Australian Property Chart of Shame - Epic Failure of The Australian Property Bears

Discussion in 'Property Market Economics' started by Shadow, 23rd Jun, 2015.

  1. Shadow

    Shadow Evil Specufestor

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    Probably my last thread on Somersoft, with the imminent closure of the forum, so I thought I'd finish off with a little chart that illustrates just how badly the property bears have failed over the past decade or so.

    Clearly the investors here on Somersoft were miles ahead of the housing bears in successfully calling the direction of the Australian housing market (and building lots of wealth in the process).

    Enjoy! And best wishes to all my old friends (and sparring partners) on Somersoft since 2007! I'll see you all on PropertyChat! :D

    Australian Property Chart of Shame - Epic Failure of The Australian Property Bears (click for HD version)

    [​IMG]
     
    JohnHenry likes this.
  2. Sim

    Sim Administrator Staff Member

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    erm ... could you perhaps shrink it a bit for us first before embedding it? :eek:
     
  3. Shadow

    Shadow Evil Specufestor

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    Oops, it was a bit large. Have posted a smaller version! :)
     
  4. datto

    datto Member

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    Where the heck are they now?

    Has any of them said "sorry, I got it wrong" and then committed hari-kari in accordance with some oriental ritual?

    Nah. you'll find they have all been investing heavily in the Sydney property market.
     
  5. jerrybee

    jerrybee Member

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    Awesome idea for a thread:)
     
  6. hobo-jo

    hobo-jo Not a bear just a realist

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    Shadow's record in comparison. Goodbye Shadow :D

    January 2008: "Peak of boom: 2014-2015. Sydney Median Price: $1,250,000"
    Wrong

    Later Revised To: "Sydney house prices will approach $1M by 2015"
    Depending on interpretation of 'by' and 'approaching', but I'll give Shadow a half mark for this one.

    August 2008: "I expect a new construction-led boom to kick off in Australia, probably around 2010-2011."
    Wrong

    March 2010: "In my opinion there will be no annual falls (house prices or rents) until 2014-2015 at the earliest."
    Wrong

    December 2010: "Now for 2011, I predict Sydney house prices will rise by 6-8%"
    Wrong

    December 2010: "National prices will be flat (down in real terms, maybe up 1-2% nominally)."
    Wrong (down nominally also)

    December 2010: "Interest rates will go up one more time in 2011."
    Wrong

    March 2012: "I only get 80-90% of my predictions right"
    Wrong

    August 2012: "I think we're close to the bottom of the current rate-cut cycle... maybe one more 25 point cut. I'm currently on 5.79% variable and I arranged today to fix a substantial portion of my debt at 5.59% fixed for three years."
    Wrong & ouch

    January 2014: (on Gold) "The time to go long will be in a few years time when the price drops to $800."
    Waiting to see...
     
  7. Shadow

    Shadow Evil Specufestor

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    To summarise those quotes, since 2007 I've predicted a Sydney boom, with a target value around $1M - $1.25M and a target date around 2014-2015.

    I've stuck to this range for eight years... http://somersoft.com/forums/showpost.php?p=362845&postcount=1

    [​IMG]

    You can see my 2007 chart above has Sydney house prices hitting $1M in 2015. They were at $946K in April according to Residex, so already very close.

    I also predicted the current Sydney construction boom (not sure why you say I got that one wrong... Sydney construction activity is at record highs).

    You can quibble over specific prices and dates, but I was generally right. I was spot on with the direction, and very close with the magnitude.

    I was certainly a lot more accurate than bears predicting crashes and slow melts and recessions (such as yourself).

    And I profited immensely by buying Sydney property, hence the anger and frustration from many bears. :D

    And why 'ouch' about the fixed rate? It remained below the standard variable rate for much of the fixed period, and comes back onto an even lower variable rate in several weeks. Overall, I saved money by fixing some at 5.59%, some at 5.39% and some at 4.99% (and kept some variable).

    Anyway, it's quite telling that after my 1,600+ posts on Somersoft and 12,000+ on APF over the past eight years, you could only find five things that I got wrong.
     
    Last edited: 23rd Jun, 2015
  8. hobo-jo

    hobo-jo Not a bear just a realist

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    haha not according to this data http://www.loansense.com.au/historical-rates.html & who pays the standard variable rate anyway? Just be happy you've made a nice profit on the properties and be honest, you fixed at the wrong time and ended up slightly out of pocket as a result :)

    Those were some I dug up in around 20 minutes a couple of years back... I'm sure someone who had time to go through all your posts (& no doubt mine) would have a field day by cherry picking out wrong guesses/predictions, just as you've done with those in the chart.
     
