I'm Jeremy Sheepard. >> And I'm Daniel. >> We use data to expose deceitful property experts and their marketing BS. >> This is the expert busting series. >> Welcome to episode 12 of the expert busting series. Long-term growth, why shortterm wins matter more.
Let's jump in Jez. >> Yeah. So, just about every property investment advisor is going to tell you the property is a long-term investment. But the fastest way to financial freedom is actually through a series of short-term investments. And this is just one of the things that artificial intelligence has brought to this industry. In this episode, I'm going to show you the proof of why a short-term focus is better.
>> All righty. >> First of all, a pop quiz. >> Pop quiz. What's a pop quiz? >> All right. Have a look at this chart.
>> Mhm. [snorts] I'll give you a minute and then I'll give you the question. So first of all, let me just explain this chart. So it shows the growth of two property markets. A that's the turquoise curve and B, we'll call it the uh purple curve. So they both start off at 500,000 at year zero and they grow over the next 25 years.
Market A, that's the turquoise curve, starts off well, growing quickly by 50% in the first 5 years, but then it's flat and does not grow at all for the remaining 20 years. Marker B, on the other hand, the purple curve, it's the opposite. It starts off flat for the first 5 years, but then over the next 20 years, grows by 300% from 500,000 to 2 mill. All right, so here's the question. If you had to choose to buy in either market A or market B and if you knew the future growth for both excuse me for both markets will play out according to this chart. Which market is the most profitable to buy in?
Would you pick market A kicks off great for the first five years but then flat for the next 20? or would you buy market B, the purple curve that's flat for the first 5 years and then has excellent growth over the next 20. So, it's a hypothetical situation. You're unlikely to find these kind of 25 year profiles um in the real world, but you don't know into the future how how this growth is going to play out. But how which would you pick? >> Well, a lot of investors what they'll do is they'll get that uplift.
That's what you should be looking for right away. Uplift up front. So I would be looking at market A first and then around 5 years if I've got capacity which I should by then I would release some equity and then jump into another market and jump into market B. So I've got both properties. But that's what happens in reality today a lot of the time. Um, if you're just looking at this, you'd have to say just market B because it outperforms if I had to pick one over that 25 year period.
No. >> Well, yeah, you got it right with your first answer. >> Or another option is if you want to be aggressive, you sell that property and then you move all that money to that secondary market. So, if you know market's flatlined, no. >> Yeah. Damo didn't know the answer to this question before, but he nailed it.
He nailed it. Yeah. So the best option if you go to the next slide. >> I hope I got it right because I'd be in question then. >> Yeah. So market A is the best option because after 5 years you'd sell out of market A >> and buy into market B with more funds than you would if you had started off in market B at year zero.
And that's shown with the new curve on the chart, that orange uh curve there. So it starts at year five. The turquoise curve ends at year five to mark the sale of the property um in market A. >> And yeah, that orange curve starts off lower than where the turquoise curve finished at year five. And that's because there are costs to selling a property such as the agents commission um and of course the uh CGT on the the capital gains that you've got there. Uh, and that's also why the orange curve is is higher than the purple curve because you've you don't lose everything.
You've still got some gains there. You are paying CGT and you're paying an agent there commission. And then to buy again in in market B, you've got to pay stamp duty. And there's legal fees for both the exit and entry. But um you in the end have more money to invest in market B at year five uh than the investor who put all their money into market B at year zero. And now it doesn't matter what growth market B has.
The investor who started in A and then traded property for B is going to outperform the investor who just held for the long term. But uh trading property like this does come with some problems as shown on the next slide. So there are two main problems with the approach of trading property and the first is the cost involved in selling your property and buying the replacement. So capital gains tax that's the big kicker. Um the agents commission it's not too shabby either. I mean there's you know 2% of your the value of your property you're going to lose there.
>> But even a buyers agents too buyers. >> Yeah. That's when you're purchasing. Yeah. So there's um there might be other costs like cleaning up before you sell. But uh then when you've got those sale proceeds, where are you going to take them?
Uh the replacement property to reenter the market. There's costs associated there. Uh stamp duty, more legal fees. your buyer's agent fee, maybe building a pair inspections, um maybe you want to spend some money on some really helpful data, too. Uh yeah, just to know where to buy. Okay, so the other problem is forecasting growth.
