The 18 year real-estate clock

Dumb luck
Nah, he did say it would probably happen, but it could've taken a while.

 

The real problem though is even if you believe the end is nigh.....if you sit out of the market you are being deflated away, eg put your money into cash and you re losing 5% per year in real terms.....

As someone once explained it to me.....doesn't matter if the company behind the stock is any good....it matters does the market believe the stock is any good because its investment moment that makes you the money.

 

Yep the interesting problem with the fund is now if you want to sell......who will buy eg what was supposed to happen over 5 years...happened in less than 2 but its setup for 10 year - so now what.

Steve did mention hedging to lock in gains but never mentioned costs etc.

 

That's true.
I wonder who they sell to if they want to leave. Does the fund just buy it back?

 

Tell that to the Japanese

 

According to this diagram, another expert also confirms the theory of 14+4 as well:

Which means, Australian property price can still have some potential to go up or more expensive than this year (2016) as I write this post.

Source: The 18 year economic cycle – the basis of our rigorous economic framework | Ascendant Strategy

@Barny have you subscribed to the www.phillipjanderson.com/18-year-real-estate-cycle/ website ?

 

Hey mate haven't subscribed to him. But I read his material in the daily reckoning when posted. He's a firm believer that we have a few more years ahead of us of positive growth before the cycle ends and starts a downward cycle. I'm not convinced, I think we will see trouble prior to his dates. Hope not.

 

Ah I see,
So Do you mean the trouble which can happens limited to Sydney and Melbourne area ?

I also read this http://www.htw.com.au/Downloads/Files/286-Month-in-Review-October-2016.pdf
when you go to page #24 and 25 Sydney is on the rising market which is in tune with Phil's prediction.

 

I don't think it will be limited to any area, if Sydney and Melbourne take a hit, then other states will follow. But I'm wrong a lot so who knows.
I'm not sure about property clocks from Herron Todd or others. But it does seem to show Sydney and Melbourne are in a rising market which as you point out, is in tune with phill's prediction.
Let's see how much higher Sydney and Melbourne can grow before it pops

 

Some states are ahead of Sydney and Melbourne's states in being in the doldrums. They will likely pick up after NSW/VIC downturn. Different markets doing different things...

 

So phil's latest from the daily reckoning.


Phil Anderson has a strong opinion on pretty much everything.

For one, he has no patience for stupidity.

He also has no respect for the mainstream media.

And he DETESTS so-called ‘elites’ who think they know better than the market.

To him, political correctness is killing the world today, because it stops people from speaking the truth.

Well, for better or worse, Phil certainly doesn’t suffer from that problem! That was unequivocally clear when he took the stage at the jam-packed Glade Pavilion:

‘There are only two places left in the world where my audience is predominantly white and old…

‘Country regions of England, where most of the Brexit voters came from…and other parts of Australia.

‘If I talk in London, US and Asia…my audiences are filled with younger folks, with Asians, Africans and Latinos. And their view of the world is NOT what you heard yesterday.’

For the last day and a half we’ve heard how Australia and the world at large are heading for a debt-fuelled crash. A deflationary spiral that could decimate stock and property prices.

Yesterday Jim Rogers described it as the end of the world as we know it.

Vern Gowdie said the whole thing was a mirage…an illusion with no truth or substance.

And today Jim Rickards warned of the coming collapse of the monetary system.

‘I absolutely and fundamentally do not believe this,’ exclaimed Phil. ‘And I don’t want to stand up here and give you another set of opinions…I want to teach you how to understand the structure of the economy.’

It’s his knowledge of this structure that led him to make what was undoubtedly the most controversial prediction of the entire conference: ‘Far from a collapse…I will show you why the world is on the verge of a super and massive boom in the next 10 years.’

Now if you don’t know Phil, here’s a brief background…

For over 25 years he’s studied economics and markets. And what he’s discovered is that Western economies exhibit an 18-year real estate cycle.

It’s this cycle that underpins financial markets. As Phil says…

‘Generally this cycles out as 14 years up and four years down.

‘A study of US history, for example, reveals a very clear (average) 18 cycle in US real estate prices, measured from trough to trough or peak to peak.

‘The actual cycle has never been shorter than 17 years, never longer than 21.According to my research, the Australian market follows the US.

‘The good news is that once you understand the real estate cycle, you can forecast it. History, I assure you, does repeat. And if you can forecast correctly, you can make money.’

According to Phil, understanding this real estate cycle is the absolute key to becoming and staying wealthy.

Once you see it, you’ll have an incredible advantage few other investors ever see or understand. You’ll also rarely need to worry about the barrage of conflicting data we all receive every day.

Every 18 Years…
So what does Phil mean by a real estate cycle?

‘It’s how the economy will move — and why — over time. You’ll have a guide as to when to buy real estate and when to stay out of the market. You’ll understand much more about the stock market too.

‘Not only has the real estate cycle been historically consistent at about 18 years in duration, each cycle has unfolded in a highly regular and consistent manner.’

