Raven Prop P Discussion Threads

[kenny] 13/10/2020 17:10

Low interest rates have proved not to lead to more spending. In fact, they lead to more saving. Here’s an extract from an article published earlier today:

“Furthermore, she said it had a corrosive psychological effect – known as the Alice in Wonderland syndrome, when you walk through the mirror into a world that has become unhinged. It sets off a scramble for cash and safe deposit boxes. It leads to higher inert savings. In other words, it can be contractionary.̶1;

Clearly investment BB’s like this are for posting unsupported opinions based solely on blogs, below articles, by unknown people, - with no link to those blog posts. Obviously, these blog posters are financial experts hiding out as blog posters – which sounds familiar!

We should base our investment strategy and decisions on blog posts and ignore the content of the articles!

More seriously, I do deduce that in current circumstances, one of the main reasons that low interest rates are being pursued by/forced on governments is in order that their currency depreciates and/or does not appreciate against other governments who are pursing negative interest rates. Governments will never publicly admit that, so some people miss this nuance.

The financial landscape has changed. Given the new circumstance we live in, I do not believe spending will be people’s priority. The massive increase in the UK saving ratio shows that; as well as the material paydown of UK credit card balances.

In any event, spending will not create inflation because unemployment is going to hold back economic growth and demand. Latest projections are for UK unemployment to hit 7.5% by year-end and that circumstance cannot support demand or inflation.

Most people I know are concerned a) that they may be made redundant in the near future and b) even if they retain their job, they worry how they are going to afford to retire in a low/negative interest rate environment. Therefore, they are cutting back on their spending rather than planning their next expenditure.

It was hilarious reading recent posts but I am going to resist the temptation to respond further to “pogue” because that only encourages more amusing posts.

[igbertsponk] 13/10/2020 13:57

Somoene starting squabbles again on the other thread I see. Conflicting views will not be tolerated there!
Such fun

[pogue] 13/10/2020 13:44

Kenny
Where did I say the BoE were not considering negative interest rates? Strawman again Kenny either that or you cannot read a whole post of mine and understand the obvious point I was making.

In answer to the second part of your question.
I read widely on the topic not just those that reflect my own views so understand the bull and bear case my feeling is inflation will happen as that is the objective of every country that is reducing interest rates at this point, and to boost exports. As for if inflation will happen just because it did not work there does not mean it wont work here, circumstances and people are different. In the UK saving money is not what people want to do they are more spenders than savers so lower interest rates on their borrowing thus providing them with more money and they will spend it more than likely. Read some of the blogs below news articles on negatieve interest rates and people there say they will take it out and spend as saving is pointless. So spending more money in an economy where a lot of competition has gone bankrupt and the surviving businesses need to make up for the missing revenues of the past, and possibly future, months and you have a recipe for rising prices. Nothing like Japan really.

[kenny] 13/10/2020 13:28

pogue- In reply to your post 715, I would reply with your own words:
“pogue29 Aug '20 - 20:21 - 654 of 716
Why? My views are my own, you feel the need to post other people's views in reply then at least post ones that are relevant.”

If you did not know the BoE is considering negative interest rates, I suggest you do some research. You might also find out that the common view is that negative rates will not create inflation. The experience of negative rates in Europe and Japan are factual, whereas your views are meaningless, if based upon no research and no more than a gut feeling.

[rahosi] 13/10/2020 11:13

Negative interest rates helps with the HUGE amount of money the Gov is spending on Covid

[igbertsponk] 13/10/2020 10:51

Buying opportunity will last for months until Invesco finally sorted.

[gfrae] 13/10/2020 10:44

There is almost certainly some arbitrage going on between the Ords and Prefs.

[zangdook] 13/10/2020 09:51

narrow spread atm 113 - 113.6

[pogue] 13/10/2020 09:46

Bit of a lurch down today.

[pogue] 13/10/2020 07:30

Kenny
the whole point of negative interest rates is to promote spending to increase inflation so inflation is not expected to stay low by the BoE its being positively encouraged! Why do you think they are considering negative interest rates?

[zangdook] 13/10/2020 06:12

Whatever happened to Neil Woodford? Is he still riding his horses around saying it's everyone's fault but his?

[kenny] 12/10/2020 12:07

In response to post 708 above. It looks like there is a big overhang thanks to Invesco, so it is impossible to predict the bottom.

[igbertsponk] 08/10/2020 15:33

Interesting to see big change in Ords with Quilter going from 5.12% to 16.69%.
No doubt something to do with the Convertibles and Invesco.
Good to see such confidence whatever. Hopefully signals the end of some of the downward pressure.

[gfrae] 08/10/2020 09:57

I would have thought a return of 10% on a relatively safe investment is pretty amazing.
Arguably Russia is more stable than the UK. There are less warehouses there than here, therefore should keep high occupancy. Russia has very little external debt (Thanks to sanctions). Russians have very low personal debt, therefore can still borrow. Move to internet shopping has been exacerbated by Covid . Warehouses in demand. Compare to WARE which sits at a premium to NAV.
The ordinaries and Prefs are cheap because of the overhang of shares caused by the redistribution of RAVC and also the Invesco overhang.

[ryszy] 08/10/2020 06:30

Hello, send me a DM if interested in a serious way to make passive income

[meathed] 08/10/2020 03:35

You're forgetting your prognosis is pretty short. Spend it on gin and rentboys.

[my retirement fund] 07/10/2020 22:30

Looking on putting a decent addition slug away for longer term here. What are current views? Is it wise to wait for better value or is it about now?

[cc2014] 07/10/2020 12:38

We will see what happens. The government are suggesting they will relax the stress test rules but I'm not sure that will help at all. The banks aren't lending because they think property prices will fall and they want a decent deposit ratio to cover it.

Waht would work as reported by the Telegraph is that goverment guarantees the loan about 85%. I don't think the bond markets will accept that.

The government need to stop meddling and just let prices fall a bit. Surely that's the best way to help all the people who can't get on the ladder.

[zangdook] 07/10/2020 12:27

Then when houses are unaffordable they have an excuse to (continue to) concrete over the green belt which enriches their property developer friends.

[gary1966] 07/10/2020 12:13

What's scary is that successive governments keep trying to solve a problem that they keep adding fuel to. Make homes be homes again, not investments. Introduce stringent lending caps like there was up until the 70's. Boris is announcing this new scheme as he is saying that houses are unaffordable to many, particularly the young. What does he, and all the other bright sparks in Whitehall, think is going to happen to house prices in the long run if you reduce the amount of deposit that is required and extend loan terms?

The reality is, is that successive governments may say that house prices are unaffordable and are an issue but they want higher house prices because people feel wealthier and therefor spend more. The treasury raises more money in stamp duty and direct sales taxes, it is a win, win for them.

[stun12] 07/10/2020 11:22

L-L, there seem to be a couple of factors. Invesco owned a large amount of RAVC and it was not totally clear what they would do with them after Raven opted out of the repurchase agreement they had. Additionally, RAVC had a safer profile than what it was exchanged into due having a maturity date in 2025. Holders like me ended up with common stock (which I didn't really want) and RAVP, which I actually bought a bit more of today. The yield should provide some protection from here provided the company remains healthy, I would like to think.