said:

How would you say today's environment affects the different sectors, which I think are mostly complete(?) on the list?

That's a broad question that would involve a lot of research and time to answer properly and today I just don't have that much.

I run our investments alongside my day job and I drop into my regular reads whilst I'm doing other things.Today,Im re researching silver miners.

[Sancho Panza]

19 hours ago, Majorpain said:

I love that chart MP,picture paints a 1000 words ..

16 hours ago, nothernsoul said:

Am i going off at a tangent, but is sainsbury asda merger related to this thread, as Asda owner Walmart is motivated by inability to generate sufficient profit? 

The merger is both a symptom and a cause of price/margin deflation

[Democorruptcy]

41 minutes ago, Sancho Panza said:

Asda used to dominate the price sensitive end of the market,as Sidey says below,not any more.

I agree Sainsbury's are halfway to Waitrose with virtually a completely different demographic.The logic is that they'll cut costs.Experience says they'll lose some of their more affluent shoppers.

All in all,this will be a real positive for Aldi/Lidl,M&S and Waitrose

Excellent point on the way the 'Big shop' has gone out of the window for younger people.I'd never thought of the aspect you raise-relating it to fridge size/sharing but it's makes perfect sense.

The local Co ops/Sainsbury's/Tesco's are doing really well.

Sainsbury's would have done better investing in an Aldi lite version on similar footprints to Aldi.

 

I agree it's good for Aldi/Lidl etc because it reduces competition and so gives them scope to improve their prices and so margins. It's price inflationary.

I've been expecting this for some time as the CMA seems not fit for purpose. Ladbrokes were allowed to buy Coral, which would never have happened a few years back.  Tesco were allowed to buy Booker

Home Bargains or B&M the next target?

[alifelessbinary]

6 hours ago, Thorn said:

Aye- 5% seems more practical and should reduce any daft fees from too-frequent selling - minimise fees is the trick and I think yes it will be new money to buy dips. 

I think I had too much in PHGP and SSLN so I've got now 1/4 of each, kept some as cash to BTFD - esp if silver drops - and put the rest into FTSE 100 ISF,  S+P 500 and VEVE to get as much dollar stuff for each pound now before the pound slides more...

Brilliant morning's work. In my own unchallengeable opinion.

God only knows how it will work out but on we go - as you say, Chronyx, those DB picks have been unreal.  

John Lee states that he uses a 20% stop loss in his book How to make a million slowly. The level you use really does depend on your investing horizon, but his view is similar to DB’s in that he sees capital protection as key. 

The book is well worth a read if you’re interested in small cap investing, but he also has over 60 years investing experience and talks a lot of sense. He used to write a regular column for the FT, but is a bit more sporadic now. His recent article ‘Sixty years of investing, with plenty of ups and downs’ can still be read for free and discusses several themes raised in this great thread. 

[Barnsey]

Scott Minerd of Guggenheim has pushed back his U.S. recession prediction by about 6 months, to early 2020. I'm thinking that's a little far off but you just never know, dude knows his stuff.

[wish I could afford one]

18 hours ago, Thorn said:

Stop losses set for all the ETFs and UK registered equities.

The US and DOW ones will be set tomorrow after lunchtime once they open in NY.

good stuff. Thanks Harp.

...and here for what it’s worth I think Sainsburys are bonkers. I know ASDA count on each shopper spending about £30 on the basics they came in for plus the odd torch.

But nobody really does A Big Shop anymore.

When you get stopped out what criteria are you using for reentry?  Also what do you intend to buy when you do reenter?

Full disclosure: I have no stops and plan to hold forever.  The only time I sell is if an asset class rebalance is forced on me by my mechanical strategy.  I sleep soundly knowing that I'd still sleep soundly if the worst historic sequence of returns replayed.  Of course history is not a predictor of the future but it might just rhyme and if things became worse than worst case history I'm probably going to be looking for antibiotics, guns, beans and fresh water anyway...

[harp]

17 minutes ago, alifelessbinary said:

John Lee states that he uses a 20% stop loss in his book How to make a million slowly. The level you use really does depend on your investing horizon, but his view is similar to DB’s in that he sees capital protection as key. 

The book is well worth a read if you’re interested in small cap investing, but he also has over 60 years investing experience and talks a lot of sense. He used to write a regular column for the FT, but is a bit more sporadic now. His recent article ‘Sixty years of investing, with plenty of ups and downs’ can still be read for free and discusses several themes raised in this great thread. 

Like this! Although I've set mine at 5% stop loss until the profit (hopefully) gets better. I'll adjust accordingly IF the SP goes higher.

BUT I like the other bit too (capital protection as key). Preservation is what I really need to do in this current environment and setting my SL at 5% drop to trigger would still give me a 5% gain (changing daily on different shares)

Sadly his latest article is behind the FT paywall. Can't see it

[Sancho Panza]

1 hour ago, alifelessbinary said:

John Lee states that he uses a 20% stop loss in his book How to make a million slowly. The level you use really does depend on your investing horizon, but his view is similar to DB’s in that he sees capital protection as key. 

The book is well worth a read if you’re interested in small cap investing, but he also has over 60 years investing experience and talks a lot of sense. He used to write a regular column for the FT, but is a bit more sporadic now. His recent article ‘Sixty years of investing, with plenty of ups and downs’ can still be read for free and discusses several themes raised in this great thread. 

https://www.ft.com/content/4d86172e-17f4-11e8-9c33-02f893d608c2

Nice read.

