Controversial economist speaks out

Monday, 8 January 2018
Melbourne, Australia
By Kris Sayce

  • Short-changed
  • The genuine secret to the cycle — and how to profit from it

This week, we’re happy to host a special guest within the pages of Port Phillip Insider.

That guest is Phil Anderson.

It’s not an exaggeration to say that Phil is our most controversial editor. For a time, many of our readers couldn’t believe we would actually publish his work.

Not for any bad reason. But simply because what Phil had to say was so different from the views of our other editors.

While many of us, (I, Kris Sayce included) have warned about another upcoming crash, Phil has told his readers the opposite. Rather than fearing the near future, Phil says that the next eight years could be some of the most prosperous in history.

That goes for stock prices, and for house prices. As we say, controversial. But that’s what we do. We introduce you to ideas. Sometimes, these ideas are at complete odds with some of our other published ideas.

But that’s fine. We publish these ideas because we believe it’s important for you to know about them. You can check out Phil’s essay below. But first, the markets…and an incredible crypto update…

Markets

Over the weekend, the Dow Jones Industrial Average closed up 220.74 points, or 0.88%.

The S&P 500 gained 19.16 points, or 0.7%.

In Europe, the Euro Stoxx 50 index gained 38.75 points, or 1.09%. Meanwhile, the FTSE 100 added 0.37%, and Germany’s DAX index gained 1.15%.

In Asian markets, Japan’s market is closed in observance of Coming of Age Day. China’s CSI 300 is up 0.19%.

In Australia, the S&P/ASX 200 is up 8.15 points, or 0.14%.

On the commodities markets, West Texas Intermediate crude oil is US$61.60 per barrel. Brent crude is US$67.74 per barrel.

Gold is trading for US$1,319.95 (AU$1,683.19) per troy ounce. Silver is US$17.20 (AU$21.93) per troy ounce.

The Aussie dollar is worth 78.41 US cents.

Bitcoin is US$15,775.53.

Short-changed

To be honest, we couldn’t believe it ourselves.

Our three crypto services have racked up an extraordinary track record in the past few months.

As we wrote on Friday, we’ve never seen anything quite like it. Not the dot-com boom, not the housing boom, and not the resources boom.

But despite the incredible gains, it appears we ‘short-changed’ the performance of one of our services — Crypto Tech Investor.

We explained that four of the ICO (Initial Coin Offering) recommendations hadn’t yet begun to trade.

As Sam has written to his subscribers today:

Based on the Ethereum (ETH) fiat conversion at the time of writing, that works out at US$2.90 per [crypto] token.

For the first few hours of trading that is outstanding.

Remember, during the ICO our entry price was recorded at US$0.3669. That’s a 690% rise for comparative purposes.

Sam is right, that is outstanding.

And remember Sam’s other crypto gains:

  • Crypto 1 – up 505.5%
  • Crypto 2 – up 202.8%
  • Crypto 3 – up 1,940%
  • Crypto 4 – up 1,506%
  • Crypto 5 – up 488.9%
  • Crypto 6 – up 1,291%
  • Crypto 7 – up 645%

However, those were Friday’s prices. Today, the gains are as follows (according to pricing from Coinmarketcap.com):

  • Crypto 1 – up 1,116%
  • Crypto 2 – up 388.1%
  • Crypto 3 – up 2,056%
  • Crypto 4 – up 2,208%
  • Crypto 5 – up 804.3%
  • Crypto 6 – up 1,368%
  • Crypto 7 – up 1,003%

Until recently, quadruple-digit gains were a rarity. Your editor bagged the first in Port Phillip Publishing history two years ago. It was a proud moment.

But Sam has smashed that. Based on today’s numbers (which, granted, could change very quickly — this is cryptos!), Sam has five quadruple-digit gainers just from his Crypto Tech Investor service alone.

It doesn’t even include what he’s managed to achieve for his subscribers with his stock picks.

And it doesn’t include the 690% gain from the most recent ICO play.

If you’re wondering whether you’ve missed out, and if all the big gains are history, Sam says you haven’t and they’re not. In fact, Sam is currently in the process of readying new ICO opportunities to release to his subscribers as soon as he can.

And if you want to be in a position to find out what it is and how you can take part, make sure you go here now.

Just remember, Sam is after serious investors only. The crypto market is too risky for investing newbies. For that reason we are NOT offering a trial subscription to Sam’s service.

You’re either in, or you’re not. Sorry to be so blunt, that’s just the way it is. To find out more before you commit, go here for details.

Now, over to Phil Anderson…

Cheers,
Kris


The Genuine Secret to the Cycle — and How to Profit From It
By Phil Anderson

Phil, it isn’t possible that house prices in Australia can keep going up. I simply don’t believe you’.

That’s the most common response I get when I tell people — as I have for the last 15 years at least — that the biggest boom of all time is still ahead of you. In 2026.

