THE 2009 BULL BOOM

What the public should know.

One of Sydney's "leading" real estate agents (and by "leading", that does not mean worthy of respect), is saying that 2009 is a great time to buy real estate. Yeah, right.

This agent is being described in the media as one of the current crop of property "bulls", meaning he thinks the market is going to rise; whereas the "bears" think the market is going to fall.

That's right, he's officially "bullish" on the Sydney property market. "Now is the time to buy," he says.

Back in 2002, this same agent was also bullish. One of his many bullish statements was at a speaking gig with one of Sydney's biggest spruiking outfits. This perennially bullish agent told investors that any property they bought would "double in 5 - 6 years".

Well, time's up, Mr Bullish Agent.

Before we listen to your current advice, let's look at your past advice.

Anyone who bought properties from that spruiking firm after hearing your bullish predictions (as many unfortunately did) would have lost a lot of money (again, as many unfortunately did).

Just one family alone, who bought two properties from your spruiking buddies, lost around $300,000 when the market tanked.

And don't try and deny what you said, Mr Bullish Agent, because it's all on video tape. You can read more about it (and yourself) when I release my new book, Stitched!, this year.

Meantime, the public urgently needs to know something about you and all your bullish buddies who are presently urging us all to rush out and buy property.

We need to know what you're doing.

Yes, you personally.

There's a question we need to ask you - and here it is: What are you personally doing with your investments? Are you buying property, just as you are urging everyone else to do so?

Or are you merely telling others to buy it and then collecting commissions from selling it??

You see, over the years, I have noticed something about property bulls. They tell people to buy real estate when all they are doing is selling real estate. They are seldom buying it themselves.

Almost everyone in Australia has now heard of Steve Keen. He's a professor of Economics and Finance at the University of Western Sydney.

Professor Keen has been widely quoted as saying that Australian property prices are going to crash. If the agents and spruikers are the big bulls, Professor Steve Keen is the grizzliest bear in town.

In October last year, Professor Keen told journalist Liz Hayes from 60 Minutes, "I think houses are going to go down by something [in] the order of 40 per cent."

He also made similar comments to Kerry O'Brien on the ABC's 7.30 Report, saying, "The only direction in the long-term for house prices is down."

Professor Keen's comments created more than alarm. They created abuse. He has been described as everything from an idiot to "the nutty professor". Very funny.

But rather than abusing Professor Keen (or, as is happening in some quarters, bullying and humiliating him) for his bearish views, why not apply the same test to him that we apply to the bulls.

What is Professor Keen doing in his personal financial life?

Well, to his great credit (and in what's surely a testament to the man's character), Professor Keen makes no secret of his personal finances. He's selling his home.

Now, that's commitment.

Oh, and just in case, you're wondering about Professor Keen's track record of predictions, I have checked him out. It's impressive.

A year ago (on February 9, 2008, to be precise), he said that interest rates would go "up for the next six months to a year" and then, afterwards, the rates would come "down like a brick."

That's almost exactly what's been happening.

Professor Steven Keen's prediction record is much better than the perennially bullish agent.

Indeed, "much better" doesn't do him justice. The Professor has been almost 100 per cent right. The "leading" bullish agent has been almost 100 per cent wrong.

So, by now, you may be asking what about me. What do I think?

The last time I was asked for my public prediction, I said that I wanted the public to remember two words when it came to the future of the finance and property markets in Australia. Those two words were "cataclysmic collapse".

I made that comment on ABC Radio on the afternoon of Tuesday December 18, 2007. And didn't I get some nasty messages afterwards. "God, you are a scare monger," said the first text (which I have kept on my phone).

Now, I don't consider myself a financial genius. I am certainly not in the league of Professor Steven Keen. But I do spend a lot of time reading and studying - in all sorts of subjects ranging from history to economics to philosophy.

And here's one of the most important things I have discovered…

Don't just listen to what people say, watch what they do. Their actions are more important than their words. Talk is so cheap.

Today I see a lot of agents and spruikers advising people to buy property. If I ask them if they themselves are buying property, they tell me to mind my own business or they abuse me.

That makes me suspicious. It makes me doubt their words.

And when I see agents and spruikers hurling abuse at Professor Keen, I look at the clients of the spruikers. I study what has happened to them.

I look at the people who listened to Mr Bullish Agent back in 2002. They took the advice to buy and they have recently sold. The $300,000 they have now lost equates to almost 35 per cent less than they paid at the peak of the boom.

And how much did Professor Keen predict that Australian property prices would fall from their peak? That's right "something in the order of 40 per cent". Whose laughing now?

Contrary to what the spruikers and agents say, I do not believe that 2009 is the best time to be investing in real estate. I don't believe there is a boom coming anytime soon.

Except of course, a boom in spruikers and those perennially bullish agents trying desperately to talk up the market.

Yes, we are certainly headed for a bull boom in 2009.

But, really, it should be called a boom in bull.

*******************

Footnote and Disclosure: In case you're wondering, I have already sold and am currently selling several investment properties, most of which I have held since the early to late 1990s. Back then it was a really good time to invest. The numbers were right. Today, the numbers are wrong. I may buy again, one day, when the numbers are right. You see, I trust numbers more than spruikers.