Chris’ note: Imagine you could see, with clarity, market turning points… before they happen. You’d be able to invest with confidence as stocks go up. And you’d know when to turn more cautious.
Economic cycles expert Phil Anderson is proof it’s possible. By investing based on recurring market cycles, he was able to “retire” in his 40s.
These days, he flies around the world in first class. And he spends time between homes in London, Melbourne, Jakarta, and the French countryside.
As you’ll hear from him today, we’re now in the most bullish phase of the cycle for stocks. It’s what he calls the Eleventh Hour. And he says it’s your best chance to make life-changing returns in stocks in almost two decades.
You can learn all about it… including Phil’s top three stocks to buy… at his Eleventh Hour – Last Chance event tomorrow, July 26, at 8 p.m. ET. So, if you haven’t already, make sure to RSVP with just one click here.
Then read on for my Q&A with Phil about how he discovered the hidden cycles that drive markets… and how you can turn this knowledge into profits.
Q&A With Phil Anderson, Editor, Cycles Trading With Phil Anderson
Chris Lowe: You’ve been called the greatest living forecaster of our time. You called, among other major turning points, the dot-com crash in 2000… the housing crash in 2007… the 2008 global financial crisis… as well as the bottom in stocks in March 2009. How did you get interested in economics?
Phil Anderson: I’ve always had a bent for economics. I don’t know why. At 12, while the other lads in my class were swapping football cards and playing marbles, I was collecting the business news.
I still have my first cutting from the Sydney Morning Herald from 1974. It was highlighting an economic downturn in Australia, where I grew up.
Some pundits said taxes were too high, causing businesses to fail. Others blamed a weak banking system. Others pointed the finger at inflation. I remember wanting to know which of these camps was right… if any.
I ended up getting an accounting degree and taking economics classes as part of that. But could I satisfactorily explain to myself what caused the 1974 recession once it was in the rearview mirror?
Not at all.
This was a major issue for me. I thought, “I’ve got to do something about this. I’ve got to find the answer.”
It seemed to me that, if you understood what drove economic cycles, you ought to be able to make accurate forecasts. That’s not how it works in mainstream economics. You get all these different forecasts. And all of them are completely wrong.
So, I thought the best thing to do was prove whether or not it could be done.
Chris: How did you do that?
Phil: When I finished college, I wanted to see the world. So, I spent 20 months backpacking. Starting in Europe, a mate and I walked, hitched, drove, took trains, and donkeyed our way from Switzerland, through Russia, to Beijing, then back eastward to Tibet. From there, I went to Nepal and then India.
What I learned is that people are the same worldwide. We all want a house on some land where can raise kids without government interference.
That’s when I realized economics has more to do with land than anything else. But mainstream economists hardly factor in land at all. To them, there are just two factors of production – labor and capital. But I realized you can’t know anything about economic cycles without understanding the role of land.
That’s when I started learning about real estate and land values. I came across The Power in the Land. It’s a book by a British journalist and economist called Fred Harrison that came out in 1983. It shows that land speculation is what causes economic crashes.
Land is a limited resource. So as the economy grows… and demand rises… it drives up the price of land. As land prices rise, investors and speculators pile in. This causes land prices to rise even higher. And it results in a bubble. Eventually, all bubbles burst.
The most recent example of this was the 2008 financial crisis. It started with trouble in the real estate market. Then it spread to the stock market and the wider economy.
We saw something similar happen in the run-up to the 1929 Crash. In the 1920s, there was a land boom, most notably in Florida. Property prices soared and speculation was rampant.
The Florida real estate bubble started bursting in 1925. And devastating hurricanes in 1926 and 1928 didn’t help. They scared off investors and caused prices to fall even further. By the time of the stock market crash at the end of the decade, the Florida real estate boom had turned into a bust.
So, when I realized the correlation between real estate, the stock market, and the economy, it changed my life. I saw that you could start making decent forecasts using Harrison’s insights.
As it turned out, roughly two decades later, Harrison was one of the first people to predict the 2008 crash. In 2005, he said the next property market “tipping point” was due at end of 2007 or early 2008. And he warned that the only way prices could return to affordable levels was a “slump or recession.”
Chris: What did he base these predictions on?
Phil: He was one of the first people to identify a real estate cycle. He traced it back for hundreds of years and concluded it moved in 18-to-20-year cycles.
He was researching the British property market. I realized there was more interest in the U.S. real estate market – it’s what leads the world.
So, I did my own research. And I discovered that, with real estate, we typically get a seven-year recovery from the previous bust. Then we get a one- to two-year mid-cycle slow down. Then we get a bull phase that lasts five years. Finally, we get a two-year bubble that leads to a four-year decline again.
Chris: But you don’t just forecast cycles in the real estate market. You also forecast stock market cycles.
Phil: That’s right. Most people don’t see the relationship between the two. They either forecast the real estate market or the stock market. But I tell my subscribers that real estate investors need to understand the stock market. And stock market investors need to understand the real estate market. Because they’re closely related.
And I’ll give you two examples…
At the bottom of the 18-to-20-year cycle the stock market that leads the way into the next up cycle. The bottoming of the bear market in stocks in March 2009, for instance, was the clue to real estate investors that the cycle was finished and we were moving into a new one.
Now, if you’re a real estate investor, knowing this a huge advantage. You’ll have more backbone when you’re buying at those extreme lows sitting on that information.
And at the top of the cycle – which we’ll shift into over the next couple of years – 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.
So, if we go back to the 2007 peak, the homebuilders and the land developers peaked in 2005. That was a hint for stock market investors to start to get more defensive with their portfolios.
I’ve never understood why I’m the only person doing this kind of work. It’s extremely valuable information whether you’re investing in stocks or real estate… or both.
Chris: Where are we now in the cycle?
Phil: As I told Legacy Research readers at the end of March, despite all the doom and gloom in the press, this is one of the best parts of the cycle to be an investor. It is the “growth at all costs” stage.
It’s something subscribers of my advisory, The Signal, know well. One recommendation I made in April – a homebuilding company called M/I Homes (MHO) – is up 53%. I also recommended chipmaker NXP Semiconductors (NXP). It’s up 23% over the same time.
And those gains are just a fraction of what’s on offer as we head into the final stage of the cycle – what I call the Eleventh Hour.
During the previous Eleventh Hour period, I recommended nine stocks to my readers. All of them were winners. And the average peak gain was 485%.
That’s why, on Wednesday, I’m going live with my Eleventh Hour – Last Chance event. If your subscribers haven’t signed up already, they can go right here to do so automatically. I’ll show the kind of stocks and sectors that will outperform in this period… and I’ll detail three stocks to buy for the rest of 2023 and beyond.
Chris: Thanks, Phil. Those are fascinating insights.
Phil: Thanks, Chris. It was a pleasure.