So the example I just showed you assumes that we uh we know the future, but of course that's that's not true. Uh we do have some confidence about forecasting a growth into the future. It's not perfect. It's not precise. Um but we know more now than what we did say 10 years ago and the technology is improving uh every year. So uh I believe the trading property will eventually become uh common place in this new age in this artificial intelligence age.
>> I think it really depends on the investor right like what's their time horizon. I do understand you buy and hold because it's less hassle. >> You don't have to inject as much cuz the biggest thing with buying, selling, and buying is your time up front. Like so will take up a lot of your time um to push forward. But I guess where I'm going with this is you also need to understand the growth forecasting is a big one because you don't want to be selling a property that's still potentially moving in capital growth. Maybe if it's flatlined.
So maybe an example is like Hobart might have stopped growing for maybe the last 6 to 12 months. You looked at the data, there's no real capacity where you see capital growth happening anytime soon. And then you might go, "Look, now I'm going to sell. I've got confidence that this market's not going to grow anymore." And then you may pivot and go to another market. Or on the flip side, you could just keep buying and holding. But then when you hit your lending capacity, that's why it's really important to keep reviewing your property portfolio, I believe.
>> Yeah. Yeah. So >> yeah so um yeah just one really important point to note about this um comparison between these two markets about their growth forecast is on the next slide. >> So this is what um makes it all possible. So the chances of market A uh that was the turquoise curve outperforming market B which is purple by 50% over those 5 years that is actually far more likely than market B outperforming market A by 300% over the next 20 years. So putting it another way long-term outperformance is highly unlikely.
Short-term outperformance is far more likely. And that's the whole reason why uh trading is actually a superior strategy. Short-term growth differences are extraordinary uh whereas long-term growth differences are quite ordinary. Okay. And the best way if you go to the next slide please D. The best way I found to explain why that phenomenon happens is through an analogy that I call the apples and oranges analogy.
And by the way, there's another uh episode in this series called Apples and Oranges, >> which is EBS11. >> Thank you. >> Yes. >> Yeah. Anyway, I'll just quickly summarize uh that episode um the key points if you're happy to take my word for it rather than review the data that's shown in that episode. Okay.
So if a suburb has experienced above average growth over a long period of time, the effect of compounding makes that suburb absurdly expensive compared to similar alternatives and that of course subdues demand for the expensive suburb, increases demand for the cheaper alternatives and they catch up. So everything tends to balance out. Um and this is a real phenomenon measured in the data. there is a tendency for all property markets over the long term to grow at roughly the same rate. Uh and of course as I mentioned in episode 11 I showed historical data of how hard it is to outperform the averages over the long term. Um and uh yeah I showed just how varied in that episode I show how varied growth can be over a short term but how similar it is over a long term.
So in other words, it's easier to outperform by a cracking margin over 5 years than it is to outperform by a cracking margin over 20 years. >> I think in that EBS 11, it was more the fact that was it the oranges that got expensive or the apples? >> Yeah, the oranges were Yeah. apples. >> So the idea is that like if oranges for one orange it's like what $40 and apples 50 cents, which one are you going to choose? >> Yeah.
Yeah, that's ridiculous. >> And then what'll happen is that'll increase the supply of oranges eventually. increase the demand for the cheaper alternatives. That's right. Yeah. Yeah.
Yes. And then obviously maybe that the prices will sort of potentially come back out the growth balance out. Correct. >> Yeah. And you've got this tremendous balancing out act that's performing across the Australian property market. >> And as investors, like I said, look, I'm not opposed to units.
If I just had a choice, it would always be land with a house on there. But there are certain unit markets that do perform really well in those sort of older complexes um where that land content that land to asset ratio is more in your favor. But once you start seeing all these highrises go up, that's just supply. So think of it think of that. >> Yeah. It's impossible to protect against supply with with units.
Very difficult. >> All right. So, if you want radically superior capital growth, >> uh you're only going to get it over the short term because over the long term, the maths is simply stacked against you. Uh and probability says you're barking up the wrong tree if you try to pick long-term winners. So, the longer your focus is, the more likely you're going to have the same growth as everyone else. You're not going to be able to get ahead.
But over the short term, uh the difference between winners and losers can be phenomenal. Like that example, that hypothetical 50% growth over five years versus something like 5% um over the long term. You know, that difference is just just not going to happen. U that's a 10 tfold difference you're going to see is is quite simple over 5 years. See a 10-fold difference. You can you can get that, but you're never going to get anywhere near a 10-fold difference over 20 years.
