Louise Yamada - Secular Bear Market in stocks until 2022
with stocks, i've been saying we've been in a holding pattern for the past few years. it's plainly obvious - we have support on the down side and resistance on the upside and the market has been rangebound since late 2009 ish.
this would explain why property isn't moving - normally in this country, money moves from stocks to property, then from property to stocks.
since we have a holding pattern, if slightly negative, in stocks, it makes sense that we're likely to have a holding pattern, but slightly positive, in property. however, this isnt the case currently.
what is interesting is that Melbourne clawed back in direct correlation with the return in the stock market - which appeared to signal a new trend - one of housing confidence FOLLOWING the stock market.
however, this was ONLY Melbourne to this degree - everything else just started to either find it's feet or continue to fall. the thought that Melb would pull Australia out of the doldrums faded within 9 months, which pretty much disproves the notion that australia wide, property would now move with the stock market.
it's simple. people start to lose money in a heavily imaginary world like stocks, so they choose tangible assets like gold, land, oil etc. it's been this way since day dot and it forms basic human thought process and the old fear/greed arguments.
the fact that gold almost doubled in price since 2008 across all currencies should show some solid proof to this theory.
i posted the link to Louise Yamada's thoughts on the upcoming secular bear market in stocks because it's interesting to think what will happen with the money that leaves the stock market at the double top / head and shoulders / insert confirmed bear trend here - i should note she specifically deals with the US markets, but with all markets and money being tied together now through reserve banks and hedge funds, dont think for a second that a slip in the Dow or SP or Stoxx50 will not reverberate here.
some people transpose this reasoning across to property as well, but we're yet to see blood on the streets. not saying it wont happen, but in my opinion, it's highly unlikely. however - as long as there is debt tied to property and banks hold that debt - property is vulnerable. but we should also remember that around 40% of properties in Australia have no mortgage - so that's further food for thought......but i digress.
the US is taking advantage of the "flight to USD" away from the Euro at present. in 2 months, their bond yields have HALVED, even though there's been a worsening in the state of the USD. why? because the USD is the best deckchair on the titanic - the ship is going down, but people are moving to the rear of the boat.
what that means is - hedge funds, corporate money, international money are lending their cash to the US and receiving a bond, or promise to repay with interest. the current 10 year bond is offering a 1.86% interest rate per annum. with USD inflation running just shy of 4%pa, they are losing roughly 2% per annum!!!
the halving of a bond yield means that now all the other deck chairs are underwater, the price for the remaining deck chairs have doubled.
this flight to safety is why gold is going up and has done since 2001 - from $250/oz to now $1640/oz. silver has had a similar move, from $5 to just under $30 currently. smarter funds and a few cluey folks with old money are parked in tangible assets to protect their capital and try to protect against the devaluation of their purchasing power through inflation.
in other words, the gold price isn't going up - the purchasing power of your dollar is falling.
governments are buying gold now moreso than ever. china are buying mines globally. japan is trying to tool up and specialise in minting like they did with electronics - a market being lost to the chinese. the US mint looks set to run a record number of silver eagles - rumour has it one larger client put down $1.5m for nothing but the 1oz rounds - which is just shy of fifty thousand ounces.
what else in tangible? well, the world needs oil. but you cant park your money on a tanker delivery of oil. so you're exposed to the paper market again, this is why i think oil has not gone higher in recent years (i mean over that $150bbl mark) - because funds and old money realise they have to buy in - and be exposed to - the system again.
tangible? land. china, saudi arabia, india - all buying farmland here in australia, large tracts in africa (china's interest is the sub-Sahara, india are countering china's offer for uranium in mali etc) and trying to negotiate with the big wigs of socialism in south america, like chavez - however, i think they will get burned there like china got burned sending money to angola for infrastructure - the stuff just vanished.
so it seems that, in this country, that if we are set for a secular bear market in stocks - taking it's lead from the US and by default globally, then my continued prediction of "growth" in property from 2011 to 2020 could realistically come to light. it would also mean that a flight to gold is very, very likely and my target at the end of the bear run of anywhere between $6000-8000/oz gold is likely as i honestly cannot see the Dow falling below this number either; and expect a 1:1 gold ratio around 2020, to which gold will fall away from and stocks will rise away from, sucking a lot of money from property.
people wonder how i can be bullish land and gold at the same time. well, there you have it.
i'll post up my thoughts of the changes to the idea of personal wealth coming after 2020.
