The Property X Factor
Posted by Mark on 29th Sep 2009
John Maynard Keynes likened making investment decisions to the difficulty of deciding who will win a beauty contest. In this circumstance beauty is not in the eye of the beholder, rather,the determination of what is beautiful will be decided by the majority decision of others; the wisdom of the crowd will be the arbiter.
Simon Cowell's decisions as a judge in the X Factor are much the same, his personal taste, for what it is worth and judging by his clothes may not be that good, is secondary, it is subsumed into his sublime ear for what he can sell to the masses.
Morgan and I are presented with a similar dilemma in the current market. The "market" already seems to be driving the price of some assets to levels that we frankly do not believe can be supported by fundamentals. We have deliberately shunned looking at core buildings in The City and West End, but who are we to judge? Perhaps our investment strategy should be to join in the party, with an eye for being able to bale out to a "greater fool" before the Environmental Health Officer comes around to complain about the noise.
An alternative is to spot the next trend before the market, something that Mr Cowell has occasionally done, but is repeatedly achieved by Madonna.
Money can be made out of the most ordinary opportunities.
What we'll be looking for is the next Robson and Jerome.
EDIT: I have subsequently realised that anyone under 30 or American may not quite get this cultural reference. For convenience can I refer you to http://www.youtube.com/watch?v=f5UlB4Yw1wQ
, you'll find it very hard to understand quite how successful they were.