Just just won't happen. Never has. So, the point here is that if you want to outperform uh the averages, if you you want to get ahead, then you need to have a short-term focus uh to increase your chances because the ads are the odds are simply stacked against you from accomplishing that over the long term because of this phenomenon, this tendency for all property markets to grow at the same rate. And just to be clear, if you're looking to engage a buyer agency service or do a property course, whatever it might be, and you hear a professional say, long-term, challenge that. Challenge the long-term analogy because that's just an excuse in my books. Like, I think if you're not outperforming, I'd say the national average after 18 months after purchase, then questions need to be asked.
So always ask that question to your advisor or whoever you're talking to that >> why do you keep saying long-term challenge it because you hear it all the time >> it's an excuse >> and the other thing to maybe also flipping like buying get that capital growth selling you also need to think maybe where you're going to be in 3 years time or 5 years because I've dealt with clients where they're like I want to reduce my workload I want to start a family so in those instances it's going to be very hard to sell at that time and then go buy again. So, you just don't go sell the property right away. You need to have a strategy in place. Talk to a good mortgage broker. So, yeah, things just to keep in mind, bring your personal circumstances into it. I've had clients that they had a goal of, you know, we by 45, we want to cut back work completely or or 50 even.
Nice. >> But just accumulate and then start maybe selling off some properties while they're potentially not working or they're traveling, whatever it might be. So, yeah, just a bit of a value ad there. Yeah. All right. So, in the next slide, um there's another excellent benefit to having this short-term kind of focus.
>> You get to learn from your mistakes. So, when you make a mistake at picking a short-term winner, you know you've made the mistake within about like the 18 months that you mentioned. And you can learn from your mistake and adjust uh whatever research you did, do a better job next time. so that every few years you're accumulating some experience. In other words, you get feedback more frequently so you have time to improve. But how can you do that for a long-term growth strategy?
Uh if if 15 years is enough to finally accept h looks like I made a mistake. Well, how do you get multiple learning experiences in your lifetime if you got to wait 15 years uh before you can accept that you made a mistake and uh you know it's not not much help is it if someone's nearing retirement uh they got to wait 15 years before it'll come good. So yeah, try try telling an investor that um that's that wants to enter to retirement or is nearing retirement. Um yeah, long term it'll it'll eventually come good once you're dead and buried. >> The it's starting early, right? But it's also the challenge with property is that if you get it wrong, it can hurt.
Like buying a property and holding it 8 n years and not getting that capital growth can really hold you back and it can even deter a lot of investors from go getting back into property. So, for example, with stocks, it's easy. You can spend maybe a couple hundred dollars, made a mistake, you can diversify quite heavily, and it doesn't hurt as much. But with property, if you do get it wrong, and I urge people, like the one thing I always say with our suburb data research platform, if you're going to just take one thing from that website, go to market metrics, type in the suburb, if you've got an existing property, as an example, in I don't know, just pick a a suburb. Let's say Wllingong, somewhere in Wulingong. Let's just say Wuna as an example, like a suburb.
you type in the DSR3 like the market metrics look for DSR3 and just seeing has the growth slowed down has it increased is there potential for growth not looking at from an owner occupiers lens but an investment point of view >> so because like when should I sell Jeremy that would be my question because it's a common question that you do get asked >> yeah well there's the answer is quite complicated um and yeah we'll have to have another episode on that >> but off the cuff It's more about like think about maybe Hobart was that 2018 >> 2017 the end of the run >> the start of the run >> the start of the run was 2017 >> so you had like Melbourne then you had like Hobart and then after that >> well it was Sydney >> Sydney >> Sydney 2012 2017 then Hobart >> but Melbourne had sort of pockets it was still picking up through that period but then Hobart went through that massive run and then after that it was Brisbane so >> it's like one of those markets where if they slow down in Sydney for example or or Hobart, you cashed out of that and then purchased again. But again, re-entry time, all these costs do add up and but it's it definitely there's something to say that an active strategy can definitely work if your goal is to retire ASAP. And you could even >> it's a really good side hustle when you do think about it. >> I know that flipping is a big thing at the moment. So buying properties that are unrenovated, I think there's a lot of value in in that. Buying properties that are run down cuz you've got less eyes on it.
You go in there, fix it up. Why not? >> Yeah. Yeah. All right. Uh if you go to the next slide.
