Anglo Asian Mining Share Discussion Threads

[mad foetus] 16/10/2018 12:14

well bo, the biggest risk can become the speed in which you can sell them. With a dematerialised holding you can sell online anytime, but if there was a trigger event and you wanted to sell a paper cert, it can take hours or longer if you were for example on holiday.
the advice I always gave was that if a custodian went bust, the shares it holds would be returned in specie to the ultimate owner (after the palavar of liquidators sorting it out) but that cash would (subject to the FCS limits) be an unsecured claim to rank with all others. So I was surprised that Beaufort appeared to allow the liquidators first dibs at what I had always felt were protected client assets.
there are entities like Fundsmith where you can buy directly off the issuer, thus conceptually cutting out the middleman, though I am not sure how they manage the separation of duties there

[aim_trader] 16/10/2018 12:13

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[mad foetus] 16/10/2018 11:29

Bo, I agree with Taleb and am a big fan.
But in a previous life I had quite a senior role in a small part of a global bank. This bank was highly rated, the largest in a major country and processed all the civil service salaries in that country. I would occasionally be asked "what happens if you fall insolvent: how can I get my money back? can I place it in trust with you rather than on deposit" and similar.
And my answer was always much the same:
1) why are you asking me? if the bank falls insolvent whatever I have promised you will be worthless, so there is no value in you ever asking me that question
2) if we fall insolvent, there will be tanks on the streets of a major european capital. The chances are that several governments will have fallen. Getting your money back will be the least of your problems.
3) what else are you going to do? you have cash and if you invest it into something else you take investment risk. if you place it with another bank you have their counterparty risk.
If you are really worried about the safest thing is probably a fund invested in a wide range of bonds. But you are exchanging one form of risk for another. Reducing the risk to zero is near impossible. Land, art, physical gold can all be seized or stolen. Any other assets and you always have counterparty risk.

[bo doodak] 16/10/2018 11:18

Wan has said he is happy to take any views on this topic on his bb

[bo doodak] 16/10/2018 11:03

Wan,

RISK MANAGEMENT

One last thought, try to become familiar with and try to understand the extent of your exposure to different types of risk and how they vary over time; macro, micro, company specific, country, regulatory (as I mentioned on the other thread), etc. The risks caused by incentive structures, hidden risk, etc.

While its absolutely necessary, in general, most investors IMO spend too much time analysing only company and market specific news. That's simply not sufficient, and exposes one to huge unconsidered risks.

Risk management is critical. For example, one negative 'black swan' that you are unprepared for can ruin you.

All Naseem Taleb's book's IMO are essential reading

[bo doodak] 16/10/2018 10:47

2sporrans,
I find it pretty hard these days to have any real confidence in any jurisdiction, as fiat rules everywhere so to speak.
At least we still have our own currency as a safety valve to depreciate when required.
For all our flaws the UK IMO is still hopefully a better bet than most in which to manage one's risk, but holding a portion abroad could be a sensible option.

No worries, I can see my concerns are not shared to quite the same extent by other posters

[mattjos] 16/10/2018 10:41

someone beat me to that just then !

[2sporrans] 16/10/2018 10:27

I'm going exercise restraint now in posting other than AAZ focused.

Realise that, much as other discussion interests me and/or has merit,
will not be welcomed by many who want to stay strictly on topic and what the bb has kindly been provided for.

At least during the trading day :0)

[2sporrans] 16/10/2018 10:17

Point taken BD.

One aspect worth contemplating is extent to which a financial crisis is truly global.
Will there be regions/nations far less afflicted than UK?
Could one hold at least a goodly % of one's assets with institutions therin?

Just a token idea.

[wanobi] 16/10/2018 10:12

thanx Bo, interesting...

all, feel free to use this thread for your 'end of the world in nigh' debate if it helps free up the mattjos thread for pure AAZ posts...

I am certainly interested in you views on the subject...

Cheers
Wan

[bo doodak] 16/10/2018 10:01

2sporrans,
You've taken what I said out of context. Its only meant in relation to the point on balances. The last thing I want is a collapse, I'd rather the system bumbled along till I'm gone.
It probably will, but my concern is how we can mitigate the confiscatory risk to our hard earned finances that the authorities will attempt in order in order to keep the current system running

[2sporrans] 16/10/2018 10:01

Still seems to be a fair few nervous sellers and/or short termers in play.
Whenever each wave of buying has a pause a selling spree commences.

But there's been plenty of sustained buying ever since the excellent RNSs up to the Dividend release one.
Previously, the buying dried up to a trickle soon after news releases.

As long as the buying keeps coming the price will keep ratcheting up to at least 80p imho.
Don't expect heavy selling before then nor 80p to be more than a short term top.
Why would growing numbers of long term holders ditch any time soon?

[mad foetus] 16/10/2018 09:54

I wish those of you who want to talk about the world ending would go to a general gold thread, rather than the focussed AAZ one.But FWIW I have never found a single person who can call the price of gold with any accuracy: as a commodity it seems to attract perma bears and bulls. But talking about bank collapse is daft: what you are worried about is general counter-party risk and government seizure if assets. And shares in a mining company, gold ETFs or physical gold (where a trail can be found showing that you bought it) are all just as likely to be seized. If global capitalism comes to an end, the chaos will be such that even if you had a kilo of gold, how would you be able to turn it into value without getting robbed/arrested? It is all in the basket called "not worth worrying about". Guns, a nuclear shelter and a stockpile of food is what you would want, not gold.

[bo doodak] 16/10/2018 09:52

2sporrans,
Which ever way this plays out the public will finally have their eyes opened.

A balanced approach of directly owned shares like Cinoib, to remove system risk as much as possible and some system risk with ISAs is one option. Maybe NSI has its advantages as Treasury linked . As not bank could be a safer more secure option going forward and higher protection limit to £2m balances

I'm hoping others as well may feel it worthwhile to discuss options of how to reduce the confiscation risk to ones cash balances/profits/holdings.

My AAZ profits are still smallish at the moment, but...hopefully

Celeritas,
Don't believe it applies to houses, except for the risk to the added protection on house sale assets for (6 months I think) one currently gets.

[bazboa] 16/10/2018 09:42

Are we taking a breather before continuing the march towards fair value!?

[2sporrans] 16/10/2018 09:39

Cinoib

What form are your share certs. etc in?
And where do you keep them?

[2sporrans] 16/10/2018 09:36

"...it doesn't really matter whether the system fails or survives."

You serious BD?

The real economy will collapse if such a scenario unfurls.
For one thing, the whole jamboree runs on credit.

[2sporrans] 16/10/2018 09:27

"I have no confidence that our gvt would even honour its small £85K guarantee if the crisis was deep enough." - BD.

Not divined anything in all the blurb that stipulates a timeframe within which depositors would be paid any compensation.
So, might simply be deferred indefinitely.....

[cinoib] 16/10/2018 09:25

2Sporrons, then don't buy into any institution just do your own investing direct into a company of your choice then if anything goes wrong only you to blame for making a bad choice. I packed up all such investing a long time ago as the returns were inadequate and just invest direct. Yes I still have sleepless nights if I make the wrong decision but hay, that's life.

[celeritas] 16/10/2018 09:23

Probably more reason to buy physical gold.

How does that transfer to people with million pound houses, maybe it would be total assets. I do think if the above was to ever happen we would see anarchy on the street, a free for all.

[bo doodak] 16/10/2018 09:19

Not sure I understand, as IMO it doesn't really matter whether the system fails or survives. Either way a percentage or all of your savings will be confiscated as you are a creditor.