“Fake prices” of property bubble to implode

Lucerne Investment Partners note:

This is a truly frightening pandemic with significant ramifications which much of the developed world is unlikely to cope with well.

The reality is ICUs [intensive care units] are likely to be overrun around the world and people will increasingly seek to avoid social contact and hide at home in order to avoid contracting the deadly virus.

One bubble after another is at risk of popping, as the fake wealth and artificial economy of the last few years explodes in the face of a devastating global recession.

…[sharemarkaets] crashing, delusional housing prices likely to follow.

Unlimited QE is likely but won’t help alter the destruction from the pandemic.

These are truly dangerous times for all investors, but particularly for those holding large amounts of overvalued equity and property assets at fake economy prices.

And there you have it.

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)

Comments

  1. CraftsmanMEMBER

    Unhedged Gold the best investment. Unhedged global stocks next (during the rebound). As long as you have 12 months of living expenses saved, not much else you can do.

    • Gold has been great, yes.

      But it’s a 0 yield asset and with government paper approaching 0 yield again now, can you paint me the picture of where the further upside is?

      • I see gold more like a long term inflation linked bond with zero coupon. The further negative REAL interest rates go the higher the gold price will go.

        disclaimer: I have 15% total in gold/silver mainly for insurance against RBA malarkey rather than investment.

      • That logic is warped – when yields are high gold struggles (precisely because gold doesn’t have a yield). When real yields go negative, which they are now, the opportunity cost of holding gold declines and therefore makes gold much more attractive.

        You can’t print gold but you can print money – any rational person would far rather hold an asset that couldn’t be debauched endlessly and lose purchasing power in the process. How many trillions of dollars of global currency will be created out of thin air this year? It beggars belief that any rational person would want to hold cash or cash-based assets, especially when you’re guaranteed to lose money in the long run.

        • Fox and the Hound

          This right here.

          When has gold ever been more attractive than it is now? As the global economy continues to crumble, it should only improve.

        • ErmingtonPlumbingMEMBER

          22 trillion from the last bout of QE with fk all of that making its way into the real economy.

    • nexus789MEMBER

      Government’s have a history of coming for your gold. There is legal threat of gold confiscation, as I understand, by the Australian government that exists due to the Banking Act.

  2. I’ve been a paying member since 2013
    It’s unacceptable to me to delete harmless comments
    Could you please provide a refund
    I paid my membership on Dec so I’m ok for a pro rata refund
    Please pay refund to my credit card
    Thank you

      • Tezz
        I’m a person that likes to encourage open discussion
        I actually wouldn’t have a clue why (the thing I’m banned from talking about) affects markets
        I have just analysed historical data and there are too many data points to ignore
        I don’t want to be part of a site that operates like a dictatorship
        If I wanted that I’d move to China
        I just want a refund on principle

        And I think I’ve copped a lot on here and I’m always professional in my response

        Thinking of starting my own YouTube site on trading

        • reusachtigeMEMBER

          Totally agree with you Solar Boy. I love your work. It’s harmless, unless real of course – which it isn’t, and I think many find it intriguing. Why it needs to be censored is beyond a profit lover like me.

        • The site hasn’t changed how it operates since december, Why were you ok with it then but not now?

          Oh, now it effects you, not just others…

          • Bj
            That’s not true what you are saying
            I haven’t seen you being muzzled or your comments delated when harmless
            I understand if you are being abusive or swearing etc

            So get your facts correct

            It’s all sorted
            The guys are under huge pressure
            I understand

            Solar boy received the acid

            Carry on, this is carnage, no one knows what to do

          • I remember my first warning letter from ZH.
            At first I was hurt then angry then resigned, all the grief processes but then I just thought sod em

        • bolstroodMEMBER

          Like your work bc. You have been (sun)spot on recently.
          You have never claimed to understand SS activity , just noted the correlations.
          Will miss your input, if you go.
          Iam calling April 5th

        • bcnich, I enjoy your comments as well.
          Certainly coming from a different direction.
          I hope you can sort things out.
          I will miss the sun spots/solar spots or whatever spots.

    • Bcnich that would be a shame, Im loving your market predictions and housing predictions and am waiting for more..hang in there..

