Well Hardcore, I don't know what the collapse of Carillion has to do with Tesco, let alone 'the price of fish.'
However, I must say that I have never invested in the likes of Carillion , Capita etc. as I have always viewed their kind of business model with a deal of caution. However I must admit that the collapse of Carillion has affected my investment in Galliford Try..........temporarily, I hope.
Yes, PFI was quite a feature of New Labour, and outsourcing of services has not always proved a success. Nevertheless, excuse me if I am dubious about the benefits that would accrue from Corbyn/ McDonnell bringing PFI businesses 'in house' as they say, let alone the possible cost of £50 bn. to you know who.
The story of Carillion's collapse is undoubtably a sad shambles, but this 'fun loving'??? Tory does not believe Jezza and John are the answer.
In the meantime, it is good to see Tesco's SP tick up, possibly, much to the dismay of
Numberbiter, Uncle Doug and youself!
I am surprised no one has commented on the collapse of Carrillion, especially you Dregor, our fun loving Tory friend. Carrillion, one of four that pocketed over £300 million flipping PFI schools and hospitals to the highest bidder. And that was before the companys existential problems began.
Carillions PFI assets are already in the hands of foreign-domiciled investors, meaning that while the government will have to take over many of the services Carillion can no longer provide, it may still have to pay leasing costs to the foreign-owned firms that Carillion sold out to. Otherwise, those firms may sue the government for lost profits.
This is all happening as the true cost of PFI is becoming apparent. In April 17, a bombshell report by the National Audit Office warned that the price tag for paying PFI firms would reach £8.6 billion in 2018 alone. In total, taxpayers owe a mind-watering £121.4 billion on public projects that are worth just £52.9 billion. And the compound interest continues to grow.
The Daily Telegraph revealed that young people starting work in 2017 would end up paying taxes for the Governments Private Finance Initiative until they are nearly 70. In return, they get to use increasingly costly and shoddy services.
"... if you graph the S and P dividend yield against the yield from 10 year Treasuries over the past 30 years, both have declined, only the Treasuries have declined faster... probably reflects more money in the markets and that people are demanding a lower premium for risk because they have not experienced a real catastrophe."
Yes, it definitely reflects that investors have been progressively prepared to accept lower equity premia (and therefore lower prospective returns) - in absolute terms. But there are a number of ways of looking at this - one way being the relative perspective.
If you accept that all asset classes are all ultimately priced off each other, than equities are still "cheap" relative to pretty much all other major asset classes... cash, bonds, previous metals, even property (in most places). Probably vs fine art and fine wine too, if that is your bag (in which case - good luck). Even equities in the US - albeit much less so than elsewhere.
"Remember 1987? I do and it still makes me cautious."
You are right to keep 1987 in mind - and there will be another 'correction' along at some point, it is a question merely of when (but also, from what level??) But I really don't think 1987 is anything to strike fear into true investors' hearts - we had recovered all of the deficit within a year, as I recall, and then carried on upwards for some time thereafter. The lesson is you don't panic, you stay calm... and stay invested - but if you also retain a decent cash reserve to take advantage of the opportunity, then so much the better. And this might be the best lesson of all to learn from 1987...
1929 might be a more cautionary tale - most of the initial Wall Street sell-off was recovered quickly enough, but from there a greater bear market took hold, taking values significantly below post-Crash levels over a period (to 1932 or so). Though even then, things recovered eventually and resumed a decent upward trajectory in time.
And for now, you can see a 1987 scenario - though I don't think we are there quite yet, in terms of valuations or accelerating investor euphoria (though the US market today gives pause for thought). But it's hard to see 1929 or another "Great Depression" any time soon - although history and experience chimes in with "never say never!"
Thank you very much. Most helpful. The only thing I can add fwiw is that if you graph the S and P dividend yield against the yield from 10 year Treasuries over the past 30 years, both have declined, only the Treasuries have declined faster. I think this probably reflects more money in the markets and that people are demanding a lower premium for risk because they have not experienced a real catastrophe. Remember 1987? I do and it still makes me cautious.
"... a pal who thinks that a good indicator of when to sell shares would be if the reverse yield gap reappeared.. looks like we may be moving back to a situation where bonds yield more than equities... This might be telling us that the market expects the real return from bonds to be worse than the real return from equities over time."
