Business

IN THE END, WHAT GOES DOWN MUST COME UP. MUSTN’T IT?

By August 20, 2018 No Comments

Well the needle moved another quarter, with the base rate shooting up to a whopping 0.75 percent (a perfect example of hyperbole there), and the reaction was, well, mixed. The usual narrative was trawled out from both sides of the pro/anti interest rate raising camps, with those in favour citing higher than acceptable inflation as the real threat to ‘pounds in the pocket’, and those not in favour decrying the move as a blow to roughly three million homeowners on tracker mortgages.

But the truth is, a quarter-of-a-percent rise isn’t going to be felt as real pain by anyone. This is caution in the extreme by the bank of England, and it’s a sensible way to keep the good ship Britannia steady as it navigates the choppy waters of Brexit, and tries to keep pace with Donald Trump’s daft draft of draconian tariffs—now there’s some alliteration worthy of a mercurial, gunslingin’, golf-swingin’ US president. But in the wider scheme of things, does any of it really matter?

In my opinion, not much. Narratives are exactly that. Narratives. Stories. And if you followed every one of them, and based your investment decisions upon your interpretations of them, you’d either do nothing because you’d always find a reason to back out, or you’d do the wrong thing because you were relying on macro news and economics to make decisions, rather than using your instinct and experience.

So, while the world bites its collective thumbnail to the quick over trade wars, a no-deal Brexit, the spectre of interest rates spiking to 5 percent, and just about anything and everything else that goes on in the news, the sensible few among us do what we’ve always done; we go out and we work hard to create and complete deals. In my case those deals happen to be in a niche sector of the property market—hotels.

Because deals have to be made, done, and won whether the rest of the planet’s in a tailspin or not. Dealmaking is embedded in human nature. Putting a finer point on it, dealmaking is embedded in natureper se: grey wolves and striped hyenas putting aside their differences to sniff out and catch prey together; crabs with an appetite for risk carrying venomous sea urchins on their backs in exchange for added protection (no guns required); oxpecker birds dining out on parasites and ticks embedded in zebra fur. There are even tales (arguably tall) of Egyptian Plover birds proferring their services as living toothpicks…to crocodiles with leeches stuck between their teeth!

Point being, deals are being struck everywhere, overtly and inadvertently, in the strangest of places, at the oddest of times, regardless of what’s going on elsewhere. Deals power the economy and deals augment our success as we move through life.

You know, some of the biggest business success stories were born out of the last recession. In other historic news, some of the best business success stories were born out of the world’s major wars. Now I’m not for one minute suggesting that we should be crossing our fingers in hope of the revisitation of recession or war, but what I amsaying is that if you spend too much of your time concerning yourself with what’s happening elsewhere (and moreover worrying about it) most of best deals will drift by beneath your nose to end up in the hands of dealmakers and investors who continue to live by the aphorisms ‘business as usual’, and ‘the show must go on’.

The key things is to adapt to circumstances, not to try and predict them. It’s a bit like looking at the weather forecast on an app. On the whole those apps are pretty accurate, letting you know whether it’s time to reach for the brolly or slap on some sun factor before heading out. But it’s still just a forecast, not a prediction. But even if the forecast turns out to be wrong, the smart investor will use the brolly as a sunshade, and the sunscreen as an emollient as he or she waits for the rain to pass.

And it’s the same with investing in property. When economic winds pick up and changeable gusts create volatility, we need to adapt to thrive (not just survive). And that doesn’t mean tearing up a strategy that’s worked well for years. It means revisiting it and tweaking it, or just looking at it a little differently. The reason I can say this with real confidence is that I’ve ploughed on with my own evolving strategy through two recessions, and my portfolio has continued to grow.

Above all, you have to keep swinging at the ball. Because as soon as you stop swinging the chances of striking the ball go from a reasonable percentage straight to zero. What’s more if you keep swinging and focusing on what’s right in front of you, your eye naturally sharpens enabling you to hit more than you miss.

I call this the law of incrementally increasing advantage. Or as a famous golfer once said: ‘the more I practice the luckier I get.’

Many big city investors that make their millions, or billions, do so on what many novices would consider pithy odds. They’re happy with a 30 percent strike rate on their trades. While that might sound like a lousy returns, the truth is that being right one out of three times is fine if, when you’re right, you’re veryright, and if the figures tell you you’re very right.

One big win versus two out of three not-so-big losses can, and often does, amount to a highly successful strategy. The main thing to remember about these overall winners is they don’twhimsically change their strategy because of their losses. They stick to their guns and they keep on swinging and slinging their way to growth and success. Their focus remains on reducing losses, maximising wins, and adapting to change as and when necessary.

 

To find out more about raising finance in the face of rising interest rates, and growing your capital by as much as 20% with rock solid hotel investments, please call us today.