Regular readers know thePaepae.com isn’t a soapbox for my business pursuits. Even so, every now and then I’ll share something of what I’m doing for those who may have some slight interest.
In that spirit, here’s a 12 minute ‘sample’ clip of an audio programme on the outlook for the NZ property market and economy in the year ahead, featuring some genuinely experienced experts who it is my privilege to be friendly with: Olly Newland, Brendan O’Donovan and Mark Withers. (Recorded at a live MARKET UPDATE event in Auckland last month … introduced by lil ol’ me.)
Audio clip here:
More details here.
Brendan O’Donovan: “Recession every 5 1/2 years”, Um not sure about that one. sounds like creative research to me.
Erm, Craig: He says “so we have a recession on average every … ” doesn’t he?
No-one, least of all Brendan, (he’s joking!) ever trusts averages to fall out completely accurately … but the patterns he describes are instructive, in my view.
http://www.brainyquote.com/quotes/authors/y/yogi_berra_2.html
That’s what I mean by creative research. Common thing about statistics is inconsistency and truth stretching.
“truth stretching” ??
Craig, you are probably already aware of Disraeli’s famous ‘three kinds of lies’:
http://www.quotationspage.com/quote/487.html
If you will forgive my terrible gaucheness in quoting myself, my view of economists (love some, chuckle at others) has been recorded here, in my introduction to How to Survive and Prosper in a Falling Property Market…
Beware pseudo-science
Be wary of pseudo-academic discussion and analysis around
‘drivers’ and ‘influencers’ of the property cycle. Some amateur
economists and self-proclaimed property investment experts
are, sadly, ‘gums for hire’ — and their services are used as
bait by property promoters.
On the other hand, many genuinely qualified, professional
economists are fine people, but, with respect, they sometimes
appear to forget economics is a social science (not one of the
‘hard’ sciences like physics).
…. Some of the brains looking at the market are the best in the
business and can identify what’s been going on (hindsight)
in terms of investment fundamentals, taking into account
inflation, mortgage interest rates, rents received and tax rates.
From experience, however, many of their ‘predictions’ can
turn on a dime — the analysts change their forecasts with
great alacrity. And you can’t blame them for this. “When
the facts change, I change my mind. What do you do, sir?”
economist John Maynard Keynes once famously responded
to a charge of inconsistency.
In many cases, such commentary is little more than
hindsight — some of it practised by self-appointed experts. A
wise investor sees this as ‘noise’ and looks for real-world, specific
data for their specific market — ‘hard’ factors such as up-to-date
comparative sales prices and rents/leases being received.
…. There’s value in considering these [‘soft’] factors, their trends, and
being aware of market commentary, but it’s not just arithmetic.
Market sentiment and confidence — optimism and pessimism
— are the indicators we observe most closely.
It is difficult to improve on Olly Newland’s evaluation
from The Day the Bubble Bursts:
Gee, sorry if that reply felt like overkill!
No not at all was fine, however I would like too make an observation,
The ironic thing is people who claim to be experts in this area are all the same. (generalisation) Now you will claim no no my guy he knows what he’s talking about. I have listened to many in this field and the subject is so subjective. Any stat you can drum up and apply a theory too can be counter argued. e.g every 5 1/2 years on average
there is a recession, where we all know this is not strictly true, why because its subjective.
For me they are like Car Salesmen or Real Estate Agents which I have dealt with many, sure there are some more credible than others but they all have murky motives.
And of course the market is driven by emotion or as it was put optimism and pessimism. but its what drives this emotion I am interested in.
Craig, thanks for your (somewhat jaundiced?) comments.
“…they all have murky motives” ???
Crikey chum, I can’t even get to the bottom of my OWN motives most of the time!
On economists, hindsight is what they’re best at — explaining AFTER the facts… no question about that. Nevertheless, there can be considerable value in their a opinions — pattern recognition, I call it.
And sometime they’re just flat-out RIGHT. A property valuer whom I respect greatly, Rex Jensen, told me: ‘Ignore the economists at your peril’.
He ignored predictions of a commercial property slump following the 1987 sharemarket crash …
I listen to their predictions, bearing in mind Keynes, the arch-economist:
“When the facts change, I change my mind. What do you do, sir?”
That seems reasonable to me.
Cheers, – P