Buy Capital Gearing Trust?

aroominyork

I went to the CGT AGM yesterday. These are Peter Spiller’s views of the coming years, hopefully relayed reasonably accurately. They are consistent with the headlines of this piece, though I have not listened to the embedded interview.

 - Inflation is not transitory and will remain high. Interest rates are below where modelling suggests they should be. However, CGT thinks the Fed will pivot in a year and reduce rates.

- That will reduce government debt and prepare the economy to withstand Volcker-style monetary tightening and the recession the economy needs to reduce inflation and get back on its feet.

- Asset prices will fall steeply, making them cheap and laying the groundwork for large gains when we emerge on the other side.

- The coming years will be therefore be about protecting money. The aberration of the last 30 years (relentless gains with short periods of correction) is over.

Type_45

aroominyork said:

I went to the CGT AGM yesterday. These are Peter Spiller’s views of the coming years, hopefully relayed reasonably accurately. They are consistent with the headlines of this piece, though I have not listened to the embedded interview.

 - Inflation is not transitory and will remain high. Interest rates are below where modelling suggests they should be. However, CGT thinks the Fed will pivot in a year and reduce rates.

- That will reduce government debt and prepare the economy to withstand Volcker-style monetary tightening and the recession the economy needs to reduce inflation and get back on its feet.

- Asset prices will fall steeply, making them cheap and laying the groundwork for large gains when we emerge on the other side.

- The coming years will be therefore be about protecting money. The aberration of the last 30 years (relentless gains with short periods of correction) is over.

Largely true. 

Albermarle

Asset prices will fall steeply,

This is always the tricky bit. If that is the consensus, they would have dropped already. If it is not the consensus, then he is just guessing/having an opinion.

Aminatidi

Spiller has been saying that for a long time and has missed out on some pretty spectacular gains because of it.

I say that as someone who has about a third of their net worth in CGT so I certainly buy into what they're trying to do.

Linton

aroominyork said:

I went to the CGT AGM yesterday. These are Peter Spiller’s views of the coming years, hopefully relayed reasonably accurately. They are consistent with the headlines of this piece, though I have not listened to the embedded interview.

 - Inflation is not transitory and will remain high. Interest rates are below where modelling suggests they should be. However, CGT thinks the Fed will pivot in a year and reduce rates.

- That will reduce government debt and prepare the economy to withstand Volcker-style monetary tightening and the recession the economy needs to reduce inflation and get back on its feet.

- Asset prices will fall steeply, making them cheap and laying the groundwork for large gains when we emerge on the other side.

- The coming years will be therefore be about protecting money. The aberration of the last 30 years (relentless gains with short periods of correction) is over.

I agree partially  for the UK, assuming the new Tory leader doesnt take the promises of tax cuts they make in the next few weeks too seriously. Yes to interest rates continuing to rise and yes to the end of dominance of  growth investing of the past 30 years.  But does the country as a whole need a recession bearing in mind the situation outside the SE and the difficulties faced now by many poorer people?  "Levelling up" seems to have been forgotten.

It is not clear to me from the summary  whether he is talking globally, the US, or just the UK. Being retired, the only thing that could affect me significantly is a long period of high inflation.  UK investments or UK assets more generally are not a major concern.

So painful for many.  However certainly not "the end of the world as we know it" as predicted elserwhere.

aroominyork

Linton said:

aroominyork said:

I went to the CGT AGM yesterday. These are Peter Spiller’s views of the coming years, hopefully relayed reasonably accurately. They are consistent with the headlines of this piece, though I have not listened to the embedded interview.

 - Inflation is not transitory and will remain high. Interest rates are below where modelling suggests they should be. However, CGT thinks the Fed will pivot in a year and reduce rates.

- That will reduce government debt and prepare the economy to withstand Volcker-style monetary tightening and the recession the economy needs to reduce inflation and get back on its feet.

- Asset prices will fall steeply, making them cheap and laying the groundwork for large gains when we emerge on the other side.