THB - it's a big question, indeed... with no easy answers! I am big believer that most things revert to the mean, over time - but not always clear what the true 'mean' is. What was the true 'normal' period - 1959-2008, or the "new normal" of 2008-2017? Either way, we won't actually know until much further down the line...
People are getting exercised because US bonds (eg. 10yr treasury) are now yielding at least the same as the US equity market... yet elsewhere we have a long way to go. UK 10yr Gilt currently yields 1.3% or so, yet FTSE 100 offers something above 4% (prospectively), and the wider UK market only marginally less. Of course, if the US market crashes, we cannot escape the cross-fire... as a wise strategist once told me, "the correlation can go low, but it can't go negative!" But this doesn't mean that markets such as the UK cannot fall quite a bit less than the US in any such 'correction' - nor that the subsequent recovery can't be relatively impressive and sustained.
Two main tenets inform my view. First - that equities SHOULD deliver a higher real return than bonds (on average, over time), to compensate for the higher equity risk. Second - how 'bull' and 'bear' markets actually work. Bonds have enjoyed a (pretty much continuous) bull market for well over 30 years... in this time, investors will buy into bond yields even when they think they are too low (eg. vs history), in the general expectation that they will go lower still. If we get a sustained bond bear market - it's too early to say this is it - the reverse will likely hold. Investors will become more attracted to good equity yields IMHO, even as bond yields rise above them, as they come to expect the latter to keep on rising (and hence bond prices to keep falling).
"I think you are right about a long term (maybe secular) decline in bond prices, but does this tell us anything about where equities are going?"
Maybe the best gauge is - don't try and second guess the market, ask yourself what bond yields you'd need to buy them ahead of, say, a solid and safe (relatively) 4-5% equity yield (of which there are currently plenty). With the latter, you have a good chance of further dividend growth into the future - and hence growth in the SP and/or effective yield. With the former, your "entry" yield is as good as it's going to get, and you can only hope that inflation - currently a full 3% (interestingly, in line with the long-run 'mean') doesn't eat too much into either the headline yield or the capital value (on sale or redemption).
So what bond yield would you need?? I know my answer - and it's (a lot) more than 4-5%!
Something I should like your views on. I have a pal who thinks that a good indicator of when to sell shares would be if the reverse yield gap reappeared, with bonds yielding more than equities. For the period 1959 to late 2008 we had a reverse yield gap with bonds yielding more than equities (largely I think because of inflation). Suddenly in 2008 it switches so equities now yield more than bonds. It looks like we may be moving back to a situation where bonds yield more than equities (and on some measures we are already there). This might be telling us that the market expects the real return from bonds to be worse than the real return from equities over time. I think you are right about a long term (maybe secular) decline in bond prices, but does this tell us anything about where equities are going?
"Remember what caused the crash of 08, increases in % rates. The U.S. already has an incredibly over-heated property prices. Events in the bond markets will alert you to a coming "correction" in equity markets."
Nice story, Hardcore... only one thing getting in its way - the facts! But hey, apart from that...
US rates actually peaked in mid-2006, and were steadily falling from there until the crash. In the UK, the "peak" was slightly later, into early 2007 - but even then, this "peak" was lower than in the most recent cycles (as was the case with the US).
While the actual causes of the crash were various, it could be argued that the subsequent loosening of rates, well before the crash, was more to blame for the credit and liquidity (rather than rates) shock which was the primary catalyst...
And where are these "incredibly over-heated" property prices?? In many states, property prices remain well below pre-2008 levels, and rising only gradually - unlike in the UK, where we long since regained and left behind the previous highs (though I won't argue that UK prices are not on the stretched side). I am sure the various people I know who own US property - in various places - would love to know where they can get some of this over-heating...
A prolonged bear market in bonds is overdue, of course... possibly even multi-year or even generational in duration. But I am not so sure this will be bad for equities - that is how bear markets work! On a long-term sustainable basis, of course - any surprisingly sharp rise in bond yields could well spark an equity correction, but I know what I will be doing in that event... The US equity market is indeed expensive (albeit less so than the less observant commentators would have you believe), yet virtually every other major market is trading at no more than "fair value" on most historical metrics - and many of them outright cheap on some.