I must admit,I've avoided small companies as finding the good ones can take a lot of time.Which is where a good tipsheet can be worth it's weight in the yellow stuff.We haven't really held small company stocks since the middle of the tech bubble.

If anyone knows of one,then feel free to post a lnk.

1 hour ago, wish I could afford one said:

When you get stopped out what criteria are you using for reentry?  Also what do you intend to buy when you do reenter?

Full disclosure: I have no stops and plan to hold forever.  The only time I sell is if an asset class rebalance is forced on me by my mechanical strategy.  I sleep soundly knowing that I'd still sleep soundly if the worst historic sequence of returns replayed.  Of course history is not a predictor of the future but it might just rhyme and if things became worse than worst case history I'm probably going to be looking for antibiotics, guns, beans and fresh water anyway...

I agree completely.I've never understood this idea of rigid per centage stops.

Stops encourage overtrading and as you say,re entry points are key.There are loads of shares that have gone down 20% only to then rocket back past that point.

[Thorn]

41 minutes ago, Sancho Panza said:

https://www.ft.com/content/4d86172e-17f4-11e8-9c33-02f893d608c2

Nice read.

I must admit,I've avoided small companies as finding the good ones can take a lot of time.Which is where a good tipsheet can be worth it's weight in the yellow stuff.We haven't really held small company stocks since the middle of the tech bubble.

If anyone knows of one,then feel free to post a lnk.

I agree completely.I've never understood this idea of rigid per centage stops.

Stops encourage overtrading and as you say,re entry points are key.There are loads of shares that have gone down 20% only to then rocket back past that point.

Over the day I’ve actually removed them after gradually coming to the same conclusion.

lots of tweaks so far but happy with the combination I have in there now so it’s hold and add I think.

 

[Ash4781]

20 hours ago, Sancho Panza said:

I look at the above Ash and I'm surprised by the logic on Sainsburys side.I just can't see what comes with Asda  besides market share that's being haemorraghed to Aldi and Lidl.

Sainsbury's on the other hand appears to have a much more stable platform and stronger brand loyalty.Still bedding in Argos.Strong sales in it's local shops.......etc etc.

Asda just has a large portfolio of warehouse style shops,that are aimed at the cheaper end of the market but aren't that cheap.Luckily,we sold out of Sainsbury's a while back.This will destroy the value in it imho.

Quite right HarpUnless you're trading with cash,it just doesn't count.

Trackers bought the sort of stability that eventually creates instability if you leave it long enough,

There’s a nice visual representation of supermarket market share (Kantar) at the link below.  I don’t remember Asda being cheap just dreadful quality (well the fruit/veg and the meat). Maybe it improved? 

https://www.kantarworldpanel.com/en/grocery-market-share/great-britain/snapshot/25.03.18/

 

[Will!]

8 hours ago, harp said:

BUT what could be coming is what I'm interested in and how to make the best of a terrible crash and to take advantage of it. There's some good stuff around which is new and current. Talk is a once in a lifetime crash. There's always opportunity in a crisis. And I/we should be better positioned than most hopefully. 

You might want to have a look at this thread to see quite how long the sky has been falling on HPC. (And it's been falling a lot longer than this.)

 

[leonardratso]

3 minutes ago, Will! said:

You might want to have a look at this thread to see quite how long the sky has been falling on HPC. (And it's been falling a lot longer than this.)

 

hehe i remember that one, one day it will be correct, maybe not today, maybe not tomorrow, but soon, real soon (igor).

[durhamborn]

3 hours ago, wish I could afford one said:

When you get stopped out what criteria are you using for reentry?  Also what do you intend to buy when you do reenter?

Full disclosure: I have no stops and plan to hold forever.  The only time I sell is if an asset class rebalance is forced on me by my mechanical strategy.  I sleep soundly knowing that I'd still sleep soundly if the worst historic sequence of returns replayed.  Of course history is not a predictor of the future but it might just rhyme and if things became worse than worst case history I'm probably going to be looking for antibiotics, guns, beans and fresh water anyway...

I have no stops and never will.Like you say you dont protect a portfolio with stops,you protect it with asset allocation.My biggest winners over the decades (up 1000%+ before dividends) all went down over 10% (most 30%+) many times through the holding period.

Once im invested im more bothered on the divi than the share price.

[leonardratso]

hahaha, i once set a stop loss on some shares i had years ago, but i mistakenly set it as a limit order, as soon as i confirmed it, it sold straight out at spot price, ah well, you live and learn. Ive also had stop losses ignored on steep drops and limit orders ignored on short squeezes, they arent guaranteed to fire even if set up correctly.

[Sancho Panza]

1 hour ago, Thorn said:

Over the day I’ve actually removed them after gradually coming to the same conclusion.

lots of tweaks so far but happy with the combination I have in there now so it’s hold and add I think.

 

Warren Buffet has a great phrase that if 'you're willing to hold a share for ten minutes,you should be willing to hold it for ten years.'

My experiences of winning and losing over 25 years have steered me toward picking an asset class/share that's undervalued and then sitting in it until it becomes a 'momo' favourite.I've always had an eye for good value but my biggest weakness over that time has been selling early in the uptick-Whitbread,Rolls Royce,Unilever.....I could go on and on and on.

Many of my best winners have suffered significant pull backs after purchase.As have some of my biggest losers.The key to long term growth is to be able to read the newsflow and ascertain whether what's occurring is noise or a sign of a more fundamental change in outlook for either the share or the asset class.