thanks for reading.
with stocks, i've been saying we've been in a holding pattern for the past few years. it's plainly obvious - we have support on the down side and resistance on the upside and the market has been rangebound since late 2009 ish.
this would explain why property isn't moving - normally in this country, money moves from stocks to property, then from property to stocks.
since we have a holding pattern, if slightly negative, in stocks, it makes sense that we're likely to have a holding pattern, but slightly positive, in property. however, this isnt the case currently.
what is interesting is that Melbourne clawed back in direct correlation with the return in the stock market - which appeared to signal a new trend - one of housing confidence FOLLOWING the stock market.
however, this was ONLY Melbourne to this degree - everything else just started to either find it's feet or continue to fall. the thought that Melb would pull Australia out of the doldrums faded within 9 months, which pretty much disproves the notion that australia wide, property would now move with the stock market.
it's simple. people start to lose money in a heavily imaginary world like stocks, so they choose tangible assets like gold, land, oil etc. it's been this way since day dot and it forms basic human thought process and the old fear/greed arguments.
the fact that gold almost doubled in price since 2008 across all currencies should show some solid proof to this theory.
i posted the link to Louise Yamada's thoughts on the upcoming secular bear market in stocks because it's interesting to think what will happen with the money that leaves the stock market at the double top / head and shoulders / insert confirmed bear trend here - i should note she specifically deals with the US markets, but with all markets and money being tied together now through reserve banks and hedge funds, dont think for a second that a slip in the Dow or SP or Stoxx50 will not reverberate here.
some people transpose this reasoning across to property as well, but we're yet to see blood on the streets. not saying it wont happen, but in my opinion, it's highly unlikely. however - as long as there is debt tied to property and banks hold that debt - property is vulnerable. but we should also remember that around 40% of properties in Australia have no mortgage - so that's further food for thought......but i digress.
the US is taking advantage of the "flight to USD" away from the Euro at present. in 2 months, their bond yields have HALVED, even though there's been a worsening in the state of the USD. why? because the USD is the best deckchair on the titanic - the ship is going down, but people are moving to the rear of the boat.
what that means is - hedge funds, corporate money, international money are lending their cash to the US and receiving a bond, or promise to repay with interest. the current 10 year bond is offering a 1.86% interest rate per annum. with USD inflation running just shy of 4%pa, they are losing roughly 2% per annum!!!
the halving of a bond yield means that now all the other deck chairs are underwater, the price for the remaining deck chairs have doubled.
this flight to safety is why gold is going up and has done since 2001 - from $250/oz to now $1640/oz. silver has had a similar move, from $5 to just under $30 currently. smarter funds and a few cluey folks with old money are parked in tangible assets to protect their capital and try to protect against the devaluation of their purchasing power through inflation.
in other words, the gold price isn't going up - the purchasing power of your dollar is falling.
governments are buying gold now moreso than ever. china are buying mines globally. japan is trying to tool up and specialise in minting like they did with electronics - a market being lost to the chinese. the US mint looks set to run a record number of silver eagles - rumour has it one larger client put down $1.5m for nothing but the 1oz rounds - which is just shy of fifty thousand ounces.
what else in tangible? well, the world needs oil. but you cant park your money on a tanker delivery of oil. so you're exposed to the paper market again, this is why i think oil has not gone higher in recent years (i mean over that $150bbl mark) - because funds and old money realise they have to buy in - and be exposed to - the system again.
tangible? land. china, saudi arabia, india - all buying farmland here in australia, large tracts in africa (china's interest is the sub-Sahara, india are countering china's offer for uranium in mali etc) and trying to negotiate with the big wigs of socialism in south america, like chavez - however, i think they will get burned there like china got burned sending money to angola for infrastructure - the stuff just vanished.
so it seems that, in this country, that if we are set for a secular bear market in stocks - taking it's lead from the US and by default globally, then my continued prediction of "growth" in property from 2011 to 2020 could realistically come to light. it would also mean that a flight to gold is very, very likely and my target at the end of the bear run of anywhere between $6000-8000/oz gold is likely as i honestly cannot see the Dow falling below this number either; and expect a 1:1 gold ratio around 2020, to which gold will fall away from and stocks will rise away from, sucking a lot of money from property.
people wonder how i can be bullish land and gold at the same time. well, there you have it.
i'll post up my thoughts of the changes to the idea of personal wealth coming after 2020.
thanks for reading.
