Editor’s note: Unfortunately, your editor is unwell today. He will hopefully be back with your regularly scheduled insights from The Daily Cut tomorrow…
But in the meantime, we’ll be handing the reins over to colleague Phil Anderson.
You might remember Phil from these pages as the economic cycles expert who has called every major market move – up and down – for the past three decades of his career. He predicts these market moves by tapping into an 18.6-year real estate cycle that can be traced back hundreds of years…
He’s so accurate with his forecasts… he’s becoming known around the Legacy Research offices as the “market whisperer.”
And right now, he’s convinced that we’re at the cusp of a huge event in the markets – one that we haven’t seen for 20 years… and won’t see for another 20 after.
And if he’s right… this could make or break your retirement. In fact, he says you could pocket a decade’s worth of gains in the next two years… if you know what moves to make.
That’s why Phil is hosting a special event tomorrow evening, December 14, at 7 p.m. ET to share his forecast for 2024 and beyond.
Go right here to reserve your spot. You’ll be added to the guest list automatically.
We’ll hear more from Phil about his history of tracking market cycles below… But first, an update on the markets today…
Market Data
The S&P 500 closed up 1.3% to end the day at 4,707.09… the Nasdaq added 1.3% to close at 14,733.96.
In commodities, West Texas Intermediate crude oil trades at $69.79, up $1.18 since this time yesterday…
Gold is $2,041.80 per troy ounce, up $48,60…
And bitcoin is $42,752.50, up $1,911.22 from yesterday.
Now, over to Phil…
It was 1991. And London had a problem…
The city was experiencing a surge in homelessness.
And an enterprising duo – John Bird and Gordon Roddick – hit on a solution.
They founded The Big Issue. It’s a magazine created exclusively for homeless people to sell and generate an income from.
The model was a success.
Since 1991, vendors in Britain have sold 220 million magazines.
If you stacked all the magazines on top of each other they’d stretch for 455 miles. That’s well beyond the International Space Station.
And all that sales data revealed something …
Vendors learned quickly they could sell more magazines on busier street corners. If they were on quieter streets, they sold fewer copies… even with the same amount of labor.
Some vendors bid for the top locations. Others were willing to defend their spots with violence.
It’s a simple observation: Certain pieces of land produce more value independent of labor.
And it’s the key to understanding the 18.6-year real estate cycle I base my forecasting on.
You see, land values dictate the course of economies and markets. This insight can be enormously profitable. Because it has helped me predict every major market move since I discovered this cycle 34 years ago.
I know that’s unbelievable… but saying anything else would be less than the truth.
Here’s a short list of some of my accurate calls…
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Housing crash in the early 1990s
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Dot-com crash in 2000-2002
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Bull market in stocks from 2003-2008
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The housing crash in 2007 and the global financial crisis (“GFC”)
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The bottom in stocks in March 2009 after GFC
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The bull market in stocks in the 2010s
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The pandemic-induced crash in early 2020… and the recovery
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The sell-off in 2022… the March 2023 low… and the recovery we’re in right now
I can get a whole lot more specific with these calls. But these are the broad strokes.
How is this kind of accuracy possible?
Ricardo’s Rent
I’ve made it my life’s work to understand how economies and markets really work.
What I discovered is that market moves are not completely random. They move in cycles. History repeats.
It all comes down to the land market, which rises and falls every 18 to 20 years. This charts the direction of economies, markets, and everything in between.
If you’re skeptical, I don’t blame you. But allow me to prove it. And to do that, we need to meet David Ricardo and understand his Theory of Rent.
Born in 1772, the British economist Dave Ricardo a key figure in understanding the 18.6-year cycle.
In 1817, he observed that wheat prices were increasing at the same time as arable land prices.
This posed an interesting question. Was the rising value of wheat driving up land rents? Or were the rising land rents pushing up the price of wheat?
Ricardo determined that the rising price of wheat was pushing up the value of land. The more farmers could fetch for their wheat at market, the more they were willing to pay to rent land to grow it.
Like the magazine vendors who were willing to bid on preferred locations, farmers knew that the profit opportunity was higher even with the same amount of labor.
And this relationship between land prices and the economy isn’t restricted to farming.
Boom-Bust Market
All economic activity is dependent upon land. It’s the foundation the rest of the economy sits on top of.
Agriculture is an obvious example. But even the digital economy requires land.
E-commerce giant Amazon owns 16.7 million square feet of land for its distribution facilities. Airbnb boasts 4 million homes on its network.
And as Ricardo’s theory tells us, people are willing to bid up prices for the most productive land.
Farmers will bid up land that yields more crops. Amazon will bid up land close to its customers. Airbnb renters want homes in hip locations. And this bidding for and purchasing of land that makes a market.
All markets, by their nature, have booms and busts. But the land market and the stock market are joined at the hip. So the booms and busts in the real estate market have knock-on effects on the stock market, too.
And you can use how they interact to accurately forecast each market…
How to Read the Real Estate Cycle
That’s because the two cycles interact predictably…
At the bottom of the 18.6-year cycle, the stock market leads the way into the next upcycle.
Take the bear market in stocks in March 2009. This came after the roughly 50% selloff in the S&P 500 following the 2008 crisis. And it was the clue to real estate investors that the cycle was finished and we’re into a new one.
Now, if you’re a real estate investor, knowing this is a huge advantage. It helps you have more backbone when you’re buying at those extreme lows.
That’s what I did at the bottom of that cycle. I got together with some other investors. And we bought commercial properties for pennies on the dollar – an investment that is still paying off today.
And at the top of the cycle, it’s the land market that peaks first.
So if you’re a stock investor, you should be watching land prices and the prices of stocks that operate in the real estate business.
If we go back to the 2007 stock market peak, you’ll see that homebuilders and land developers peaked in 2005. That was a hint for stock market investors to start to get more defensive with their portfolios.
We’re going to hit the top of the cycle mid-decade. But we’re not there yet.
Real estate and stocks won’t crash for years yet. There has never been a crash at this stage in over 200 years of following this cycle.
If you’re interested in hearing more… I’ll go into all of this tomorrow evening, December 14, at 7 p.m. ET during my forecast for 2024 and beyond. %Go right here to make sure you don’t miss out.
Regards,
Phil Anderson
Editor, Cycles Trading with Phil Anderson
P.S. To further prepare you for the event, I want to give you The Market Whisperer’s 2024 Forecast.
All you have to do is upgrade to VIP – which is easy and free. You can do that right here.
More Markets
Today’s top gaining ETFs…
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VanEck Gold Miners ETF +6.3%
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SPDR Kensho Clean Power ETF +5.3%
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U.S. Global GO GOLD and Precious Metal Miners ETF +5.1%
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Amplify Transformational Data Sharing ETF +5.1%
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iShares MSCI Chile ETF +4%
Today’s biggest-losing ETFs…
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Global X MSCI China Consumer Staples ETF -1.6%
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iShares MSCI Turkey ETF -1.5%
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KraneShares MSCI China Clean Technology ETF -1.5%
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Global X MSCI China Consumer Discretionary ETF -0.5%
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WisdomTree Japan Hedged Equity Fund -0.5%
Mailbag
If you have any questions or comments for our experts here at Legacy Research, we’d love to hear from you.
Write to us at feedback@legacyresearch.com and just type “Daily Cut mailbag” in the subject line.
Cheers,
Kris Sayce
Editor, The Daily Cut