In 2005 Phil created a clock that gives us a visual diagram of how the repeat plays out, based on his research of US real estate (land) beginning from 1800.



Source: Cycles, Trends and Forecasts
[Click to enlarge]

Now take a look at how Phil used this clock to his advantage…

• He predicted the US housing market would bottom between 2008–2010, and begin recovering in 2011. He was correct.

• In 2009, he took on infamous Aussie property bear Steve Keen and told him he was wrong and prices would not crash in Australia. He was correct.

• He predicted US stocks would hit all-time highs even on worse economic news. He was correct.

What is the property clock telling you today?

This was his main message for those in the audience at the Great Repression…

‘If you think stocks and property are going to crash, YOU’RE DEAD WRONG.

‘Once you make the paradigm shift, then you know you have to plan for a real estate cycle…it becomes a lot easier to forecast the economy in which we all live.

No fear
Phil’s talk was a real break from overwhelmingly fearful message of most of the other presenters.

And fear, said Phil, is the biggest obstacle to successful investing.

‘It paralyses you into inaction. And you do not want to be an investor with fear. What we all trying to do is maximise our earnings. Once you know that there must be a real estate cycle, you can start planning.’

So where are we now in the cycle?

Expect a huge boom over the next 10 years
Phil says:

‘We are now at 9-o-clock in the United States.

‘After a bust, the rent of established buildings it goes up. Then makes it cheaper build more. Then more credit follows.

‘This is where we are at now.’

‘If history is to repeat, the clock says we have another 10 years to build…and what will follow the biggest boom you have ever seen.’

 

We are currently in a credit tightening phase. Doesn't this usually lead to the economy constricting and prices dropping?

 

Yes good point.
Wonder how long that will last though, and is the current constriction enough actually make any difference? As prices are still increasing now.

 

I'm with Barney on this one. Very interesting concepts that Anderson promotes.

I think it's important not to try and fit Anderson's thinking to every real estate market or market within a market but look at Anderson's work as mapping out what happens at the macro level. Find a long-term chart of the ALL ORDS on the web and apply his 18 year cycle thinking to it. Beyond his 18 year cycle thinking he also provides advice on other key signals (think canaries) to watch like oil prices, completion dates for the world's proposed tallest buildings etc. but more importantly he explains why these are signals to watch.

I subscribe to Anderson's CTFs and I'm just waiting on his book to arrive.

 

Good to hear some feedback once read.

 

That video is 8 months old and makes zero mention of the changes to borrowing capacity...

I'm with you Barny - I dont see any prospect of another 10 years of price rises.

And further, I think all of the 18 year, 14 + 4 models, theories, PHD doctrines or anything else you want to call them, all fail to adequately account for the extraordinary 25 year credit expansion,the mid 90's massive Johnny Howard middle class welfare expansion unique to Australia, neg gearing unique to Australia , CGT concessions unique to Australia ( Howard again) , state and federal home buyer grants unique to Australia, the use of actuals - also unique to Australia until very recently - and an "almost" unique level of federal, state and local council incompetence with regards to appropriate, affordable land release and matching appropriate infrastructure.

These arent historical norms. They are anomalies, rolled out incrementally in one unique , compounding 25 year mother of all credit explosions, period of time. How can data being presented in these historical theories possibly account for these anomalies accurately?

All of these unique things - every single one of them - contributed in its own way to the credit elastic band stretching and stretching and stretching . Some more than others. Cheap credit and actuals above all else... but all contributed. But in the end, the elastic band can only stretch so far , otherwise it snaps. And we are very near the end of that elasticity.

What we are seeing now for example in Sydney's 2nd wind, is the upgraders ...spending all the cash they made by selling to investors last year, before investors were increasingly frozen out this year. Ive been at a dozen opens a week all throughout spring... ( the wife would like a bigger, fancier house...) its very obviosu at the opens that for the first time in a very long time, things are much more biased towards Owner Occupiers in most cases, this Spring. That's a first for Sydney for years and years. So I am predicting that when the upgraders have spent their money, and with investors largely sidelined in many cases....and with the apartment glut starting to arrive next year, we will see it slow right down.... especially if there are a lot of settlements that fall over....

 

Daily Reckoning has a bet each way on everything....
Check out some f their historical posts for perspective

 

You bring up an excellent points, easy credit is no longer which is slowing investors and stopping many. Can't remember which member posted a graph recently indicating investors are no longer the main buyers, and owner occupiers are leading the purchases. It looks like investors rolled off a cliff.
Just your educated guess if you could, what what it take for the basil committee to relax restriction and rules that they now have in place, and allow easy credit like in the past?

 

Yes agreed. But phill has his own belief and theory regarding property which doesn't tag along with the reckoning.

 

But does he believe his own theory? In other words, does he buy and sell property as per his economic clock?

At his presentation, does he show his clock, does he overlay on his clock when he bought/sold, where he bought/sold, how much, the running total of properties and their values as we go around the clock, etc.

If he does,that would probably convince a lot of skeptics (like me ).