Member Info for steph

SO long as there is chronic undersupply margins of 15% or better will probably be achieved by the sector on average. Barriers to entry creating effectively a long term sellers market keep the margins up there. There is a lack of full market competition. Even in the middle of the 2008 crisis 100% of product of the sector was always sold and relatively quickly when put to market. The only uncertainty was the exact price. London was not and probably never will be Spain or Ireland who did for a period have real oversupply and unsold units. Of course in a big crisis (1987 or 2008) even a player such as TEF will see margins dip to 5%. Others may actually have losses as land banks are written down. ON average though in the long run margins will work out to 15% or better. Any lower than that long run and there will be less house building and then government incentives and reduced competition will fatten margins until an uneasy equilibrium of 15% margins and moderate building rates are returned. Are we still in a "bounce back" period from 2008 with higher than long run margins for the sector still in play or are we in a "new paradigm" where margins are sustainably slightly higher than 15%. I err like you on the side of caution. 15% margins is plenty enough for TEF to double in size every 4 to 6 years and my ISA plans to become real. If margins beat that over the next 15 years well that is icing not the cake.

http://www.efta.int/faq Still think the end game will be EFTA plus some fudge on a customs arrangement that prevents a hard NI border but allows the UK to sign independent free trade agreements. Teresa may is the biggest obstacle to EFTA as she is the biggest hawk, even within her own cabinet, on reciprocal EU/UK immigration rights. Corbyn second biggest obstacle. Why a socialist want free trade in goods ahead of freedom for people I don't know. Sits oddly with his supporters as well as his history and socialist principals.

For my isa still 100% Tef However in 2 months time I’ll have a remortgage to play with and in a spread will certainly look at crest on a 2 year horizon depending on relative values as you do.

Wish the price would stop rising before I can raise 20k for this year’s isa injection .

https://www.telegraph.co.uk/business/2018/04/24/fed-tech-entrepreneurs-put-britain-visa-delays/ This will hurt us more than Brexit itself. Brexit plus a liberal approach on skilled immigration is tolerable. Brexit (losing automatic access to EU nations) plus a mad May immigration policy for skilled migrants (even the British High Commissioner was not immune to the mad May approach) will do some real damage to TEF's market.

Thanks for all the informative postings. I read them all. I suspect we are now in what I call "the long wait". Hidden value is building in the SP which is held back by some political uncertainty and the aftereffects of the crash -where the whole sector is still under suspicion. As TEF chugs away increasing volume, political uncertntly clears over the next 2 years and the memory of the near death experience for the sector in 2009-10 fades we will see some impressive SP increases. Will be in fits and starts but over a 2 year period this SP is going up.

thanks

https://www.telegraph.co.uk/business/2018/04/16/uk-services-firms-cash-global-growth-official-data-shows/ must say I am surprised but of course Brexit has not happened yet and in substance is 3 years away. Still companies read the news of course and make investment decisions now. If I were heading the conservative party I'd go for the Norway option which is in the single market but not in the customs union. That allows us the optimum mix of freedom to make our own trade deals but full access to the EU market. IN the customs union ( like Turkey) but not in the single market is a dogs dinner. The tripping point on the Norway option is immigration policy . We have a completely mad home secretary promoted to prime minister at a point when she looked like the only adult left standing. Caribbean citizens who came as children 50 years ago with flawless NI contributions all their lives being classed as illegal aliens and suddenly departed and given a 2013 dated home office pamphlet on "how to pretend to be Jamaican". May would have made a great Nazi era industry minister. Focus on the KPI's and ignore the human cost please. Where were the lib dems at this point? Did they not notice what was going on in the home office?

Anybody know when is it due? Last year was April 5???