Personally, I would love a correction - most likely triggered from the US - to give me that multi-year buying opportunity elsewhere... I am less convinced we are going to get it, at least not yet. But I am sure you are predicting it, Hardcore - the year begins with a "2", right? You have to be right eventually, one of these years...
Remember what caused the crash of 08, increases in % rates. The U.S. already has an incredibly over-heated property prices. Events in the bond markets will alert you to a coming "correction" in equity markets.
"On Friday, it was Boston Fed President Eric Rosengren who told the Wall Street Journal that he expected more than three rate hikes this year to get this under control before its too late. I dont want to get to a situation where we have to tighten more quickly, he said, citing specifically the fairly ebullient financial markets, and the risks of waiting too long.
These doves are worried that the Fed will have to speed up its rate hikes to get a grip on asset price inflation, wage inflation, and consumer price inflation before they become difficult to control."
Announce plans that it intends to start up a crypto-currency, shares spike 300% in one day! How´s this for more corruption? Kodak directors get massive stock grants day before blockchain hype caused Shares to ppike 300%. But the oods news is the regulators are still soundly asleep!
Shore: dont miss out on Tescos rally
A warmer trading update and unconditional clearance of the Booker acquisition has left Tesco (TSCO) in a positive position according to Shore Capital, which still rates the shares a buy despite admitting its stance may be premature.
Analyst Clive Black retained his buy recommendation on the shares, which fell 4.4% to 202.5p yesterday.
We see material valuation rating compression for Tesco stock out to 2020, albeit that contraction is back-end weighted... we continue to believe that we may be a little premature on our upgrade [to buy], he said.
However, we also believe that it is better to be too early than to miss the anticipated appreciation of Tescos shares.
The underlying progress is undeniable and the direction of travel clear.
Poor show from TSCO yet again. Aldi , Lidl, ... even Morrisons are winning the battle. Although they try cheap loss leader deals on wine, multibuys and "fake" farm food to lure customers the Tesco brand is still going down the pan. I'm waiting for sub 180p for another quick scalp - shouldn't be long.
No real surprise with the fall in SP today.
Reckon it got well ahead of itself and with results slightly below city expectations, that is what happens.
I still have faith in 'Drastic' and reckon the company is travelling in the right direction.
While LG don't seem to have a moral problem handing stock over to hedgies the "Coverage" section on page 3 states they don't do any lending of UK equities. Again it seems to be for practical rather than moral reasons.
"We do not engage in securities lending in UK equities for three principal reasons:..."
Anyway the initial point was just that institutions dominate on a massive stock like TSCO and there will be plenty willing to take the Odey penny.
Apart from the well publicised successes like Carillion and this week on Debenhams it has been a tough time for shorters after the sustained market rise.
However there are still big short bets against the grocers and we'll get a better view of how that pans out after next week's set of results - MRW-Jan 9; SBRY-Jan 10; Tsco-Jan 11.
mea culpa ! my information was based on the CEO several years back publicly stating that L&G were in the business of selling their client's pension and savings assets to the clients' own detriment ...
having read through the link you kindly provided, it seems that they succumbed based on NY research studies that selling short didn't drive stock prices down.... ( try telling that to the Odey Investment managers and every hedge funds and they'll laff themselves silly.... of course short selling hurts the stock owners: ) efficient markets _me a_rse
Awe well , I'm going to still make my token protest and ask my asset manager to send me my share certificates for my L&G holdings. I know the institutions cross invest in each other by and large but at least , the hedge funds are not getting my meagre holdings.
LGIMs approach to securities lending
We acknowledge that securities lending is not free of
risk. However, we believe that the risk involved can be
mitigated and controlled effectively. Whenever we have
engaged in lending, we have done so on the principle
that we must avoid any potential for conflicts of interest
between ourselves and our clients.
For this reason, we have decided that all revenue from
securities lending (net of our agents administrative
charges) should go to the fund for the exclusive benefit
of clients. We do not engage in any revenue sharing on
the basis that all investment returns, including any stock
revenue income, belong to our clients.
Over 94% of Tesco shares are held by institutions - many of whom are happy to extract a little extra income on their holdings by lending stock to the hedge funds.
I agree with you. I know for a fact that L&G refuse to lend to shorters.this respects the wishes of the pension funds who ultimately hold the shares. so exclude L&G from the list of fund managers who act with no integrity
the other institutions' have not announced their policy is on short lending - but whatever profits they rake in from their short lending , they pocket this for their own private funds to the detriment of their policyholders. I guess that is capitalism but when they effectively steal from their policyholders and pension funds , then this needs to be highlighted.