Um so, uh this is one of the phenomenons about um compounding. So, there's quite a lot of long-term outperformers that aren't really long-term outperformers. Many had uh exceptional growth over the short term recently. So this is again coming back to it's not about long-term outperformance. It's highly unlikely. It's all about short-term.
So the suburb may have been an underperformer for the first 25 years of its say last 30 years history, but it exploded over the last 5 years. And that's what makes it look like it was a great long-term outperformer. Uh but it's really just been um short-term outperformance. So, in other words, it's not really a long-term outperformer. It's only a short-term outperformer that looks like it's outperformed over 30 years because of the exceptional growth period that was recent. >> An example that I can think of, I remember I had a client maybe around 2018, I'm just going my memory is vague at the moment.
It's wild out. He had three properties in Perth and they were stagnant. Some of them had negative growth. So through that period he could have gone into other markets because he was so concentrated on one market and I remember he said to me Damian I thought like after seven years the property should double because he had them for that long but now he obviously would have done really well. So where you talk about that backend growth if he kept all those properties he would have done okay which I think he might have sold one back at that time because he was buying his owner occupier but it was just interesting that he just was so concentrated in that that one pocket. Yeah, just at the wrong time.
>> And one thing to mention back to your point Jeremy is like you've made these mistakes. So a little bit about your story like when you started you didn't have any data like you obviously wanted to make a change in your life and property was that vehicle for you? So was your first one a mistake that you purchased? >> Uh I I made mistakes with the first one but the first purchase was was not a mistake. >> Yes. I coincidentally uh purchased a property in uh 2002, which is where there was there was a nationwide boom at that time.
>> But uh yeah, the the seller of that property uh said, "I've got a tenant in another property. You can hit the ground running. Do you want this tenant in your property?" >> And I thought, "Oh, that sounds great." Um, and they were going to move into the granny flat out the back whilst I was renovating the main house so I could get some cash flow whilst I'm doing the rena. Fantastic. Except they moved in uh didn't pay anything and I couldn't get rid of them. [laughter] >> So that that that landlord who sold me the property uh also led me down the garden path with the tenant.
He was getting rid of a problem tenant. >> But before like you're at a state where you didn't have a lot of cash on hand. So when you got started, you obviously had your your income and it was challenging back then for you. So when you started, you actually did a joint venture, didn't you? >> Uh the first joint venture wasn't until later. I already had a property more than a dozen.
I think I had 16 properties before I did my first joint venture. >> But that's you going pretty um excessive though. Like you were trying to get >> Yeah, I was pushing too hard. >> Lending and then you even thinking about going into >> I bought in New Zealand. I had put two deposits down on two properties in the USA. >> Yeah.
>> My next question is going to be why so aggressive. >> Yeah. I was just playing catchup because I for most of my life at that point uh I well I was at a point in my life where all my friends had um uh you know they were they were married, had a car, maybe a house, and I had nothing. And I was living at home with my parents. I'd squandered all all that I'd earned. and I was playing catch-up >> and uh because of Yeah.
Yeah. Anyway, it was just it was catchup. So, I was aggressive. Too aggressive. Yeah. >> And were you selling a lot through that period?
I know now you've sort of sold off a fair bit, but back then we >> Well, yeah, for the first uh seven or eight years, I was just accumulate, accumulate accumulate. >> Uh now I'm wiser. I know that you can actually uh yeah, trade property. So it um yeah, now I'm a big believer in in trading, but but back then the experts of the day said buy and never sell. And I think that was actually good advice back then because how do you know where you're going to move your equity is going to be any better than where it currently is. And that's because they could not forecast capital growth at least to any reasonable degree of accuracy whereas we can now.
>> I think that's the big thing now. you can definitely increase the probability in going into a market that is seeing capital growth and even if it's had 10 or 20% growth in the you know the 6 or 12 months. It's still not a bad market to invest in if all the if the algorithm is pointing to that market still because a lot of people think I've missed out on all that growth. But if you look at it from a 10-year perspective or longer and might be only still like lagging six or seven% peranom growth still. So even though it's had a big uplift early on, it still doesn't mean it's a bad market to invest in. >> You you don't know if the boom is going to be for 3 years or six.
>> You you mostly start seeing it flat out now. One, the growth rate will slow down is most probably one. But then you'll see it flatten out. That's when you sort of go, okay, maybe now is the best time to get out. >> And it's I wonder like what is that sweet spot? Is it three months?