There are many ways to find land in London. One is mixed with employment uses such that employment density does not go down but residential is added. Win in for LA's. Hit employment and housing targets. Another I once worked on and TEF have "not dipped their toes in" (forgive the pun) is floating homes as per the plans for the Royal docks. The cost extra for the construction of a floating home vs traditional home in London is well offset by using land that is owned by the LA and is currently priced at zero. The economics works well for London. I talked to some floating residents in Insteading Holland and they were paying more for floating homes than the exact same model of home on dry land (some were built forward of the flood barrier and some on dry land behind so we could compare). The third major way is partnership wit LA's and housing associations for densification on existing housing land. TEF is a specialist on this. A forth and much overhyped way is building on utility and railway land. There are usually good reasons whey all that land has not been developed on already and the raw numbers bounced around are misleading. A fifth way that will not fully emerge for 10 years but is in the pipeline is released road and parking spaces due to driverless technology at least parking the car a bit away from origin or destination if not replacing the family car altogether. This could have quite an impact on suburban retail and employment centres where large surface car parks are still the norm even though they may be a few minutes walk from a rail station. Even now some schemes are viable although that is a trickle that will turn into a flood. The economics of expensive car parking so close to origin or destination will change radically. Calling for your car, or indeed calling for a car, to pick you up or drop you off precisely at the door will become the preferred mode to access a car and not walking to or from a car park. All require some forward thinking and propensity for innovation. Lets hope TEF stay on top of trends and lock in options on land as technology changes the options. There is space in the near prime London market for TEF to grow to 10,000 units per annum but site acquisition will need to get more innovative yet.

I asked that q at agm and the answer was that for a substantial chunk of investors there were tax advantages to AIM so not anytime soon .

Agree that more could have been done pre Brexit. A beefier safety brake on unbalanced immigration flows applicable to all members could have been created. Junker being appointed against vigorous uk objections was provocative, We are where we are. Unless opinion polls shift substantially we are going to get a hard but orderly Brexit. Lib dems have not benefited at all from their pro Brexit stance. I’m surprised that with all the news that the promised Brexit dividend is fantasy and even most Brexiteers accepting that, uk opinion polls have held roughly the same,

YEs I agree we are helped along by the incompetence of others. Money needs to go somewhere and UK and London in particular might be the least of many global evils. Trump in particular helping the City a lot. We would be haemorrhaging jobs to New York under a more stable immigration friendly regime over there. Add to your list Russia, middle East, Africa and even India and China. None of them I would put my money above London even under our current leadership. Too much political risk about all over right now. China probably OK but I the apparent stability has been achieved at the cost of rigidity on political evolution and that can suddenly crash and burn -aka USSR. The sweet spot when you had Dengite pro growth cadres who had little connection or interest in getting personally rich running the place relatively competently and relatively corruption free. They are now dying off and completion for the spoils in a one party system can rip a country apart. Canada, New Zealand, Norway Sweden, Denmark, Singapore and Finland and Australia stable but there are limits as to how much money can flow into those tiny countries and none of them are big on financial services. The Swiss who are big on financial services have banks as large as they want right now so no expansion there and they are having trouble discouraging capital inflows that inflate their currency. What we could achieve with a stable government focussed on UK making as much money as possible for the UK population to enjoy as wages and/or benefits as conditions permit. Immigration that makes money for us or provides an essential service -good. Member of a trade block on services that allows our world leading business and financial service sector to grow at the expense of Frankfurt or Paris -good. Benefits or discounted University fees that leak benefits abroad -Bad. The only exception is our 0.7% on real foreign aid. I am very proud of our country whatever it's faults for doing that and maintaining it under difficult circumstances. All three parties in favour speaks volumes about our collective character and beneath the current chaos is a deep UK decency. Ditto on NHS cross party support.

commonwealth immigrants who came 50 years ago as children being chucked out because they don't have detailed 50 year old records in a process that mad May started at the home office. Our commonwealth partners who we need to woo in new trade agreements are appalled and protesting. Sends a signal of "**** off" just when we need them. May repeating a 100,000 cap that not a single member of her immigration obsessed cabinet can sign up to (and all NHS and business chiefs say is harmful to UK never mind harmful to our Brexit negotiations on getting the best possible trade deal). A nation of lions ruled by idiots. Not even useful idiots, real idiots. My own party is not much better. Redistribution works best if you have a booming economy to tax and Corbyn's left wing euro scepticism (socialism in one country) is unhelpful on that front. I don't think there is a constituency for a poorer more "socialist" country just as much as there is no constituency for a Fox led deregulated utopia where we are all eating chlorinated chickens, GM modified foods and getting ripped off by lightly regulated US financial and social media firms. We are a sensible nation normally ruled by sensible people. Hard to be an investor now but overall worth staying in the right sector and company. UK economy chugs along in spite of the rot at the top. Just shows how strong the UK (London at least) has become and how linked to the modern and growing sectors of the international economy. Imagine what would happen if we had great (or even just competent) leadership? I'd be back into my leveraged positions to be sure.

