How would you like to know what the property values are going to be at the end of the year?
Would you like me to forecast what property values are going to be in two to three years’ time, or which areas will have the best growth?
Of course! Everyone likes forecasts.
We want certainty. That’s especially true in today’s market with things are so uncertain.
But let me bust a myth about forecasts. The myth is that forecasts work.
No they don’t!
Today, I’ll have a chat with Pete Wargent about forecasts, why they don’t work and what you can do to have a better idea about what’s to come.
At the end of the conversation, you’ll have a better understanding of what you should be looking for instead of forecasts.
And I’ll also share a mindset moment about personal development.
What’s a better way of preparing for the future?
The problem with forecasts is the same problem that makes chess such a difficult game, or that makes it so difficult to win the lottery.
There are just too many variables.
Those variables are impossible to predict and therefore make it impossible to forecast real estate markets accurately.
A better option is to think in terms of probability.
You want to be approximately right and avoid being completely wrong.
It’s important to question the models and forecasts.
If they don’t ask and answer the right questions, they won’t provide accurate information.
When evaluating a forecast take your gut instincts into account.
You can’t rely on this completely, but your instincts may be trying to relay important information.
You should also consider the track record of the forecaster, and the model that they’re using.
Remember, asking the right questions is essential.
Ways to prepare for uncertainty:
- Be somewhat flexible – avoid being narrow-minded.
- Understand and limit your downside.
- Seek unlimited upside – if you pick high-quality assets in the right areas, over the long run, the compound growth has seemingly limitless upside
- Mingle – Great things happen when you meet people face to face
Links and Resources:
Join us at Wealth Retreat 2020 in October –find out more here
Pete Wargent’s new book Low Rates High Returns
Some of our favourite quotes from the show:
“Some forecasters just keep getting it wrong, but they keep kicking the can down the road.” – Michael Yardney
“I think the aim is to just do better than average because average isn’t very good.” – Michael Yardney
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