Track Record

2013:

The Next Great Boom is Coming

‘We are now (have been since the late 1990s commodity lows) on the upside of the Kondratiev commodity price wave, so commodity prices will stay high, (relatively) and indeed are set to go higher till the mid 2020s. (Assuming I suppose the cycle repeats.) With effectively zero holding costs on real estate, unemployment low, commodity prices set to stay high, does this help you to see why I stay bullish on world events? Add to this mix the relentless technological developments AND the lower and set-to-go-even lower energy costs, and you have things tailor-made for another real estate cycle in the mid 2020s, something similar to all the prior ones we’ve had.’

18 Jun 2011:

The Euro Will Survive

‘The Euro is not going to collapse, Greece will NEVER be permitted to default (how else will the bankers be repaid?) and the rent will go on being collected as it always has.

The (mainly French and German) banks owning the Greek debt simply do not have the capital cushion to absorb any default losses, so a Greek default just isn’t going to be allowed to happen. You will now see Greece begin to sell off government owned assets; ports, telecommunications companies, electricity producers, railways, its airports, any banks government owned and especially government owned land, of which there is billions and billions…austerity measures will continue to screw workers and taxpayers alike. If you have the cash, the present buying in these distressed areas will prove the buying of the century.’

28 Apr 2010:

The China Bears Are Wrong

‘Bubbles never collapse whilst so many people are saying they are in one. When so many people say it, money stays out of markets. Bubbles only collapse when absolutely everyone, and their money, is ‘in’ the market. And by that stage, all the bears and cassandras are dead, bankrupt, or both. Or if there is one left, everyone laughs at him/her. No one is laughing at present-day China Cassandras, which to my mind means they will be wrong — but wrong only as to timing.’

9 November 2009:

THE GFC Collapse is Over

‘Western stock markets, and so too their real estate, exhibit reliable (approximate) 18-year cycles, best measured from trough to trough. The cycles originate in the enclosure of the economic rent. Stock markets exhibit more volatility than real estate, but when real estate prices decline, the stock market declines will be more severe and generally longer lasting.

‘For those highly leveraged at the peak, the decline is often life changing. This is what the West has just been through. Remember, at the trough of each 18-year cycle, the stock market will bottom first, before real estate…

‘For this present 18 year cycle, I believe stock markets worldwide have seen their lows, being March of 2009. We will know that for sure when the next low on the monthly charts occurs. Readers would be aware, I had forecast markets to have a March 2009 low…It will be years, not months, before markets again approach those highs of 2007.

‘On the smaller timeframe for stock markets, I am not at all sure what they are doing presently. When that is the case, it is important to say so. Except to say that we are not going to see stock markets collapse from here. The current stock market 18- year cyclical lows are in place…

‘The “great recession”, GFC, call it what you will, is just about over, and stock markets are on the way up, recovering…

‘Bernanke is going to keep rates in the US as low as possible for as long as possible. Stock markets will rise (or perhaps it is better put: stock markets will not fall) whilst he does this.’

19 October 2009:

Forecasting Gold’s Major Price Breakout

The capitalisation of the rent leads to a land price. This then creates the need to buy and sell it. This creates the need for a bank loan, credit created, to afford the price. This leads to volatility in most other markets, and once there is a lot of debt created, brings in a focus on gold as a measure of the safety of the (paper) currency, or notes, generally printed out of thin air in the credit creation process.

Here is where the volatility of such markets begins. Don’t complicate any further analysis with all the economic hocus pocus that you read elsewhere. It is actually quite simple. As you can see, gold has now broken into all time new highs…For the whole of 2009, on the daily chart, gold did not have at any time more than three days in a row down. This indicated a bullish bias for the entire year so far….

The trend is presently up…Gold has commenced a solid break. Let’s see what happens…too much money and credit has been created since 2001 and the consequences of this I always believed would show up in the price of gold. Now it’s begun.

5 June 2009:

US Stocks Will Rise Despite Dire Economic News

‘You should have been noticing over the past several months, each time bad news comes out of the US, its stock market moves higher. It tells you that the bad news is already known (ie certain) to the markets, it has in other words been ‘discounted’ and that the markets are now looking beyond it.

‘As to why the US stock markets should be recovering slightly now, it makes sense, since those in charge in the US, and who maintain a vested interest in collecting the rent, are printing money: the thing to do in that case, is to buy stocks.’

24 Oct 2008:

Stay Cashed Up for the Coming Buy of the Decade in US Stocks

‘The current banking events ARE NOT BLACK SWAN MOMENTS. In the larger scheme of things, they are fully forecastable, if you know the CAUSE. It is as Gann says it is. Know the cause, you can forecast the result. SO STUDY CAUSES… Cash will be king next year, for which by year’s end (2009), a stack of bargains will be available.’

10 October 2008:

US Real Estate to Bottom Out in 2010 and Recover

‘The US should hit its cyclical property low at some point in 2010. The best indicator that we are approaching that point will be the stock market. Over past property cycles, US stock markets have always made what might be called a generational low — another reason why it is so useful to view history in 18-year segments. Stock market lows at the end of a property cycle are lows that are long remembered in markets. Attitudes change for a few years when they happen. For some investors, they become life-defining moments.’

