Open Letter to Property Investors from Clifford Bennett
For those who do not know me, I have been an international markets trader, analyst and economist for some 30 years now with some of the world’s biggest investment banks. For the past decade I have been out on my own, in the wilderness, and life has never felt better.
One of the things that never ceases to amaze me, is just how diametrically opposed the real world turns out to be, in contrast to what the media said would happen. From the UK tabloid to even the Wall Street Journal, what is written and sensationalized, rarely if ever actually happens. Instead what happens, is that life goes on, people and governments react and change, and the world is a better place.
In fact, we right now live in the most prosperous period in history. Even the absolute number of people living in poverty has fully halved in the past 20 years. Globalization has delivered this, even as the population has shot higher.
You may not have noticed this great prosperity world of ours?
That is understandable, given the constant and overwhelming media barrage of the impending end of world? Especially, when it comes to the property market.
In 2008/09, I suggested it was time to begin buying property again. Especially, in the western suburbs of Sydney first, and then a little later in the Eastern suburbs. The delay in suggesting the Eastern suburbs of Sydney, is because this is where many of the Australian funds management, investment banking and broker industry types live. I lived there too. Guilty.
My point is, that understanding how deliriously negative and ‘excited by fear’ the Australian investment community is, lead me to understand that they would be the last people to recognize that it was again time to buy property. In fact, a friend sold his waterfront mansion and moved to France. I tried to tell him not to. Imagine selling that kind of property then?
During this period, and they still do to a large extent today, those fearful US styled newsletters kept talking about another great collapse. A full decade later, they are still saying the same thing. They do it for one reason and one reason only. Which is to sell fear. Which generates subscriptions and seminar attendances.
From the business manager of one of the world’s most successful and best known newsletters (one that would surprise you), I was told “we are in the ‘marketing’ business, not the economics business at all”. They are not interested in getting it right. That explains why they have been telling people to sell property and sell stocks all through the biggest bull market in history.
The US stock market has tripled in value since 2009. The Australian stock market has doubled.
Why not property?
What I am saying to you is that property is still cheap.
Yes, it as record highs. That is the normal natural state for property to be. It is a simple function of more people and more wealth. It is also, this time around, a function of the new-found freedom and empowerment of people all around the world.
Global growth, and indeed the prosperity of our times is a result of new found political freedoms combined with the empowerment to aspire via the internet. In education and business. This has been the main driver of global growth.
This process is still historically young. It has a long way to run, and the increasing mobility of the world’s population means the already high impact from overseas, one in four Australians were born overseas, is only going to accelerate. Perhaps exponentially.
Sydney and Melbourne will slow in price growth, but the gains will remain impressive.
South East Queensland, particularly the Gold Coast, has only just started an upward march. For the Gold Coast specifically, its multitude of villages has the potential in the years ahead to see it grow to become Australia’s third largest city.
Now this is a big call, but big things are happening in the world.
My view is, that if you hold property; then add to it.
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