The Rent Review Specialist
A Refreshing Change
29/05/2014
Becoming, being a landlord will change you. In the driving seat, no longer a passenger, will shift you into a different state of mind. Investment does that to people: the feeling that others are paying you is …For further reading, please visit LandlordZone newsletter issue 24 - click here
Research or Gut Feeling
01/09/1984
In an increasingly complex economy, research is rapidly intruding upon the traditional province of the valuer: gut feeling. The mixing bowl, into which statistics, 'informed' opInIons, records of past transactions and trends are all technically blended, creates a science out of prediction. An objective appraisal from a source with influential but vested interests is a real test for objectivity.
Of Chartered Pension Fund cynicism, as long as they able to back Surveyors, Hugh Jenkins of the National Coal Board said " (they) will be continue to be regarded with far as their professional capabilities are concerned, as cling to gut feeling about growth prospects without being them up with fundamental research."
It is an integral feature of professionalism that the combination of knowledge and experience inevitably prejudices optimism, except in cases of absolute certainty. Research minimises risk so that while short term deals may be lost, the long term brings substantial reward. As the private investor generally operates in the short term, the limitations imposed by research contradict investment philosophy.
Will research avoid future problems? If you have to spend money, you are going to become increasingly frustrated if your adviser's research tells you not to buy, when all about you, other funds are clearly active. This does not make the advice wrong, as waiting is a very patient game. Gut-feeling is an essential ingredient in the evaluation of research. When I suggested, in the first issue of QC, that the modern concept of professionalism removes initiative, several advisers on motivation and corporate strategy agreed with me. It's what makes sense at the time and you can only draw conclusions from information if you are able to adopt a broad view. It is not the result of research which provides a span of information, but the questions that gut-feelings invite you to ask.
The danger with published research, particularly when originating from a source actively participating in the market, is that the media picks upon the conclusions, which make news, without giving sufficient attention to the data. The effect is to institutionalise generalisations. Loose mention that secondary shop rents have grown at 9% per annum over the past 5 years, combined with the prediction that rents will rise 7% per annum above inflation up to May 1985 and 3% per annum in real terms thereafter is inviting inexperienced investors to assume that it is applicable to all secondary areas. The effect of predictions of this nature will be to force secondary yields even further lower and many retailers, in secondary positions, will be unable to reconcile actual profitability with expectations of their landlords. If major firms intend to use research for public relations, they must also recognise the harm they can do to the relationship between landlord and tenant.
Of Chartered Pension Fund cynicism, as long as they able to back Surveyors, Hugh Jenkins of the National Coal Board said " (they) will be continue to be regarded with far as their professional capabilities are concerned, as cling to gut feeling about growth prospects without being them up with fundamental research."
It is an integral feature of professionalism that the combination of knowledge and experience inevitably prejudices optimism, except in cases of absolute certainty. Research minimises risk so that while short term deals may be lost, the long term brings substantial reward. As the private investor generally operates in the short term, the limitations imposed by research contradict investment philosophy.
Will research avoid future problems? If you have to spend money, you are going to become increasingly frustrated if your adviser's research tells you not to buy, when all about you, other funds are clearly active. This does not make the advice wrong, as waiting is a very patient game. Gut-feeling is an essential ingredient in the evaluation of research. When I suggested, in the first issue of QC, that the modern concept of professionalism removes initiative, several advisers on motivation and corporate strategy agreed with me. It's what makes sense at the time and you can only draw conclusions from information if you are able to adopt a broad view. It is not the result of research which provides a span of information, but the questions that gut-feelings invite you to ask.
The danger with published research, particularly when originating from a source actively participating in the market, is that the media picks upon the conclusions, which make news, without giving sufficient attention to the data. The effect is to institutionalise generalisations. Loose mention that secondary shop rents have grown at 9% per annum over the past 5 years, combined with the prediction that rents will rise 7% per annum above inflation up to May 1985 and 3% per annum in real terms thereafter is inviting inexperienced investors to assume that it is applicable to all secondary areas. The effect of predictions of this nature will be to force secondary yields even further lower and many retailers, in secondary positions, will be unable to reconcile actual profitability with expectations of their landlords. If major firms intend to use research for public relations, they must also recognise the harm they can do to the relationship between landlord and tenant.