- The coming years will be therefore be about protecting money. The aberration of the last 30 years (relentless gains with short periods of correction) is over.

It is not clear to me from the summary  whether he is talking globally, the US, or just the UK. Being retired, the only thing that could affect me significantly is a long period of high inflation. 

I also found the US surprisingly prominent in his talk. I think it is because he likes index-linked TIPS and, presumably, thinks that where the US leads others will follow.

coastline

Albermarle said:

Asset prices will fall steeply,

This is always the tricky bit. If that is the consensus, they would have dropped already. If it is not the consensus, then he is just guessing/having an opinion.

His opinion it looks like . Markets think the FED will get to 3.5% then cool it if not before.

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Bonds have already been to 3.5% in US. Still could go higher. ?

United States Government Bond 10Y - 2022 Data - 1912-2021 Historical - 2023 Forecast (tradingeconomics.com)

Todays inflation report isn't good in terms of higher headline rate. Again see how the markets go this week ?

United States Inflation Rate - June 2022 Data - 1914-2021 Historical - July Forecast (tradingeconomics.com)

Well if he thinks valuations are going to get cheap. What's cheap P/E under 10 ? That's without earnings being cut along the way.? We are crashing then and will be 50% down and more from the US peak.? He's as bad as that Grantham who predicts doom and more doom. He could be correct but why hold equities if this is going to happen. ?

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No idea but this Volcker style tightening that's mentioned ? When Volcker joined the party in 1980 ? Interest rates had already moved up from 3% to 11% over a period of years. Why wasn't inflation killed off then.? Was it not the economy that was eventually in decline ? Just because he moved 11% to 15% doesn't mean that was the main cause of reducing inflation. This money game isn't set in stone it's guesswork.? What about Debt to GDP ? Bit different now surely after GFC and the pandemic. Governments couldn't cope with huge rate rises to finance national debt. ?

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Debt to GDP Ratio Historical Chart | MacroTrends

Sharp find out who's correct ?

Rollinghome

aroominyork said:

I went to the CGT AGM yesterday. These are Peter Spiller’s views of the coming years, hopefully relayed reasonably accurately. They are consistent with the headlines of this piece, though I have not listened to the embedded interview.

Well done. I intended to go but couldn't make it.  Was held at J P Morgan's office at Blackfriars instead of Moorgate, so a fair trek from that room of yours.  Hope you got some decent biscuits with your coffee. Peter Spiller would agree a lot is down to guessing, but he's a wise old head.

aroominyork

Rollinghome said:

aroominyork said:

I went to the CGT AGM yesterday. These are Peter Spiller’s views of the coming years, hopefully relayed reasonably accurately. They are consistent with the headlines of this piece, though I have not listened to the embedded interview.

Well done. I intended to go but couldn't make it.  Was held at J P Morgan's office at Blackfriars instead of Moorgate, so a fair trek from that room of yours.  Hope you got some decent biscuits with your coffee. Peter Spiller would agree a lot is down to guessing, but he's a wise old head.

No longer living in York but a journey nonetheless. I was last in the JPM building over 40 years ago when it housed my school. The entrance lobby is untouched: 'Headmaster' still carved over the door etc.

Rollinghome

aroominyork said:

Rollinghome said:

aroominyork said:

I went to the CGT AGM yesterday. These are Peter Spiller’s views of the coming years, hopefully relayed reasonably accurately. They are consistent with the headlines of this piece, though I have not listened to the embedded interview.

Well done. I intended to go but couldn't make it.  Was held at J P Morgan's office at Blackfriars instead of Moorgate, so a fair trek from that room of yours.  Hope you got some decent biscuits with your coffee. Peter Spiller would agree a lot is down to guessing, but he's a wise old head.

No longer living in York but a journey nonetheless. I was last in the JPM building over 40 years ago when it housed my school. The entrance lobby is untouched: 'Headmaster' still carved over the door etc.

It's a wonderful building both inside and out.  I wonder if the school's new building will be as admired when it's 140 years old?