20 Mar 2008:

The Sound of Helicopters (Bailout Number 4, and 5)

‘More bailouts…More cash being printed…Helicopter Ben is working overtime. None of this will work in the short-term though, and the real estate cycle will continue to turn: it will get worse before it gets better. The low in 2010 is looking a certainty, if there was ever any doubt.

‘US banks that are over invested in real estate will continue to fail this year. Expect to see further plans from the US administration to tighten oversight of lending institutions: all very well, but if they knew their history, they would know that all that will do is reduce further the credit available, at the very time when they should not be reducing the credit available.

‘Be assured, US house prices will continue to fall, and the debt upon them will mount faster than the provisioning that can be made by banks to cover it. In case you missed it all, last week, the Fed offered to lend banks in a bit of trouble up to US$ 200 Billion in Treasury bonds, in exchange for their troubled debt.

‘None of this will solve the crisis presently though; the Fed is proving yet again that you can’t push a piece of string: if people and banks start hoarding cash, and borrowers do not want to borrow, you can’t make them, no matter how low you drop interest rates, or give money away. This is what the Japanese found after 1989.’

28 Jan 2008:

Fed Bailout Number 3, and Counting

‘So now we’ve had another emergency rate cut, and with the US government, another bid to lower taxes and get the consumer spending even more. Whilst the move will support stock markets in the short term, it will not stop US land price from deflating, and the banks simply must rebuild their balance sheets over coming years, which infers a continuing credit contraction… Be assured the world’s real estate down turn has only just started. There are several difficult years still to follow for the US, and hence by default, everyone else.’

19 Jan 2008:

As We Go into 2008

‘I just want to make sure you know what to prepare for, as we go into 2008. If you have been following the economic news discussions coming out of the US, you will have noticed the debate about ‘will the US enter recession / will it avoid one?’, and all the attendant nonsense.

Amongts many others, one can read things like…

‘Huge and complex, the US economy has in recent years been aided by a global web of finance deals so elaborate that no one seems capable of fully comprehending it.’

Garbage. You will know that the financing, the fractional reserve banking system (creating credit out of ‘nothing’, effectively) has repeated each cycle. One does not need to understand the intricacies, only to know the consequences, as history has clearly outlined.

One can also read:

‘That makes it all but impossible to predict how much the economy can be expected to decline before it starts to stabilize.’

This is crap too. Don’t fall for it. Those who say it can’t be done, say so because they know nothing about the economic rent of land. You would know by now: there has never been a land price collapse not followed by recession. The US has just seen the beginnings of the usual 18-year land price decline: a recession WILL follow…
‘As such, the credit problems in the US in 2008 will deteriorate, and then continue world-wide. I would not go believing that the growth of China and other Asians nations will immediately bail out the West. The biggest spending patterns come out of the US, this will eventually affect everyone else.’

19 Jan 2008:

US Real Estate Will Collapse

‘On average, US land prices will decline 20 to 30% by the time it is all over. In my view, US (and UK) property prices have only just begun their decline. As such, the credit problems in the US in 2008 will deteriorate, and then continue world-wide. I would not go believing that the growth of China and other Asians nations will immediately bail out the West.’

19 Dec 2007:

A Major Warning After UK Bank Northern Rock Collapsed

‘The collapse of the bank here in the UK is a really big deal, do not underestimate the probable implications. Repercussions will go worldwide next year. Plan for the credit cycle to worsen. This has not hit Mr and Mrs Joe Average yet about the impending effects it seems to me. Why? Because they have no understanding of historical cycles.’

May 2007:

‘Subprime’ Forecast for the Australian Investors Association

‘History teaches us that the individuals who will suffer most in the next real estate induced downturn will be those who have over-borrowed in the final two to three years of this current cycle, when land prices were at their highest and unaffordability at its lowest.

‘First home buyers on low-doc loans, others with little or no equity in their property, and the rest with little cash flow to cover the bad times that will inevitably follow the good times. And also those first to be made unemployed in the downturn.’

5 September 2006:

Raw Land Rush in the US Indicates Real Estate Cycle Peak Has Arrived

‘A careful reading of Homer Hoyts 100 Years of Land Values in Chicago showed that at the end of every real estate cycle in Chicago that Hoyt documented up to 1932, the buying of raw land went over the top in the last years of the cycle and in fact marked the very peak of each cycle.

Headline, Wall Street Journal Page B1, July 22, 2006.

img-article-01

‘Scientific data it is not, the data in fact is just not assembled at any level I can get to in the US. At least not yet anyway. Interesting headline nevertheless.

‘Recall the email on UK affordable plots being extensively marketed in Singapore. Stands to reason of course. The higher land price goes, the further out one has to go to find a piece that is affordable, hence this will occur towards the end of a cycle.

