Phillip J Anderson - Relationship between Stocks and R/E

finicky

finicky

Well-Known Member
Silver Stacker
We are only halfway through the 25 year upside of a secular commodity cycle? What a seemingly impossible dream.

The US DJIA index breaking to new highs while the US real estate market is newly recovering off its 2010/11 bottom is signalling a massive boom to come in stocks and real estate. Australia lags the US but will follow its lead. Throw in the benefit for Australia of a predicted resurgence in commodity prices

Resonances with mega bullishness of Clifford Bennett

I have linked first the 2008 article referred to in the YouTube video interview with Port Phillip Publishers

http://moneyweek.com/property-will-fall-until-at-least-2011-then-us-stocks-will-lead-the-way-13814/

http://phillipjanderson.com/

Interviewer summarizes at 28m30s
[youtube]http://www.youtube.com/watch?v=MD9IlioEl7M[/youtube]
 
Major predictions made by Phillip J Anderson according to port phillip publishing:

As early as 2005 he predicted the US housing market would bottom between 20082010 and begin recovering in 2011. CORRECT.

In 2009 he told infamous Aussie property bear Steve Keen he was wrong and prices would not crash in Australia. In fact, they would boom. CORRECT.

He went on the record in 2010 that the euro would survive and Greece would not be permitted to default in the eurozone crisis. CORRECT.

And in 2013 he forecast US stocks would hit all-time highs even on worse economic news. CORRECT.

http://signup.portphillippublishing.com.au/XWBRQ419
 
finicky said:
We are only halfway through the 25 year upside of a secular commodity cycle? What a seemingly impossible dream.

The US DJIA index breaking to new highs while the US real estate market is newly recovering off its 2010/11 bottom is signalling a massive boom to come in stocks and real estate. Australia lags the US but will follow its lead. Throw in the benefit for Australia of a predicted resurgence in commodity prices
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If this guy is as accurate as people claim then we are in for one hell of a boom. It will be the roaring 2020's in Australia.
 
Wonder what he says in the "Gold update, looking forward from 2013 to 2020." emailed to subscribers November 14, 2013
http://businesscycles.biz/commodityresearch.htm

If he had a monthly rate subscription I'd probably bite but I've got two annual subscriptions to investor services going at the moment, with another maybe coming up (The Switzer Super Report). Throw in Austar for Sky Business Channel, The Age, and just discontinued bleeping Skaffold - it adds up

I'd suspect positive view for commodities would suggest positive for Gold and Silver/Plat/Pall as well?
 
It is informative to consider and contrast Steve Keen's recent capitulation to the higher property prices for longer thesis, with the reason Anderson gives for the continuation of his 14/4 year cycle.

There is no reason why this pattern will not continue, since the underlying structure of the economy will likely remain the same. Banks will continue creating the necessary credit to enable us to buy into rising land prices as they find new ways to avoid the rules and regulations expressly designed to stop the banking routs of earlier collapses

- Anderson
Click to expand...

For my part, my change of expectations about house price rises -- which I now expect to see continue for some time, thanks to the combination of the speculative buying frenzy by "investors", self-managed super fund levered purchases of property, and non-resident purchases -- reflects another of Keynes's famous aphorisms, that "the market can remain irrational for much longer than you can remain solvent."

- Keen
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That is, while Keen has consistently and correctly observed that it is credit creation through bank lending that creates the bubbles, he admitts he incorrectly theorised that it will peak out and drive a collapse "real soon now" to bring house prices back in line with local wage growth due to not appreciating the level of regulatory change made to the market. On the other hand, Anderson also observes correctly that bank credit growth fuels the property boom, but he observes that the banking industry just create new ways of avoiding constraints to credit growth such as wage growth when a bust occurs.

And that is precisely what we have seen in Australia as regulators and governments dependent on a strong property market have worked to internationalise the local real estate market, lower interest rates and change regulations around capital ratios, risk management and emergency liquidity support for the banking industry.

What Anderson says is that there is a cycle of regulatory intervention every 15 or so years to limit the effects of the bust cycle when it occurs, so a new boom cycle can be initiated for the economic rent-seekers to keep riding. Which is exactly what we have seen in Australia, culminating with the Committed Liquidity Facility becoming formally operational with the RBA next year, even though it has been informally operational for over a year (and is likely where Joe Hockey's $8.5B bailout of the RBA went).

Gold is interesting in this context, because the Gold Bull market peaked in 2011, while that is about the time of the bottom in Australian property I believe. That is, it ran alongside the property bull market until property bottomed. So I think 2011 may have been the Mike Maloney inflection point to switch into property.

Edit: just to add, that isn't to say that gold is going down, just that 2011 might have been the optimal point to trade into property. Both could start rising again in parallel, due to a resurgence in excessive credit creation say and currency risks.
 
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