      • Pat
        I might start my own YouTube site on trading, trading techniques and how Insto traders make their trading decisions
        Very different than most analysis we read
        Pure trading long short stop losses etc

        • Bcnich Thatd be great because Im a total novice and am looking to help my daughter throw her hard earned into some shares , LICs, ETFs , not really sure??, following this crash to help her get a leg up..

          • Pat – keep her cash safe until this blows over. Even pros are getting carried out in the current environment, it’s too volatile.

            Talk to the MB fund guys too.

        • Yep l I’ll check them out
          I’m seriously considering borrowing and putting it into an index fund when we reach the bottom, low rates of interest, which is deductible, low risk

        • billygoatMEMBER

          @ bcnich Good luck with You Tube you’ll need it if you’re not a Tribe member. It’s the black hole Bermuda Triangle for missing, deleted, unwanted, comments. Must adhere to undisclosed narrative. Story telling 101

    • If you’re going to delete his comments because you think the solar cycle stuff is crazy you should start deleting all the other crazy comments from other people because there are plenty.

      • Start with the Elliott wave stuff please. The solar stuff is much more entertaining by comparison.

        • Rorke's DriftMEMBER

          Elliott Wave has proven the best predictor on the Aust housing market unfolding, as previously posted. Continuing Wave C unfolding since 2017, bounce May to Feb, continuing unwind of property bubble to now take the next leg down..
          It picked the Dow Jones top, perfect 162% Wave 3 extension on a yearly chart was hit in Feb.

          • So what does Elliott say aus property will do exactly over the next 12 months?

            I want the prediction before the fact, not after, please.

          • Was trying to make it easier for the voodoo bloke with just 12 months. (At 18 months there is typically a Really massive event, as we all know)

          • Rorke's DriftMEMBER

            Is there a way of searching one’s past posts on MB? I’ll repost some past EW comments i.e. before the fact.

      • You lot are forgetting something: private enterprise.

        Govt censorship is definitely dangerous as it opens the door to tyranny

        Private entities should be able to make whatever rules they wish – after all, it’s shareholder capital at risk. Membership is voluntary. I’d be sorry to see bcnich go but that’s for he and MB to sort out between them. As bcnich mentions above, he’d be keen to start up on his own – perfect solution.

        • Yes, but I think bc’s complaint is that there isn’t a rule against what he’s been posting. Verbal isn’t good enough, it should be clearly stated.

          • I’ve never read the rules but I feel confident that the owners of MB ‘reserve the right’ etc …

            Don’t get me wrong, I’m on bcnich’s side here, but at the end of the day …. what can he do. The public sector is different because it’s the public that pay the Govt’s salaries and fund the state. This is a private situation.

        • That’s right it’s a private enterprise.. i bcnich goes, I go too. A huge part of what I come here for the characters. It’s part of the product MB sells, if they don’t recognise that, they will plunder their own value proposition.

    • predicting stocks on solar cycle is crazy but doing same based on Trump twits or central bank predictions is equally crazy

      • Prediction of pandemics works well on solar cycles as well a prediction of famine. The really bad pandemic looks to be in 2022. We are presently benefiting from the dispersion of the Chinese pollution cloud north of aus which has increasingly since late 1980s blocked monsoonal and other rain to east Australia, We have had fantastic rain plus major flooding in the north since China has had to close down significantly.

        • Rorke's DriftMEMBER

          Glo thats quite an extraordinary claim re china pollution preventing our rain. What sort of evidence is there for this or credible source?

      • Nah, Alan Jones said this morning it’s all ‘hysteria’ – people of this country have got to pull themselves together and go out and spend – true story. The amount of ignorance over this crisis is quite epic. The problem is not the virus – the problem is the f#ckload of debt we’re having to service (in aggregate) that is suffocating the global . These talking heads in the media have no business opining on the subject if they don’t understand that.

          • It would be of benefit to the planet if more like him died off. Those climate deniers are the worst in my opinion.

          • Gav, look on the bright side. It’ll be far easier to get granny into a nursing home next year. And a sizeable collection of overweight muppets like Jones and George Christensen and Barnacle are high potential candidates for pushing up the daisies.

    • Don’t go!
      6 weeks ago I thought you were completely nuts (like me). Now I think you should be running the country.
      Vote 1 – bcnich

  3. I find it truly amazing that one of natures complete enigmas, immeasurably small and yet a complete behemoth, not alive yet not really dead, and easily the most bizarre creature we know of, the virus, is going to implode the housing market in Austraila.

