About 34 years ago, with a degree in hand, and after many low paid menial jobs…

I decided it was time to see the world.

For two years, I walked, hitched, donkeyed my way from Switzerland… through Russia… to Beijing… back eastwards to Tibet… then India.

It was there, one morning in central New Delhi, I ran out of the hostel where I was staying… and straight into the back of an elephant.

It was a shock, to say the least.

One that would have a lasting impact on me and the economic research I would conduct (and profit from) over the next 34 years…

The Difference Between Wealth and Poverty

Getting back to the elephant. Most shocking to me, besides running into it, was the children following closely behind the elephant. They were collecting the elephant’s fresh dung.

Why? Because they used it as fuel for their fires.

I thought, “Why aren’t those kids in school? They shouldn’t be chasing elephants.”

But as I sat there, recovering from the collision, I noticed something else. Next to me was one of the most emaciated beggars I’ve ever seen.

For shelter, he was sitting beneath a cartload of the most magnificent fruit – plums, apples, oranges, and everything else.

He was starving. But right there, above his head, beautiful fresh fruit. That’s when I had a revelation…

I realized the difference between wealth and poverty is a land question.

It was as simple as that.

The more expensive the land, the more poverty you’ll find.

From that moment – after my revelation in India – I knew I had to get a better understanding of how land wealth impacts the world’s economies…

Discovering the Real Estate Cycle

From there, I went back home to Australia and joined a group of people who study land economics. One of the guys there knew my interest in cycles and told me to read The Power In the Land by Fred Harrison.

Fred wrote the book in 1983. In it, he forecast that the United Kingdom would go into a slump. But importantly, he used the words “land price led slump.”

No one else was talking about that as a cause for recession.

Bear in mind, I read Fred’s book in 1990. With the benefit of looking back from then, I could see that everything was panning out exactly as he said it would.

It was incredible.

As Fred had done the work on the U.K. data, I decided to study the U.S. data. After all, it made sense. It was the world’s biggest economy, the only remaining Super Power (remember, this was 1990), and the home of the biggest accumulation of personal wealth.

That was the best place to study to find out where the world’s economy was heading next.

The U.S. Leads the Way

Also remember, this was pre-internet days. To get the data I wanted, I had to go to a library. If I wanted data for the U.S., I had to go to the Australian main library… have someone look up books… and most often, borrow from libraries in the U.S.

They’d send them to me in Australia… and then I’d send them back.

One of the most important books listed U.S. public land sales from 1800 onwards. This was important because the Federal government allowed anybody who came to the U.S. to go out and claim 160 acres as theirs.

They measured the data, they measured the sales, and low and behold we had land sales peaking on average every 18 years. Such as 1818, 1836, 1854, 1869, 1888, and 1908:

Now moving forward to more recent times, the following is a chart I produced in 2012. It shows the real house prices for the U.S. and the U.K.

You can see that after 1973, we peaked in 1989, and again in 2006/2007.

That tells you where we are in the cycle and indicates what will happen next.

The following chart from the Federal Reserve Bank of St. Louis, shows the period from 2004 to today. It shows the 2007 peak. It shows the trough in 2012-2013. And it shows how real estate has soared since then.

This 18.6-Year Cycle Isn’t Done Yet

From peak to peak, the average period is 18.6 years. That puts the next peak of the real estate cycle, not in 2020… when commentators said it would top out as the Fed raised rates… but in 2025-2026.

That tells you most economists don’t understand the full story. In fact, they’re missing the most important part of the story.

It’s all because of the land, and the value in the land. And far from values and activity falling, we’re actually seeing a boom all around the world.

Check out these headlines below:

• Inside Saudi Arabia’s Plan to Build a Skyscraper That Stretches for 75 Miles – The Wall Street Journal

• Mortgage Delinquency Rates in U.S. Near Historic Lows in November – World Property Journal

• Despite Slowing Housing Market in 2022, Miami Enjoyed Second Best Year in History – World Property Journal

• U.S. homebuilder D.R. Horton beats quarterly profit estimates – Reuters

• Home Buying Demand Picked Up as New Houses Have Become More Affordable – Morningstar

This is just a selection of the proof. We’ll show you more just like this in the weeks and months ahead in this eletter, and how you can use this proof to invest and profit.

Not just in real estate, but in stocks, too.

For now, our big advice is to not let the commentators and so-called experts scare you into thinking real estate is about to crash. They’ve gotten it wrong in the past and continue to get it wrong now.

That’s because all they have to work from is their own opinion. My analysis isn’t based on opinion. It’s based on the 18.6-year real estate cycle. Hundreds of years of history and data has shown us how accurate it is.

I’ll explain more in the next issue of this eletter, due to hit your inbox Wednesday afternoon.

Look out for more.

Regards,

Phil Anderson
Editor, Cycles Trading with Phil Anderson