Is it six months >> of the period of time of the period? Well, I just look at the DSR when it comes back to a balanced score. That's probably market speaking. Yeah. >> All right. So, this chart here uh is showing some of this uh this nature of the compounding.
Uh so this is a 45 year uh growth cumulative growth chart for houses in Zilmre which is in Brisbane um versus uh the national growth rate. So you can see that Zilmir houses finish up with about 500% more growth than the rest of the nation. M >> but if you look at the path taken to get there >> you will notice that two years ago they had the same growth. So for 43 of those 45 years they were neck andneck and this is seen very frequently in these sorts of charts these um capital growth race charts that the lead changes multiple times over a long enough period of the history. Uh and there's another example in the next chart. Sorry.
Interesting to see from what 2011 to about it started playing real catchup around that Brisbane boom, right? Around that 2020. But you would say that in the national growth rate was sort of in front for a fair while, right? Since like the early 2000s. >> Yeah, that's right. Yeah.
But I think it changes. I mean, if it's hard to tell in the bottom left, but it looks like there's been more than half a dozen times in that 45 year history where the lead has changed. Now that national growth rate is that just for houses or houses and units. So we're just looking at houses per. >> Yeah. And in fact it's not exactly the national growth rate.
It's the growth of the significant urban areas which is where most people live. So it's excluding all those extremely remote uh regional suburbs where you might only have a dozen houses. >> Okay. So it's like limited to a certain amount of dwellings in the data. >> Yeah. Yeah.
>> Okay. Okay. And then we've got Mayfield in New South Wales. >> Yeah. So, uh, in this case, Mayfield has been out in front for the last decade, not just the last two years like with Zilmir. But you can still see plenty of times in the past when the two markets, their growth curves converged >> and the major divergence has been relatively recent.
And the key point here is that quite often the best long-term outperformers are not long-term outperformers at all. They're just short-term outperformers that had a good um run over the short term recently. So, a lot of people, they don't look at these charts. They will look at the start and the end value, and they'll just look at the top right hand, and they'll say, "Oh, Mayfield is a better uh uh long-term outperformer." uh over the long term, over the last 45 years, here's how much it's beat the national growth rate by, but it's just recently. >> Why doesn't anyone show these graphs? Question.
>> Well, I guess it might take a little bit of effort to plot the charts. Um sometimes people don't have data dating back this far. Uh it does certainly take effort to do this kind of analysis. >> I think that's exactly what it is. It's a lot of effort. So why go to this effort when you can just mark it?
is my time is my time better off just spent marketing and getting in front of as many people's faces and just coming up with excuses or show the actual data. And it's interesting if you have a look early on around that 86 87 88. I think there's actually a pretty big gap there. Even though it's really hard to see because we're looking at this >> the long-term percentage growth difference, but early on if you knew, you would have maybe >> like jumped out of Mayfield early when you got that capital growth and then maybe invested in another pocket. But like there's something definitely to say cuz like I said before, >> your hands get tight after you buy that first, second, even like that first property. You might have hit your capacity.
If you're renting in Sydney, you're struggling. you might buy something at, let's say, 4 500,000 and you're capped out. It's really hard to keep accumulating. And if you do want to try and um control your wealth a bit more, you can be active. And that's why I think a lot of people do these courses where they might um you know do some flipping, which I'm not against, >> buy something. So that's a being active and it's just a side hustle really at the end of the day.
>> Yeah. Yeah. But what you were saying before about uh you make a mistake in real estate, it it hurts. like with a small parcel of shares. This is big dollars. >> Well, the great thing is you want to go into a market that's seeing capital growth.
That's number one. So, you want to put as much in your favor. The other thing you want to do is if you can add that renovation on top of it, it's fantastic. And then with that renovation, you might have some depreciation that does help with cash flow a little bit. So, you're actually adding value to the asset. You're buying it for a little bit cheaper.
So, you're paying less stamp duty. So, again, just put more things in your favor wherever you can. >> Yeah. But again requires a bit more time and work. So it just depends on how much value you put towards that. >> Yeah.