    Houses are for living in people.
    They should be cheap.
    That’s good for the economy.

    Price falls will overshoot to the downside.

    Vaccine is 12-18 months away

    THINK. ABOUT. THAT.

    Time for a nice Ron Diplomatico Mantuano.

    Hmmm.
    Living in the end times.

    • based on speed of spread epidemic will be over in 6 mnths (everyone will be infected by than) but if “investors” continue wasting 7% per day there will be very little left of stockmarket in 6 mnths

    • hoarding investment property is like hoarding TP. Pay $10/roll if you want to wipe your @rse. Pay zillions if you want to live in some dump to cover your head.

      • Maybe they should change the narrative with the TP craze. These “savvy” TP buyers look for value in the market. They search for shops where it’s undervalued and resell to make a profit. With population growth, there’s always a growing demand. You can’t go wrong with TP investments.

      • As part of the stimulus package they should make credit card interest used to facilitate the investment in TPs tax deductible. We need a new boom to focus the population on to maintain calm and confidence, this is our one chance.

  4. Short-term blinkered and panicked analysis. There are plenty of bargains becoming available for anyone with an investment view longer than 12 months.

    • *Short-term blinkered and panicked analysis. Regarding stocks, there are plenty of bargains becoming available for anyone with an investment view longer than 12 months.

      Regarding the Aussie housing market, well that’s an entirely different kettle of fish. It’s been at delusional levels for many years now but that’s government designed and everything possible will be done by the Aussie government to support the delusional Aussie property prices. Wait and see.

  5. Trigger Finger

    Boomers are toast.

    All their investments are in real estate and blue chip energy, resources and bank stocks – my god – they are so screwed.

    Hope they have lots and lots of savings…..lols.

    “Jeeves – send out that massive printing press will you”

    • FUDINTHENUDMEMBER

      Ahahahahahahahahahahhahahahahaahahahahaha… (breath).. Ahahahahahhahahahhahahahahahhahahahhahahahhahahahhahahahhahahahahahahhahahah

    • I tried telling my mum to pull her money out of Australian banks in the last couple of years. But mah dividends she said…. And that was that.

      • me too with Dad. Probably repeat across Australia with every Gen Xer talking to a Boomer.

      • to be honest when he spelled out how juicy the franking credit thing is, i completely saw his point. It is hugely lucrative.

        Problem comes when the dividends stop.

  6. Trigger Finger

    ANZ and WESTPAC leading the way on massive ramp up in exposure on fossil fuels.

    Aaaaaaaand they’re toast.

  7. So where were Lucerne Investment Partners prior to this? It has been a lonely place calling out these asset bubbles as the cheer squad grew larger and louder. All of a sudden, there are bubbles everywhere!

  8. Not hearing much from that Chinese embassy lately.

    Last month they slammed us for travel restrictions on China. If it wasn’t for the travel restrictions we’d be like Italy right now. The Chinese embassy caused us a great loss of face with their veiled threats directed at us.

    “The World Health Organisation has repeatedly stressed that it does not recommend putting travel and trade restrictions on China.

    “Only Australia and a small number of countries have taken such extreme measures which are an overreaction indeed.

    “We urge the Australian side to … respect WHO’s professional recommendations, and lift the restrictions as early as possible.”

    • Ronin8317MEMBER

      China will impose a travel ban on Australia when our numbers go over 1000, which will be about 2 weeks away if our government doesn’t close down the schools.

      • Mining BoganMEMBER

        Yep, 2-3 weeks ago Italy had 80 cases. Today they’ve added 1800 to the tally.

        We’re toast. Shut the place down now.

        • Yep, wave the snacks, grog and toilet paper in and fire up some Netflix. What’s not to love?

          • Exactly. The end of fast food and fast fashion. Just gardening, cleaning, disinfecting, nursing the sick, walking to the victory garden to see if any carrots have ripened (or whatever carrots do). A whole new life awaits anyone who survives.

          • ErmingtonPlumbingMEMBER

            What happens if the power get shutdown?
            Surely people can’t be expected to just read books to entertain themselves.

          • @Ermo. I still read books and am old school but the lack of access to devices and streaming does concern me – the younger generations might just melt down.