Over 94% of Tesco shares are held by institutions - many of whom are happy to extract a little extra income on their holdings by lending stock to the hedge funds. So it's not going to make any difference what a PI does on their private holding.
Surrprinsingly - the owners now want to bail out with an IPO, is there any one interested on here
"Alas, all of the shares will be sold by existing shareholders. The company will not receive any proceeds from the sale of the common stock by the selling stockholders. So even after the sale of the shares, it will have no cash to operate on."
UBI Blockchain Internet - which sports zero revenues and a disconnected phone number in its SEC filings managed to get its shares to spike briefly by over 1,100%, pushing its market capitalization to $8 billion.
UBI Blockchain didnt do an IPO. Instead, in October 2016, it acquired a publicly traded shell company registered in Las Vegas, called JA Energy. It then changed the name and ticker symbol to what theyre now.
Over the six trading days starting on December 11, 2017, its shares soared over 1,100%, from $7.20 to $87 on December 18, as the word blockchain in its name and sufficient hype and speculator-idiocy took hold. By December 21, shares had plunged 67% to $29. They closed on Wednesday at $38.50. At this price, it still has a ludicrous market cap of $3.64 billion.
Here's a way to beat the shorters and save yourself some fees
get the brokers to send you your share certs for the stocks you intend to hold long term. Having the share certificates mean that
1. your stock is not being lent by your brokers to the hedge funds and shorters at large to depress the price of your holding . Believe me the brokers are all at it - lending the stock to the manipulators for a small commission.
2. because the value of your fund assets is lower , you end up paying a lower annual management safekeeping charge to your broker
3. since you hold the security in your own name, not only have you 100% protection in the event of the broker getting into financial difficulty, you get all the perks of being the direct owner - notification of voting for /against the resolutions at AGMs etc, picking up shareholders perks.
Subject to shareholder approval, the deal can go through.
Simon Polito, chair of the Competition and Markets Authoritys inquiry group, said we have carefully listened to feedback from retailers and wholesalers, but added that the retail and wholesale sectors are highly competitive and we are confident that this will continue after Tesco buys Booker.
Fresh from the farm can't praise these too highly.
Where else can you buy a bag of sweet crisp apples in mid-winter for a mere 90p a
Well done Tesco and long live Rosedene Farms and all the others!!
(and what's wrong with Polish pork. The country produces some of the finest hams
I have ever tasted)
Sorry, Turkey, you have given yourself an apt name. Richard Baugh, a pig farmer, who owns Woodside Farms, is certainly not fake. He plans (rightly) to sue this awful company unless it drops its brand 'Woodside Farms' in the meantime to distinguish his high class produce from Tesco's cheap stuff he has changed his name to Bofs Hogs.
After he has thrashed Tesco in court he will revert to the name of his real farm. Why anyone would own Tesco shares or shop in their stores is beyond me.
But this is what supermarkets have always done & are good doing, making people buy things that they don´t really need. Take bottled water, what really is this stuff? The most important thing is always missing P.H, many of these bottled waters have a p.h of around 5, 5.5. This is the same acidity as coffee. Keep drinking this stuff over the years you run the risk of kidney stones, not pleasent. You worry about where pork is produced, the Norweign salmon is far, far more toxic & there are no warnings. Amazingly many people know the risks & still buy it.
Also as I have highlightened, is the water tested in fruit. How is the water water irrigated? Also some of you may know that Indonesia is suffering from high skyrocketting rates of AIDS, this has absolutely nothing to do with HIV but from contaminated rivers which are full of highly toxic chemicals from textile factories, plastics, human & animal excriment etc. It is estimated that only 3% of fresh water is actually portable, yet S/E Asia produces massive amounts of farmed fished.
You run around fields trying to fund charities claiming they are trying to find a cure for the likes of cancer, why don´t people actually spend one second in thinking what actually caused the cancer in the first instance?
No, it is not brand names; it is deliberate dishonesty. If 'Sweet meadow Farms' packaging had in large bold letters "PRODUCE OF POLAND (or wherever the meat actually came from) then fine. But it doesn't; the aim is to con their customers that they are buying meat produced in the UK.
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