Monday, Apr 23, 2007
reply to a previous post
the long wave analyst: Long wave cycle
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Posted by sold 2 rent 1 @ 05:21 PM (446 views) Add Comment
23 Comments
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1. sold 2 rent 1 said...
OK, I might have been a bit over dramatic with the initial posting.
As I said 99.99% of the population will think I am a crackpot for saying this. That percentage will come down to 99.98% if I polled the people on this website. (HPCers are more bearish)
Here is another way of looking at it. Imagine how you would convince a BTL landlord that prices of property don’t go up forever. He can’t see your argument and you don’t understand why.
You explain to him about booms and busts in the economic cycle and give examples of 1974, 1981, 1990. He tells you things are different this time. You tell him people always think that and they are always proved wrong.
One of the primary reasons why the BTL landlord can’t see your point of view is that things are good for him and he doesn’t want to imagine bad times ahead. Quite often the argument of “The government wouldn’t let houses crash again” is used. Governments don’t have that much control.
Now let’s expand the argument to the next level. I see any person who doesn’t understand the power of the K-wave the same as you would see that BTL landlord. The arguments are the same (slightly more complicated) but over a bigger timescale and with more severe consequences.
I can offer detailed evidence of this k-wave happening over the last 2 centuries. You tell me things are different this time. You tell me that central banks around the world wouldn’t let a depression happen again. I say maybe central banks don’t have that much control over the economy.
You think that central banks can drop interest rates, have a small recession and get back to another huge credit expansion can go on forever. When you think about it your arguments to discredit the K-wave theory are as flawed as the BTL landlord’s view that prices can only go up.
The cycle has to go back to beginning. You can’t just keep expanding credit to infinity.
The fact that depressions are not very pleasant at all doesn’t stop them from happening. Most of you hadn’t budgeted for a depression. A nice short recession and a 30% drop in house prices fitted the bill perfectly. Unfortunately what we want and what we get are 2 different things.
I don’t think I will convince anyone (except ivmreader) just like the average HPCer fails to convince the average BTL landlord.
2. sold 2 rent 1 said...
For the record.
I have just adjusted my portfolio from gold/silver/natural resources/Japanses stocks to all gold.
Gold is the only thing to rise in a depression.
If I get it wrong (which there is a chance) and this all turns into hyperinflation instead - gold isn't a bad choice on that front too.
3. taffee said...
agreed..I have sold both properties and put 50% of cash in gold ingots.........
4. fahrenheit451 said...
I'm going to get shot for this one ...
If (1) we are in a Boom and (2) we require immigrant labour to support it and (3) we have a massive overspending problem ...
What is the difference between now and when in the North America and Europe in the early 1900 ...
we had (1) a Boom and (2) we required slave labour to support it and (3) we had massive difference betwen the "have"s and "have not"s
There was (a) Massive Economic Crash, (b) WW1 / WW2 was started, (c) gold went though the roof?
And today ... any helpers here, grounds a bit shaky ...
In the 19xx's it was basicly a European + North America scenario
Now it's got to be more global ... and 10x worse ...
5. harold said...
S2R1, how high does your model predict gold will go? Ball-park figure.
6. sold 2 rent 1 said...
taffee,
Where did you buy your gold?
Where do you store it?
7. sold 2 rent 1 said...
harold,
anyones guess.
2,000 to 10,000 USD / ounce
8. inbreda said...
Yeah taffee - I'd be really interested to know where you store your gold.
A map and a list of times when you won't be in might also be useful
;-)
9. paul said...
"Yeah taffee - I'd be really interested to know where you store your gold."
It's under the oak tree, and X marks the spot - AHAAAR.
10. uncle tom said...
I don't give a lot of credence to ultra long oscillation theories..
There are too many people poring over data, trying to find a holy grail somewhere - it's like these people who try to find secret codes in the text of the bible, but forget that the book was a translation, and a poor one at that..
'History repeats itself' is a common and respected mantra, however, I have my own variant:
'History often repeats itself, but it's never quite the same'
Spotting the difference can make you very wealthy...
11. taffee said...
there are a number of places to buy/store gold if you google it,however,my bank organised the purchase and a safe deposit storage of it via a specialist...love to say it was in a swiss vault but just boring old london I am afraid
I wouldn't post any more info!!!!!!!!
12. taffee said...
this is a good link I think
http://www.atsbullion.com/index.html
13. sold 2 rent 1 said...
UT,
'History repeats itself' is a common and respected mantra, however, I have my own variant:
I agree.
History is not repeating itself. If it was then the depression would have started in 2001.
The variant this time is that we have twin asset bubbles (stocks and housing).
Also that China is about to implode like the Nasdaq in 2000.
Presumably you are not going to share your variant.
I can only hazard a guess.
There are only 2 options for this mess. Hyper-inflation or depression?
It seems like you are not plumping for the depression, so you must be expecting hyper-inflation?
Am I close UT?
14. sold 2 rent 1 said...
Either way.. gold works wonders in both hyperinflation and depression environments
15. dohousescrashinthewoods said...
I have been toying with Bullionvault - seems to be a reasonable operation from what I can find on the net.
You can even have it stored in a Swiss vault if you like.
I am thinking of transferring my ISA to a self-select and opting for a gold ETF.
I thought maybe a Euro fund to do some hedging in case this is all madess, but I don't see a bright future for the UK and US.
I am interested to see how things develop over the next 12 months, into Q1 2008 (sic.).
16. sold 2 rent 1 said...
dohousescrashinthewoods,
IMHO avoid ETFs.
Paper claims on gold may not hold up a financial crisis.
Gold should be held physically or through mining stocks
17. dohousescrashinthewoods said...
I had been pondering that. I guess I need to find some real money to buy some real gold rather than tweaking m ISAs.
ETFs are derivatives, though - I was reading that the issuer has to hold the underlying asset in order to issue the shares. Does that make a difference?
18. sold 2 rent 1 said...
I have invested in the fund INVESTEC GLOBAL GOLD which is ISA wrapped.
I am considering physical gold too. Not sure how much or what type yet.
I have read on several occasions that ETFs carry extra risk.
The longwaveanalyst guy shares this view
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