  9. Shadow

    Shadow Evil Specufestor

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    According to that data, the SVR has ranged from 1.01% above my 5.59% fixed rate to 0.06%-0.33% below - i.e. during the time the SVR was below the fixed rate, it was below by an insignificant amount, whereas the time spent above was by a much larger margin. I also fixed some loans at 5.39% and 4.99% by the way, and kept some variable. Overall, I benefited by fixing (across all my fixed rates), but probably lost a small amount on the 5.59% loan itself.

    There would be heaps more that I got wrong. I only have an 80-90% success rate with my predictions, and I make a lot of predictions, so the 10-20% that I get wrong would still amount to a huge number of predictions in total. But I've found that an 80-90% success rate is sufficient to profit from, especially when I only put money on the ones I'm very confident about (like the $1M Sydney median by 2015).

    In any case, I'm just an anonymous guy who posts on a forum. Any incorrect predictions I made are pretty much irrelevant and based upon trivial stuff like interest rate movements, or house price growth for an individual year etc.

    Whereas the people quoted in my chart are all high-profile public figures whose predictions attracted a huge amount of media attention and who were very public with their sensationalist forecasts of imminent massive 40% to 60% crashes, severe recessions, bloodbaths, catastrophes, disasters, economic carnage etc.

    A lot of people would have been swayed by their calls. I know of many people who sold up in 2008 based on Steve Keen's 40% crash call, and more who sold up in 2011-2012 when Macrobusiness were going hard with their crash calls (their articles were being published by Fairfax and News Ltd. with predictions of a decade of nominal declines etc.) Innocent people would have lost a lot of money as a result. The doomsayers who led these people up the garden path deserve to be exposed and taken to task.

    On the other hand, my incorrect call on interest rates in 2012 would have zero impact to anyone... it was just a bit of trivial forum banter.
     
    Last edited: 23rd Jun, 2015
  10. hobo-jo

    hobo-jo Not a bear just a realist

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    So the SVR is the best you could have achieved as an alternative to a fixed rate of 5.59%? Nice try :D

    Dig up the 50 correct predictions to counter those I found above that were wrong and I'll be convinced of your high win rate... :cool:
     
  11. Shadow

    Shadow Evil Specufestor

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    Yeah, like I have time to trawl through my 20,000+ posts across Somersoft, S&S, APF, CC and the G.HPC archive in order to convince you.

    In any case, my magnum opus is the $1M Sydney median by 2015, with accompanying construction boom. That's worth at least 100 normal predictions. :)

    Anyway, this thread isn't supposed to be about me.

    What about those doomsayers in the chart... got anything to say about them? Were any of them even remotely close?
     
  12. hobo-jo

    hobo-jo Not a bear just a realist

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    Yes. You seem to be missing Christopher Joye.
     
  13. Shadow

    Shadow Evil Specufestor

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    What's his prediction?
     
  14. hobo-jo

    hobo-jo Not a bear just a realist

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    This was from 2013.
    Arguably we've since seen the strong gains he warned about as confirmed recently (from this year)...
    So according to Christopher Joye we are going to see the most serious housing crash in 75 years... just another doomsayer, he should be on the chart.
     
  15. Shadow

    Shadow Evil Specufestor

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    I see a qualification there from Joye... i.e. there will be a serious crash IF something else happens first. I can't disagree with that... if Australia ever develops a large enough housing bubble, then there will be a serious crash. But with national house prices having simply tracked income growth for more than a decade, any bubble (if one exists) is only in its infancy today.

    I'll be the first person to call a crash myself when the time is right - i.e. when we have a substantial bubble. Every bubble that has ever crashed, anywhere in the world, has always been preceeded by a sharp and prolonged (5-10 years) increase in house price to income ratios in the immediate run-up to the crash. Australia has not experienced that. Our price/income ratio today is almost the same as it was in 2003. That's why all those bears calling imminent crashes for the past decade have been proved wrong.

    You can't have a major crash without a major bubble. And I know from your posts on Macrobusiness that you don't believe we have a major national housing bubble. Joye doesn't believe we have a major bubble either, although he did say last year that we have a 'nascent' bubble - i.e. a bubble is beginning to emerge.

    And really, it's only Sydney that has a nascent bubble. The other big cities have basically gone nowhere (or backwards) in real terms for a decade.