So uh long-term growth is as you've seen from those charts, this is a stereotypical chart. Long-term growth made up of uh these little spurts of growth >> followed by flat boring bits uh before it surges again. And that repeating cycle allows other markets to catch up, sometimes overtake. Uh, and I don't think I've ever seen a single market consistently outperform over a long term like long-term growth like say 30 30 or more years. So those previous two charts uh you pick any two markets you like and compare them in a capital growth race, you're going to see the lead change lead change and that cycle repeat. the two curves diverge, that is they become further apart and then they converge and that cycle repeats again and again and you would have to look at a 100 charts to find a case uh where it doesn't happen.
It is so rare. It's really um peculiar and the longer the growth cycle you're looking at, longer the growth period you're looking at, the more likely you're going to see this this cycle uh repeat. So there's going to be eras when a market outperforms and there are going to be eras when that same market lags behind. >> So I guess at the time of recording and the back end of sort of 2025 can you recall like I know in recent times you've had like for example like Brisbane and then you've had Perth move quite significantly but at the moment everywhere is sort of picking up so it's just a matter of going into the market that's going to grow the most. So if you're buying now and you've got one shot, you could go to like one of the major cities for example and take that 5 to 8 year time horizon or you might just want to have that threeyear time horizon. So it just depends.
Are you active and passive? But can you recall a time where the market's been like this like a nationalwide surge? >> Uh well right now I don't think it's as as big a boom as we had in co uh that kicked off in 2020. Um and then there was uh well 2002 when I first started there was a that was nationwide. Didn't matter where you picked >> but co for example Melbourne got hit hard so that market was sort of lagging and going backwards. >> It still had pretty good capital growth by long-term standards.
>> Long term. Yeah. But I mean over like a a 12- month period like where all the markets are where they're growing all at the same time if that makes sense. We'd have to go back and check. probably not everywhere like every significant urban area for example, >> but um there might have been some occasions where like every state capital was having doubledigit growth. I'd have to have a look.
>> All right, >> move on. So we got so less risk of technology [clears throat] change. >> So here's another reason why a short-term focus is a good idea. We have some idea of what the short-term future holds, but no idea of what the long term holds. So, what impact will driverless cars have on property markets? What impact will the next generation of remote access technology have?
There's already been a big push towards working from home. Co, for example, triggered a lot of that. >> Uh they used to call it um telecommuting before CO. Now it's now it's got a different name, but it's the same thing. Work from home. Um, what impact will magnetic levitation vacuum tubes have on uh on property markets?
You don't know what they are, do you? >> No. But >> no, >> you do obviously. You've been watching some YouTube videos. >> Yeah. Yeah.
I can remember them in uh what was that show? Towards 2000 and then after that it was called Beyond 2000s. All about technology. >> You lost me there, buddy. Yeah. Yeah.
So, um there could be some technology of the future that radically alters the way we live and that can happen within the next 20 years. So, technology that nobody has even contemplated yet, how do we know the property markets that we picked for long-term growth won't be tragically affected? And if you are relying on long-term growth, you're at a greater risk of a change in technology uh affecting your plans. And another thing that we haven't put on this slide, I realize um climate change. Will tree change markets become a higher risk of bushfire due to, you know, climate change or will coastal properties become riskier due to either rising ocean levels and um degradation of the coastline or higher incidence of cyclones? I don't know.
Um, but the good thing about investing for the short term is that because the exit horizon is so much closer, you're less likely to encounter significant negative changes. So, a short-term focus makes an investor more agile >> uh to to whatever the new world brings. Um, that could radically spoil the prospects of a long-term investor. And I think again down to your risk level. If you just want to buy and hold one property, there's nothing wrong with that if you're comfortable with that. But I think it's just [clears throat] more about being aware that if you want to be active that you can.
So that's what we're trying to challenge here today is that just don't take the excuse of just buy long-term, hold, that's it. It's a matter of take control of your wealth because no one else will. >> Yeah. Yeah. I'm not saying that long-term is is a terrible thing. M uh it's just that you will hear advice from a lot of um experts out there uh and they fall back on this excuse uh long term it will outperform but um they probably haven't been in the industry for what's long enough to be uh long term and and if they have I would recommend you ask them show me all the places you were picking >> 25 years ago and then we can analyze those and see whether they did outperform longterm but there is this tendency uh over the long term for all markets to grow at the same rate.
All we're saying is if you want to outperform, you're more than likely going to have to aim for the short term >> because if you've got like one decent investment property that even grows with the national average and your superanuation fund, your retirement is looking pretty good up until the age of like 60. >> Yeah. Yeah. As >> for a passive income rule of thumb. >> Yeah. I think that um you know when we used to have um property magazines, >> when did that finish up?