  9. SnappedUpSavvyMEMBER

    Australian RE could look like a nice safe investment for many, just as it did after the GFC

    • Goldstandard1MEMBER

      If people can get the bank credit (liquidity is seizing up), and if they have a deposit after their share market losses.
      Property is probably toast as people need to liquidate. Just takes longer.
      We get property is less liquid, it is not safer at these debt levels.

  10. Aussie1929MEMBER

    I put 70% of my SMSF into bullion Dec 2018 split between 70% silver and 30% gold. Good times ahead when you foresee a bad economy.

    • That’s some serious disaster hedging.

      That said, I can’t talk, I’m 85% precious, 5% energy (gulp) and 10% bonds.

      • Aussie1929MEMBER

        I was thinking at the time if I overdid it a little but expected a gradual decline of the economy, not this black swan event of the virus but we are both on a good boat sailing into the sunset of sparkly things

  11. billygoatMEMBER

    The T sorry C virus seems to be only happening in TV. Unfortunately in a public space with TV blaring PM talking all things CC (Corona Virus Crisis)
    8 Chinamen just sat down at table next to me talking horse racing via interpreter & joking about baby wipes & funny roll. Thanks Dog tables set apart 1290mm so I’m safe. They can’t believe supermarket panic buying and wonder how it will impact real estate development at said race course. Anyway I digress …black swan came to real estate / FIRE party in fancy dress as Corona Virus.

    • Back in the day, when I was doing the London thing, we had a few fancy dress parties – a favourite theme being London Tube stations. ‘Cockfosters’ was a fave from that theme as you would turn up wearing a suit of empty Fosters cans – an expensive endeavour as no right-minded person would drink that sh1t so the cans were either sourced from the trash or paid for and the contents tipped down the sink. Oh and condoms too.

      I see a slight logistical problem with Corona theme though – health & safety might not approve either. Perhaps screen-printing is the way forward?

      • I was somewhere on the tube in London last year and heard an announcement about Cockfosters. I laughed like I drain. My woman, who is an ex Londoner, looked at me quizzically. She’d known of it all her life, so the humour somehow eluded her.

  12. TightwadMEMBER

    As a new member I particularly enjoy the comments section. There is a great range of opinion, some offensive, very diverse but always entertaining and informative.
    I have enjoyed bcnich’s comments and find them ‘ outside the box’ but thought provoking and interesting. I am completely shocked that you feel the need to censor him simply because you disagree with his views.
    This censorship goes against the very essence of free speech and open discourse and I urge the moderators to reconsider. If non offensive free speech is censored in the comments section it detracts from the credibility of this blog.
    Just my thoughts.

    • darklydrawlMEMBER

      Agree. And I have been here since day 1 – before paid memberships were even available. bcnich’s comments are considered, thoughtful and polite. You might not agree with the concepts, but there are plenty of other comments on here that are genuinely offensive or sexist that go thru the the keeper without issue. I appreciate that moderating the comments section is a thankless and time consuming task.

      Solar cycles to read markets isn’t my thing and I cannot see how it works, but hey, on the other hand bcnich has been pretty much on the money with this one regardless of how you feel about the methodology to get there.

    • Hi
      I am also new and agree with you.
      I’d say bcnich has been one of the better commenters and the standard has been good recently.
      He talks more sense than that skippy fool who has posting diarrhoea – cut him off!

  13. “Fake prices” of property bubble to implode

    In theory Yes, but in practice No
    Now I know that in Theory, theory and practice are the same, but in practice they often differ.
    The assertion that,“property bubble to implode” is fundamentally based on the assumption that there are other viable “better” investments, but what happens when it is this fundamental assumption that’s wrong? What happen when the best possible investment is still a terrible “investment”? What happens to the value of a terrible investment when all other investment choices are worse?
    If I valued the truth, I’d probably spend some time examining this idea before I concluded that, “Fake prices” of property bubble to implode
    Hey but don’t listen to me because like most Aussies I’m Dumb-as-Dirt

  14. Caught with your hand in the cookie-jar, stealing God-given free land value (created by the community) from the working class, first peoples and future generations? That’s fine, eat gold instead.
    Land is the natural source of public revenue. Collect the entire annual rental-value as the price of monopoly granted, reducing its price to nil (plus improvements).
    Gold is useless, heavy stuff. Fools, your reward is neither here nor there.

  15. Another + for bcnich

    Please don’t censor bcnich. I enjoy his stuff and get value from it.

    Arty