‘So we are seeing:

  • The NSW government set to ‘fast track’ planning legislation to bring more raw land to market
  • The Qld government promising even more hand-outs to first home buyers should it be re-elected, plus reduced stamp duty. (Hope you know that this will kick straight into land prices, sending them higher and be of no use whatsoever to buyers.)
  • Yet another market scheme to allow more buyers to get into the market, this time from PodProperty, a scheme allowing people to group together to collectively buy a house or investment property, with PodProperty drawing up all the legals for you…

‘The pressure is mounting now.

This is how as I said in prior classes it would happen, is it not? So far so good. The last years of the cycle are upon us, in my view.’

29 September 2006:

The Real Estate Cycle Will Run its Due Time

‘In my view, the real estate cycle will run its due time, and things have to happen to make this happen.

‘Roy Wenzlick, way back in 1936, had already noted that in the 18 year real estate cycle, from the low, residential prices recovered first, followed later by commercial prices and rents. At the top, subdivisions in raw land increase as cities expand. So, no surprises to see stock markets breaking new highs; means profits are improving, to which rentiers will put rents up when rental agreements come up for renewal, and the cycle repeats.

‘Wenzlick also noted that whilst all the action at the top was going on, (more credit, more subdivisions, increased building), foreclosures quietly started mounting. (In Australia, we call them mortgage defaults.) But it happens quietly and few see the evidence. Banks, finance companies and governments, especially if an election is approaching, do not want you to see the bad news.

‘The only threat presently on the horizon is if the Fed continues to raise borrowing costs for the remainder of the year. The chances of this are remote.

‘Remember too, oil is paid for in US dollars, with prices having been so high recently, even more dollars are being printed by the US to facilitate payment for it all. Those being paid for the oil have to put the money somewhere, and it goes into banks, swelling their deposit base equals more money to lend. More credit equals more business equals higher asset prices all round…

‘For 2006 and 2007, the trend I think for the business and real estate cycles is continuing up. But remember, the higher land price goes, the more debt taken on, the bigger the eventual bust. At least that is how it has happened in the past. Every 18 years on average.’

25 July 2005:

Completion of the World’s Tallest to Mark the Passing of This Current Cycle

‘In all past cycles since 1873 the world’s tallest buildings have consistently opened at the peak of the real estate cycle, after which there has been a downturn, some downturns were worse than others.

‘I expect history to repeat because the fundamental structure of capitalism – (built on those government granted licenses) has not changed. In Dubai, this one – the Burj – is scheduled for completion, as it happens, in 2008, the US tower to follow some time after that. (Thanks to an alert class participant for the photo).

img-dubai

Can you see the inklings of a set up coming here? World’s tallest coming to completion, events at the peak of the cycle to focus the world’s attention onto something else apart from; the declining credit standards at banks, the wayward credit creation, wanton and totally unproductive speculation in real estate.’

2 August 2003:

Be Bullish Amidst This US Downturn Gloom

‘I would move the hands of our economic clock now to between 8 and 9 am. This is echoed in our stock market at the moment where there is stacks of good value small cap stocks also moving off bases.

‘More important however is the efforts by all the Presidents men to ensure he is re elected;

  • Massive deficit financing, ie the US government issuing bonds and notes on a scale never before seen, it is just huge. Fractional reserve banking at its finest, i.e. the issue of credit as a debt, backed by the government’s power to tax, for future generations to payoff. The banks just love it.
  • Large tax cuts favouring the wealthy end of town (I am told it will ‘trickle down’)
  • US central bankers, well one of them anyway, a certain Ben Bernanke, saying last week “we should be willing to cut the funds rate to zero, should that prove necessary to provide the required support to the economy” (I would insert 2004 presidential election in between the lines there…)

NEVER BEFORE IN THE HISTORY OF THE UNIVERSE HAVE ASSET PRICES DEFLATED WHILST THIS IS HAPPENING. Got that.

The collapse of asset prices has always, in the past, without exception, been preceded by interest rate rises, and / or government budget tightening. Interest rates, we watch the yield curve. Budget tightening, watch the government accounts naturally. And the bigger they are…the harder they fall.’

14 January 2003:

Property to Go Right Over the Top

‘Monday’s AFR headline, ‘Unions to target manufacturers in wage push’. This is quite significant. Now don’t get me wrong here, unions always seem to be pushing for higher wages (except at recession lows), but such a new push, organised as “Campaign 2003” comes as rents have climbed astronomically in the past two years. Go back and re-read the first property summary I sent a few months ago, and you will see where this fits in. As the rent (land price) gets higher, living costs get squeezed, unions will push to be compensated. You can expect greater union militancy this decade, and into the 18 year property cycle peak.

‘More importantly, this campaign is targeted at the manufacturing sector. Mainstream economists will not see the meaning of this as described above because they are unable (or unwilling) to see the third factor of production as natural resources, which they consider to be part of capital. It isn’t. Around 2005, as manufacturers get squeezed on the rent front yet further, then on the wages front, then finally on the profits front as interest rates rise a little, you can expect less money flow into manufacturing, more into the speculative rent seeking activities. It is then that property will go right over the top (In my view).’