The land market — and the credit created against it — drives the real estate cycle, which drives the economy, which ultimately drives both the stock market and the real estate market.
If you don’t understand the land market, you’re blind to the risks and opportunities taken while invest.
By viewing the economy through the lens of the 18-year real estate cycle, you have an advantage over every other investor.
At the very heart of the real estate cycle, chasing the unearned wealth — the economic rent of land — is the motivation behind most real estate investments (i.e., speculation).
The banks love this process.
They capture the economic rent through mortgage payments — trading the interest on a multi-trillion-dollar derivatives market.
It’s a parasitic system that means banks are now an enormous part of the economy.
Financiers quite simply carry a licence to mortgage the earth.
We are all, in effect, slaves to this system.
It’s very profitable for those who control it.
We cannot have a truly democratic system of government whilst this process exists.
Those who control the creation of money control the people.
Against all cries from the public, the government will do all it can to keep markets inflated and avoid a financial crisis.
But the boom cannot last forever!
There’s theoretically no limit to the amount of credit that can be created.
But the real economy — the productive sectors that have been eroded away by rent-seeking speculators pouring debt into unproductive assets — inevitably reach a point at which they are no longer able to afford the debt.
This is what brings the meltdown.
And it’s this that drives the volatility of the cycle – producing the great booms and busts that you’ll witness in most major capital cities.
Right now, we’re on the verge of entering the last two years of the real estate cycle — between 2024 and 2026.
This is what we call the ‘Winner’s Curse’ phase.
It’s a period of feverish land speculation.
During this period, the rise in demand could not offset an increase in supply for popular areas to live and work.
Speculators outbid each other at precisely the wrong time in the cycle.
Interest rates continue to increase throughout the period, putting a strain on small businesses and productive activity.
The world’s tallest buildings will be gearing up for completion.
Among them are:
Middle East — Dubai, United Arab Emirates
Ciel Tower
Height: 365 metres
Expected completion: 2025
North America — New York, United States
270 Park Avenue
Height: 423 metres
Expected completion: 2025
Asia — Nanjing, China
Greenland Jinmao International Financial Center
Height: 499 metres
Expected completion: 2025
While economic indicators will be generally bullish, we’ll see the yield curve invert prior to the downturn.
Times will seem good, and punters may ignore the warnings. But it will happen at a significant point in the cycle that those in the know cannot ignore.
The stock market will be surging into new all-time highs. Primarily led by the stocks most exposed to the property cycle — construction, building, and banking stocks.
But the seeds of destruction will have already been sown.
The winners of the last two years will inevitably be cursed as the market enters its inevitable downturn.
Last week, I recorded an interview with my good friend, Akhil Patel, and we talked about his latest book, The Secret Wealth Advantage: How You Can Profit from the Economy’s Hidden Cycle.
Akhil is based in the United Kingdom and has made a significant contribution to the field of economics with his unique focus on the 18-year economic cycle.
In the interview, we discuss Akhil’s take on the investment opportunities arising through the final stages of the cycle.
I question Akhil on when he thinks the peak of this current cycle will occur, and we briefly touch on some of the esoteric trends that sit behind the cycle.
I can’t share the full video here as it’s exclusive to subscribers of Cycles, Trends & Forecasts.
Nevertheless, I can offer you a glimpse by sharing some valuable content from our conversation.
If you find the excerpt intriguing and wish to access the entirety of the interview, I encourage you to subscribe to Cycles, Trends & Forecasts, where we delve deeper into Akhil Patel’s groundbreaking perspective.
Best wishes,
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Catherine Cashmore,
Editor, Land Cycle Investor
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