My colleague Phil Anderson, editor of Cycles, Trends and Forecasts, is regarded as the guru of the real estate price cycle.
The US government first began to sell land to the public in the year 1800.
Ever since, land-price booms and busts have occurred in a regular cycle.
Phil explains how each real estate cycle panned out in his book, The Secret Life of Real Estate, which you can find on Amazon.
In Cycles, Trends and Forecasts, Phil regularly touches on many recurring themes.
One is the invention of new technology.
Following every land-price-induced economic collapse in the US over the past 217 years, markets recovered. The invention of some form of new technology carried markets to new heights in a regular fashion.
Another theme Phil focuses on is China’s meteoric rise to economic power.
The continued growth of China’s economy baffles some experts. They point to danger signs of a bubble and warn people to get out. Some go further and advise to go short on China.
Yet the growth continues. It shows no meaningful sign of slowing down.
However, it now seems the technology and China themes will go hand in hand.
For many years, most of the breakthroughs in technology came from the US.
You’ve heard the acronym FAANG, which describes the biggest tech stocks in the market: Facebook, Apple, Amazon, Netflix and Google. Some substitute Microsoft for Netflix, terming it FAAMG.
Now there’s another acronym — BAT — for Chinese internet giants Baidu, Alibaba and Tencent. These companies are leading the way in China’s push to become a major player in artificial intelligence.
Hundreds of start-ups are also penetrating the industry. And they’re backed by direction and funding from the Chinese government.
In May 2017, China’s State Council published a plan with six specific areas of support for AI development:
- Capital funding;
- System standardisation;
- IP protection;
- Development of human resources;
- International cooperation; and
- Arrangements to implement AI.
There’s no prize for imagination in the plan’s title: A Next Generation Artificial Intelligence Development Plan.
The council said the country is set to upgrade its economy. It sees AI as a main driving force. The goal is to become a global innovation centre in the field by 2030.
Artificial Intelligence is here and now
Artificial intelligence is by no means a new concept. The term was first coined nearly 60 years ago. But it continues to give the impression that it’s something which will happen in the future.
It’s kind of strange. As soon as an AI application achieves commercial success, it stops being seen as AI. Instead, it’s considered to be a really clever piece of code or smart device.
Today it is spoken about much more often. This is because we’re on the cusp of a period of much more rapid growth in the use and application of artificial intelligence.
Thanks to the smartphone revolution, innovation and economies of scale have grown at an unprecedented pace. Computing power has become much cheaper and more powerful.
So too have devices like sensors, cameras, lasers and radars. This results in more connected devices. In turn, there’s a lot more data available for analysis to drive further development.
China wants to be at the forefront of this rapid growth.
It’s already made a step in the right direction. Here’s a chart of the country of origin for journal articles mentioning ‘deep learning’ or ‘deep neural network’:
Source: US National Science and Technology Council
[Click to enlarge]
The Chinese government has published a bold plan. It has specific policies to guide the private sector.
The private sector is well established to take advantage. Internet giants Baidu, Alibaba and Tencent have a history of snapping up talent.
All this is happening in a country with a huge population — one that has very high internet adoption rates.
In order to solve the puzzle of when events like these will be prominent in the future, Phil came up with the Grand Cycle Theory.
Phil has summed it up in a picture that’s worth a thousand words:
Source: Cycles, Trends and Forecasts
[Click to enlarge]
Phil has used his theory to accurately predict market moves time and time again.
It flies in the face of conventional wisdom on Collins Street and Wall Street. But imagine the benefit of having such foresight.
Back in 2004, Phil warned of the ‘winner’s curse’ phase that was about to unfold. This proved to be the final couple of years into the peak of the cycle.
History proves this foresight was remarkable.
Lead Researcher, Cycles, Trends and Forecasts