[laughter] 20 I'm going to have a guess here. 20 17 that's a guess. So anyone in the comments let me know when the last property magazine or we'll send you a book or something. We'll send you >> my hair was going gray before magazine stopped print. >> You used to feature in those, didn't you? >> I used to write for your investment property magazine for four years.
Yeah. Had a regular. But the thing is they would ask an expert investor, a successful investor, >> what would you do differently? And some of them would be um uh rena flippers, some would be developers or subdividers or just buy and hold or whatever. But they all had one thing in common. They would say I I would have started sooner.
>> So yeah, time uh covers over a multitude of ineptitude. All right, my last point. If you go to the next slide, uh for a short-term focus, uh the application of data science to short-term forecasting, it has made uh forecasting um these outperforming markets over the short term a lot easier. But as soon as we try and stretch that to beyond say 5 years, it becomes terribly unreliable. M so you've got support from known technology right now to pick out performers over the short term which reduces your investment risk and then you've got unknown technology of the future that increases the risk of failure over the long term. So again a focus on the short term uh is is probably a better strategy.
So, in summary, yeah, focus on short-term growth. Um, it allows investors to capitalize on a number of things that I've listed here. Most growth happens in short bursts. The odds are against you picking out performers over the long term because of that tendency for all markets to grow at the same rate. Uh, the stunning gains happen over the short term, not so much over the long term. you can learn quickly from your mistakes and technology is on your side, not working against you.
Now, before we sign off, I've got a bonus chart. >> All right, so remember the chart that I started with uh with market A and market B. >> Yes. >> And I said that you'd be better off buying uh in the superior short-term market and then selling and buying elsewhere. Mhm. >> I said, "You sell out of market A, buy in market B after 5 years, and you'll be better off compared to buying and holding in market B for the long term." Okay.
But why buy in market B at year five? Why not buy in another short-term outperformer that is another A type market that will have rapid growth and then flatten out? And this is what the outperformance looks like when you repeat that process of trading property. even above average long-term growth cannot keep pace with this approach of short-term property investing. So, trading property is going to become commonplace for investors uh in this new data age. The sit tight, buy and hold strategy only makes sense if you have no idea how to forecast future capital growth.
And that's why so many fake experts will tell you to buy and hold. and staunch buy and hold advice is a clear sign to me of an inability to forecast capital growth. >> Well, a lot of as you I know you've mentioned plenty of times is this old school buyers agent mentality and I've seen it a lot too just buying eastern suburbs of Sydney you'll do fine buy a unit there that's it where's their BA office located in the same postcode. So they're the things you need to just be aware of. really need to again I would say go to market metrics check the algorithm look at you know the forecasting moving forward if you look at the local government area or the SUA give yourself confidence before diving in and question um any BA service I think that's really really important ask questions because you're spending a lot of money >> and it is potentially your wealth growth but another thing here is and I don't know how many investors would do it but it is a strategy let's say you're flexible you work from home. You could buy into one of these markets, move in, stay there, get that capital growth, maybe sell it, go into another market.
Let's say you go to Hobart and then you go to Brisbane. If you can move around, you can avoid capital gain. I don't condone that atto. Don't condone that at all. But it's just it is a strategy where if you are flexible and you can move around a little bit, you could potentially um do that. Obviously, if you I think you're doing it like all the time.
Again, you have to talk to your tax accountant. It could be seen as a business you like properly trading but >> it could be a way >> another option is the SMSF >> self yeah selfmanaged super fun >> much lower capital gains taxes there >> the only challenge there is you don't get access to that till 60 so that's the big challenge but um is that everything Jeremy >> yeah yeah but uh it is a big topic this this whole thing about short-term investing and uh if you want more content on it our next episode number 13 uh that's what's the title for that one, Damian. Oh, yeah. So, that's timing versus time in. >> That's right. >> That's that's coming up next.
And we we deal with this issue of trading property uh then as well. >> Yeah. And I hope you've got some value. I think the these [music] graphs are fantastic because you can sort of see what we're actually talking about. I think it's nicely simplified. If anyone's got any questions, you can send us um a note or [music] just in the comments section.
But that wraps up episode 12 of the expert busting series. Join us next [music] time for episode 13. Why timing is better than time in [music] the market. Thanks for watching.