Murray is off for a school holiday break this week. So I’m stepping in to give you something a little different.
It’s an interview with property cycles expert Catherine Cashmore. But it’s not property in the way you would traditionally think of it.
More accurately, she’s a land cycle expert. Catherine explains it in detail in the interview. But in short, the idea here is that land absorbs all economic gains. Technological gains? Absorbed by land. Infrastructure gains? Absorbed by land. Government handouts? Absorbed by land. Central bank largesse? Absorbed by land.
I think you get the picture.
This all happens within an 18.6-year cycle. And we are heading into the peak of that cycle now.
What makes this especially interesting is that this analysis matches up with other well-known cycle studies.
In 1997, Neil Howe and William Strauss released their best-selling book The Fourth Turning: An American Prophecy. Looking back over 500 years of Anglo-American history, they uncovered a distinct cyclical pattern.
This cycle lasts around 80 years (give or take) and includes four distinct ‘seasons’, with each season ‘turning’ into the next.
According to their theory, we entered the fourth turning (a winter, or crisis period) in 2008.
Given the success of their earlier predictions, Neil Howe (Strauss is deceased) published a follow-up this year called The Fourth Turning is Here: What the seasons of history tell us about how and when the crisis will end.
This book puts the most likely climax for the current crisis era as 2030.
That coincides almost exactly with the nadir of the 18.6-year cycle…
As you’ll see in the video below, the 18.6-year cycle points to a peak in 2026, followed by four years of correction/stagnation. That puts us at 2030 for the low/start of the next upswing.
Making investment decisions based on long cycles is difficult, if not impossible. But when two proven cycle theories converge and tell the same story, it pays to listen.
This is something we’ll be tracking very closely here at Fat Tail Investment Research over the next few years. It’s shaping up to be a challenging period, but we also have the opportunity to make hay before the tough times hit.
The good news is that there is plenty of time to prepare. As Benjamin Franklin said: ‘By failing to prepare, you are preparing to fail.’
Preparation starts with knowledge. So let’s kick off with some knowledge about the land cycle and how it affects the stock market.
We recorded the interview in August.
We covered a lot of ground, including…
- A review of the land cycle
- Why property is rising with interest rates
- The outlook for the Aussie property market
- Why Melbourne missed the post-covid boom and could rebound in 2025
- Why years ending in four tend to be bearish for the stock market
- Why years ending in five are bullish for the stock market
- Where China fits into the cycle
- Commodity prices and the Kondratieff Wave peaking with the land cycle
- The difficulty of profiting from the bust
- The likelihood of war as boom turns to bust (this is mentioned in The Fourth Turning is Here, too)
Enjoy!
Regards,
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Greg Canavan,
Editor, Fat Tail Alliance, The Insider and Fat Tail Investment Advisory
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