Thanks for your clear criteria behind your share switching strategy. I’m lazier than you but admire the logic. Sector sensitive to macro set backs so I am vigilant on that front.

https://www.standard.co.uk/news/politics/brexit-news-london-at-immediate-risk-of-22-billion-economic-hit-in-the-event-of-hard-eu-exit-a3800206.html

it is a statistical blip as NY is still year on year about 2.5x London's rate but it is the first time even for a couple of months we have exceeded new York who back in 1990 had a rate of some 2,500 murders/year. Drug gang on gang violence seem to be boosting London rate rather than more generalized risk to the population. Still a worrying trend. London as a go to for footloose highly talented labour is dependent on us being a cool liveable city and high crime or high perception of violent crime is a major turn off. Image of safe UK and London could take a hit. Glasgow has cut it's murder rate with extra police resources. London has had police cuts in the same period. These gangs hard hardly brains of Britain type organizations and with enough investigatory effort they can be broken. I always thought that the effort given in London to tackle terrorism might have a spin off in helping tackle regular violent crime but in fact it may be the opposite and just drain resources from that more general fight.

HPI since the war has had many plateaus in an upward trend and only 2 significant retraces in nominal terms. IN inflation adjusted terms the plateaus are moderate decreases. The significant retraces may have been one offs never to be repeated. First was 16% central bank rates and mortgage deductibility withdrawal simultaneously. That would do it. Perhaps the only surprise is it caused "only " a 30% dip against a high base. Second was the credit crunch and bank liquidity concerns due to Mervin Kings utterly stupid "moral hazard". 16% retrace on that one quickly erased when bank to bank liquidity returned. Banks are much stronger and less leveraged now (and thus low bank SPs). Both retraces were made in UK policy mistakes. Could we get another equally stupid mistake in the next 20 years? I doubt it but populist pressures are wrecking havoc with many assumptions these days. We are in a plateau period that started with the Brexit vote but was related to many factors. Just time for the market to "catch it's breath" I think. I don't expect much upward movement until Brexit uncertainty lifts. This seems to be the forecast by most analysis. 2 yeas of flat HPI followed by a resumption of the long term term due to structural shortages and a relatively good jobs market.

https://www.bloomberg.com/gadfly/articles/2018-03-26/britain-s-fund-managers-are-in-denial-about-brexit Whether old street roundabout and the ICT and creative jobs growth can compensate for some (or all) of the more traditional finance jobs remains to be seen. There is a small sliver lining to losses in the traditional finance sector in that it releases very talented people to the start ups and ICT creative sectors. London's finance sector, however damaged by Brexit, will still remain by a wide margin the largest in the EU for the foreseeable future and the go to for start up finance helping support unicorns and jobs growth in the new economy. Overall I am still betting on the London property market in general and TEF in particular. Brexit is a bit of self harm economically (not so for "regaining sovereignty" if one is so inclined. ) but we are not the only nation self harming economically at the moment. Trump is a net negative for USA (especially for the needs of the very international focussed business and financial services). Russia doing itself some real damage. Japan finding itself on the receiving end of USA trade stupidity an looking directionless with a debt ratio that makes Italy look good. Italian politics worse than ever so no net investment going there for a while. Even Germany not as stable as normal and in any case high taxes with more to come. France still has far right nipping at the heals of the establishment and not a place mobile business and financial services would make a long term bet. Also high taxes. Could be jumping form one fry pan (Brexit Britain) into a much bigger and hotter fry pan , a national Front anti EU nation). Brazil a mess. India well is India. China going from strength to strength and is a rival for some jobs that might go to London but is also a big market for our services Footloose capital, creative staff and company HQ's have to go somewhere. Capital surpluses are building up in the global economy causing assets to inflate. London not quite as big a beacon as before but still in relative terms quite attractive and this means demand for TEF product. Regaining sovereignty. An isolated Amazonian tribe with no contact with the outside world has perfect sovereignty. The rest of us have to put up with some form of reciprocal negotiated obligations and trade. Burdensome as those may be I don't envy the isolated tribesman. He will die much earlier, have unresolvable pain from ailments we get treated for as a matter of routine, etc.

Well I reinvested my Tef dividend in my isa so I suppose I am still for my isa 100% Storm clouds about due to Brexit and trump (think trade war) but TEF and builders are on modest p/e ‘s so we are well compensated for the risk. Builders are in rude health and much safer than in 2007. I think the modest p/e ‘s overstate the aggregate risk and we have an arbitrage opportunity. Anyhow really long term (15 years) I expect TEF to be in the order of 8x current size so what is thrown at us along the way is not critical for my ISA strategy.