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Here is my question to you today.
When the peak of the current 18.6-year Real Estate Cycle comes around how do you think you will feel about it?
I want to explore that word more today. Because your feelings directly affect your financial behavior.
And right when it feels like the entire world is your oyster you are going to have to make a decision that reverberates for the rest of your life.
That day of decision is not today. But it’s coming soon. And when it does, will you be prepared?
Read on to find out what I mean.
How could you refuse such an invite?
It obviously makes a lot of sense to follow the performance of the stock, commodities, and property markets when one wishes to track how the 18.6-year Real Estate Cycle is progressing.
But that’s not the only method to do it.
I’d like to show you a little-known way of doing it today too.
It’s about being aware of and watching behavior.
Granted, this is harder than you think. People don’t like to be on the outside of what society considers the norm. If everyone around you is euphoric, then its hard not to buy into that yourself.
I feel it’s an undervalued skill though to be able to remove yourself from all this and look objectively at the things people around you are saying and doing.
Today, I’d like to give you an example of this and why it’s important to be aware of it when you find yourself swept up in the same behavior.
And there is no better recent example than how cryptocurrency entrepreneurs have acted in the last 12-24 months.
To be clear: I’m not singling them out.
As you’ll find out, nothing that they had been doing should come as a surprise to those who have spent any time studying the history of the real estate cycle.
Let’s step back in time to the spring of 2021.
We are visiting some of Miami’s hottest nightclubs.
You know you’ve made it if you got an invite to these. Only the most connected in Miami are getting one.
That’s because almost every crypto entrepreneur has either booked multiple tables or the entire venue for their own parties.
If you manage to score an invite, here’s the scene before you.
Source: FT
As the noise and excitement hits your senses, you try to move through a wave of fellow party goers, then you you gaze up to the stage.
Up there, none other than world renowned rapper 50 Cent. To your mild astonishment you notice that he is throwing hundred-dollar bills to the crowd below.
This is the place to be. A single bitcoin is now worth more than $60,000. The mainstream movement towards it seems irresistible.
Those involved in the hottest crypto projects descend upon Miami’s best night clubs to celebrate their success, and of course to flaunt their wealth.
It seems like the party will go on forever.
Here are some quotes from a recent FT article about these times.
“Out of the blue, all these kids from crypto started coming down and spending a lot of money — like, an insane amount of money,” said Andrea Vimercati, director of food and beverage at Moxy Hotel group.
“They were booking tables for $50,000, and it was like, who the hell are these people,” added Vimercati, former director of Groot Hospitality, which operates some of the hottest night clubs in Miami including Liv, Story, and Swan.
The new partygoers were “95 per cent men, young… with a kind of nerdy style,” he said. “You couldn’t tell they had a lot of money if they were just walking around.”
Certainly, a key enabler of this was the decision of clubs like E11even accepting cryptocurrency. E11even is the Miami based neon-lit night spot highlighted above with troupes of trapeze dancers and burlesque shows.
And this fact produced some astonishing behavior. Here’s some amazing stories about a cryptocurrency company who had been brought out and were flushed with cash.
“50 Cent was performing, and their spend was more than a million dollars,” said Gino LoPinto, operating partner at the club. “They paid in crypto.” LoPinto recalled: “They had bathtubs of champagne brought out and gave 50 Cent a bunch of cash to throw.”
The never-ending parties underscored Miami’s status as the epicentre of the US cryptocurrency industry.
This was fuelled by Florida’s low tax laws and less-onerous Covid restrictions. The vast fortunes being made were kept in the state via things like a huge naming rights purchase by FTX to name the arena used by NBA team The Miami Heat.
Source: NY Times
The owners of companies like FTX brought $25 million plus mansions and luxury yachts. And they were paying cash: converting Bitcoin into dollars.
For a small time, it did feel that Miami had turned into the epicentre for all things crypto related.
And if you were a resident of Miami, watching basketball at the FTX arena and reading the latest mansion or yacht being sold to these crypto millionaires, wouldn’t you feel the same?
Well, if you ask me, it will have felt no different to the young and newly minted millionaires of Moscow in 2007 and the extravagances they indulged in.
Will you make this decision or go with the caviar, suckling pigs, and quail eggs?
It might feel like a lifetime ago but what happened in Moscow at the absolute peak of the last real estate cycle is precisely the same as what’s occurred here in Miami last year.
With one crucial difference. I will get to that in a moment.
You just need to replace cryptos with commodities. Different means, same behaviour. And the inevitable same results ultimately too.
In 2007, it was young Russians who threw endless amounts of rubles across Moscow’s most famous nightclubs in much the same fashion as these crypto entrepreneurs.
Some of their now infamous excesses were £5000 pound per head New Year’s Eve parties in Rublyovka, an elite neighbourhood on the edge of the city known as the “billionaires’ ghetto”.
In 2006 metals tycoon Vladimir Potanin paid George Michael £1.7m to perform for less than an hour at a private bash.
Noted Russian celebrities attended these shows, like Roustam Tariko, the drinks billionaire renowned for his parties, amongst the guests. At the launch of his Imperia vodka under the Statue of Liberty three years ago, Tariko hosted 1,600 guests, feeding them with black caviar, suckling pig, and quail’s eggs.
It was the same, lavish, completely over-the-top behaviour as we see in Miami.
But there was one crucial difference. That difference was, unlike 2021, what occurred in Moscow in 2007 happened at the end of that 18.6-year Real Estate Cycle.
So, if you got caught up in the crypto mania lately, you may have walked away battered and bruised. But you are still in the fight.
That’s because, unlike in 2007, we still have the greatest wealth creation event in human history to come.
When the day comes will you be ready?
So back to the question I asked you at the start. Will you be ready when the time comes?
The current real estate cycle has more time to run. But as I’ve shown you here, just like the cycle itself, behaviours also repeat over and over.
You will need to understand this extravagance is going to reappear in the near future. You can walk away from the collapses we have witnessed with crypto either burned by the experience or be glad you never got involved.
But when we are all-in, right near the peak, and everyone around you is optimistic, loaded with debt but still making money in their sleep, will you possess the emotional intelligence to recognise what’s happening and do the opposite?
You will soon discover it will be one of the hardest decisions you’ll likely make. Completely against the advice of friends and family.
I’m confident, though, that you will make it. Because I am going to help you by giving you the chance to become a Boom Bust Bulletin (BBB) member.
I will teach you the history of the 18.6-year Real Estate Cycle. I will show you why it continues to repeat like clockwork over and over again.
The same behaviour taking place over and over at the same time each cycle. I will also guide you to the numerous opportunities that the cycle presents as it turns.
Expect the return of hedonism across all walks of life now that we have entered the second more speculative half of the cycle.
You might laugh now. You might consider yourself immune to the madness out there. But trust me, when the time comes, you will find yourself caught up in it as the peak approaches.
Your understanding of the timing inherent in the real estate cycle could save the financial future of you and your family.
This is what the BBB is designed to do; to teach you the timing so you can prepare yourself for the mania, then the peak and stay protected during the bust.
And take confidence in the decisions that need to be made. When everyone is in, you need to be out.
Those on the dance floor of Miami’s E11even nightclub jumped in like there was no tomorrow. Fast forward to today: they were right. There was no tomorrow.
Don’t be like them. Your today can result in a much better tomorrow.
Best wishes,
Darren J Wilson
and your Property Sharemarket Economics Team
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This content is not personal or general advice. If you are in doubt as to how to apply or even should be applying the content in this document to your own personal situation, we recommend you seek professional financial advice. Feel free to forward this email to any other person whom you think should read it.