Martin North went on The Project and told people not to buy property until next year...

But thats exactly the problem here, you're looking for daily weather forecast while Martin North is warning you of how the seasons, they are a changing.

 

Argentina today increased their interest rates to 60%, the highest in the world.

 

I really enjoy reading economic predictions, although find the prediction itself or the dating of it completely irrelevant and nonsensical. Just as i dont believe in Nostradamus i also dont believe on aggregate a room full of economist's would be any more accurate than blinded chimps throwing darts.

You can write off/disagree with the conclusion or timming but that doesn't mean the underlying fundamentals used to support it are not accurate or of use. Certainly there are those over playing the data "doomsdaying" and they have a vested intrest in doing so. On the flip side i can assure you there are those also under playing the data.

I can only use todays information to form a view or position, are there overvalued property markets in Australia? Imo yes. Are there significant and above historical average risks? Imo also yes. Will there be a crash? I dont know! Do these markets currently provide low risk value and would i feel comfortable taking a position, hell no!

 

Economics is not the same thing as meteorology.

 

Indeed, with weather forecasting your dealing with chaos theory modeling that requires huge computational power to calculate. Also with all the effort and research put into the forecast it is skewed by the time it is presented to the public. Weather chanels will add a "wet bias" to the percentage chance of precipitation.

 

Was this meant to be facetious? Sounds exactly the same as economics... (except that it is based on science)

 

lol....

Some new age optimists should just do away with the weather...

It is always sunny unless raining, in which case it is a sun shower

 

I haven't studied economics, so this is coming from a position of anecdotal observations over time (and am open to well thought out alternative views), but I think trying to predict specific outcomes based on an economic model would be next to impossible.

I would liken it a bit to psychology / neurology (study of the brain, mind and behaviour).

Generalists may understand how the brain functions at a high level.

Specialists may know specifically how one part of it works and responses based on stimuli.

But can an expert use this information to create a model which predicts the exact outcomes for an individuals thinking or behaviour? Of course not. They might be able to calculate the odds of someone behaving, thinking or reacting in a particular way, but there is no way to know the exact timing due to the complexities of influencing factors on the individual.

Likewise you can have an expert on the economy who may have a broad understanding of how market forces work or they might specialise in a particular area that gives them an edge on some market behaviours and events. However, no one can predict exactly what will happen, because there is no way to know what stimuli will be involved when modelling the future. Who would have thought 15 years ago that we would have the level of government / central bank interventions in the market that we (still) have today? How can we know how long this paradigm will last?

I think research by less conventional economists such as Steve Keen's is particularly important, especially when neoclassical economics has failed us so badly. What did we miss when assuming the economic trajectory wouldn't lead to a global financial crisis? What factors are we ignorant of today that will contribute to the next financial crisis?

Perhaps some criticisms of Steve Keen's predictions are warranted, but I think in most cases it is driven by the media looking for a soundbite that is digestible by a wider audience. We all have to market our skills and expertise in some way to exchange our services for a living. Who is going to want to read about economics unless there is 'something in it for me'? For most people that is information on how future market events will (or could) impact asset prices or our ability to make a living.

What's the takeaway?

• You should listen to a range of commentators / economists, whether they are predicting something you agree with or not.
• Look past the headline. If you don't agree with their outlook as presented by the mainstream media it wouldn't hurt to understand (at a deeper level) why they have this view.
  
• You shouldn't expect an economist to get rich from creating economic models, there are a far wider range of skills needed to invest successfully even if their model is close to being accurate.
• No economist can be expected to predict future outcomes (especially with specific timing).
• Don't buy or sell assets based on any single commentator or economist's views, take in information from various sources and take ownership for your own decision making.
  
• Unconventional approaches to models are important when traditional models have failed us.

 

Very much so, imo a politically/ideological driven branch of economics that serves a vested few.

This:

 

Track record is how I gauge "experts".

i) In Dec 2016 Martin North predicted interest rates would rise by about half a percent in the following 12 months. But 12 months later they were about the same or marginally lower.

ii) Over the same time-frame he predicted investment lending would "continue to pile on". It didn't, it retracted marginally.

iii) He also said "momentum in owner-occupier lending will slow" But it stayed the same and even actually increased ever so slightly.

iv) He said foreign investment would increase. It did, by 1.4%.

v) He also correctly picked an increase in mortgage delinquencies across 2017.

vi) In September 2018 Martin North appeared on 60 Minutes predicting property prices would plummet 40-45% in the next 12 months. Later he said there was only a 20% chance of that happening. Prices have to fall about another 30% this afternoon for his prediction to come true.

Stephen Koukoulas offered Martin North a wager regarding that prediction which makes for an entertaining read...

My open letter and offer to DFA’s Martin North – Skin in the game on house prices

 

Sorry but this is simply false. Criticise the guy on his predictions all you like (and yes there's plenty to criticise as with most who make predictions on the housing market) but be honest on what his predictions were. 60 minutes focused only on his most pessimistic prediction but he had the 40-45% price drop at only a 20% probability and had it occurring over the following 3 years not 1 year.

 

why are we still listening to this idioit?

 

I prefer to listen to investors and hedge fund managers (Ray Dalio etc) rather than economists as such.

 

Martin North has predicted the house downfall since 2000. Prices have jumped 1000% in many cities since. Guy just makes himself look stupid

 

I did mention the 20% chance. I also mentioned that he got a couple of other trivial forecasts right.

Try to find a time when he's been positive about the property market. If you hadn't bought in Sydney for example 5 years ago you'd be worse off by hundreds of thousands of dollars even considering recent declines. That places a dollar value on his advice.

 

Howard Marks is also really good

 

Was it this company that did a loan to on on Blue Sky Assets - the company that tanked from $14 to $0 over the last 12 months?

 

Im not sure if you were being a smarty pants. Are you saying Howard Marks is not some one you should learn from. If so im sad for you as you obviously dont know him of career well enough.
If Warren Buffet make a bad call say like buying Kraft is he a bad investor.?

But Oak tree deals with a alot of Alternative finance and high yield bonds. They 100s of billions under management.

Yes As per article I read Oaktree provided a $50 million lifeline to Blue Sky but Blue sky failed to meet its obligations.

Here is a snippit.


Blue Sky Alternative Investments has finalised terms with Oaktree for a $50 million capital injection that could result in the US hedge fund taking a 30 per cent stake in the troubled Brisbane-based fund manager.

The financing deal, first revealed by AFR Weekend's Street Talk column, will provide vital funding to Blue Sky, which has suffered a 90 per cent fall in its share price and the departure of its chief executive officer as it has been forced to downwardly adjust the value of assets held in its funds.

Blue Sky, which placed its shares in a trading halt on Friday, said Oaktree would provide a $50 million, seven-year loan. Interest on the loan provided by the Oaktree's special situations unit has been set at 5 per cent cash plus a 10 per cent "payment in kind" component that capitalises – or gets added – into the loan balance. The cash interest is subsequently charged on the full loan balance.

 

No was not saying that at all - I think Oaktree did well out of the deal. I watched some youtube clips and thought he seemed very insightful.

 

Last year I was sick to death of hearing ' negative gearing' . Now I'm sick to death of hearing ' Martin North'.