And until then, house prices will continue to go up in Australia, and indeed everywhere else on the planet.

Then, after that, we could see an almighty crash.

People just don’t get it. But here’s the key…

Are you ready?

This secret could genuinely change your life.

House prices are supposed to go up. It’s the sign of a genuinely productive economy. We’d be in real trouble if they didn’t. This is not a magic formula. And it’s not something that just happens by chance.

It’s completely scientific. And easy to understand. Let me explain.

It’s all about ‘Economic Rent’. The Rent, the whole Rent and nothing but the Rent.

First, the house is not what’s going up in price. It’s the land that is going up. In other words, it’s the value of your location.

The only reason it’s so unaffordable is because not enough people understand what ‘Economic Rent’ is. And this is where you can get a real investment advantage over everyone else.

So here’s your advantage. It’s a little story I often tell about the history of Canberra, Australia’s wonderful capital city. It’s contained in my book: The Secret Life of Real Estate and Banking.

Back in 1900, upon Federation, Australia wanted a capital city. I’m sure you’d know some of the history.

Neither Sydney nor Melbourne would consent to the other becoming the capital. For a while after 1901 the two cities agreed to rotate the responsibilities and take turns seating the elected parliamentarians to govern the country until a new capital could be built somewhere in between.

The elected leaders were well aware of what an announcement (or fore-knowledge of such an announcement) would have on land value in the chosen region as land speculators piled in for a quick profit from the rapidly appreciating locational value, or economic rent. To defeat them, Australia’s first Prime Minister, Edmund Barton, declared that:

So far as the law of the land allows, land within the federal area will not be sold. Its ownership will be retained in the Commonwealth. The land will be let for considerable terms but with periodical re-appraisement so that the revenues thus obtained will assist the cost of creating the Commonwealth Capital. More than that, we shall take care to put no fancy prices on land. We shall not play into the hands of the speculators

An annual rent of not less than 5 per cent of the unimproved value of the land, as assessed by an appropriate authority, was eventually prescribed for all persons who wanted to live and work in the new capital, payable quarterly in advance. The unimproved value of the land was to be reappraised at the expiration of twenty years, and thereafter at ten-year intervals. With such a simple and elegant idea, Australia went on to build the city of Canberra, truly one of the world’s most spacious and amenable of capital cities.

So, if you decided to move to Canberra and the site you intended to own was appraised as worth $1,000, you paid rent to the commonwealth of $50 per year. The site was yours, to do with what you wanted: you owned it with clear title, subject to the lease; you just had to pay the economic rent for the privilege. The politicians knew what they were doing. Collecting the worth of the site yearly in advance meant that the rent of the site could not capitalise into a tradable commodity. There would be no price in which to speculate.

The price of the site, therefore, is zero.

But, although the price is zero, this does not destroy the site’s use value, or worth.

This has some astounding ramifications. To live in Canberra, one did not need to take out a mortgage to afford the site. (This upset the banks.) Canberra sites could never be hoarded or kept out of use in expectation of future gains: the holding cost of doing so (because you owed the land rent to the commonwealth) was too high. Credit could not be created upon the capitalised land rent. There wasn’t any.

No capitalised rent, no real estate cycle.

No capitalised rent, no need for the vast amount of fractional reserve banking required to buy it.

That’s the secret.

Because society does not demand the collection of the annual rental value of the land (the Economic Rent), yearly, in advance, it gives rise to a land ‘price’. This will continue going up. Always.

And it will increase quite quickly in any city that has good laws, effective property rights, and where infrastructure is constantly being built and renewed.

Take Melbourne. In the next 10 years the current Victorian Premier, Daniel Andrews has promised construction will start on a rail line to the airport from CBD (Central Business District) stations.

You can bet property speculation has already started on the potential route. First in, best dressed as they say.  

In addition, Melbourne just created a new suburb. They’ve named it Wollert. It’s 30 kilometres north of the CBD.

The Victorian Planning Minister, Richard Wynne says it’s a major boost to affordable housing in Melbourne. (He would say that, of course. Politically it’s the right thing to say.) But his statement will prove false in the end. 

42,000 Melbournians are expected to live there eventually. 7,000 jobs are to be created by the developers as well.

To make this all happen, the Victorian planning Authority will release 100,000 new lots for development over 2018. And Wollert will get a town centre, five schools, a new train station by extending the Epping line, and 304 hectares of open space.

Therefore Melbourne’s land values will creep up yet again. And it will certainly increase by more than wages will.

Because the benefits of this new suburb and the infrastructure that goes with it will, in the end, increase the Economic Rent available to capitalise into the price of land.

Nobody ever gets it. But you can.

If you’d like to know all about how to take advantage of all that — and give your investment knowledge a massive boost at the same time — go here.

Best wishes for 2018,

Phil Anderson,
Trader and Editor, Cycles, Trends and Forecasts