Qualitative judgment is the other name for analysis using subjective judgments based on factors such as labor relations, strength of development and research, industry cycles, management expertise and other information that cannot be quantified. While quantitative analysis typically consists of numerical values and numbers, qualitative judgment takes unquantifiable data or words into account. The two methods may seem fundamentally different, but they are actually quite similar, as it is possible to quantitatively codify all kinds of qualitative data, and to assign numerical values to the latter. However, this trivial issue has given rise to a huge qualitative-quantitative debate that has snowballed into a mammoth dispute between researchers. The mixed methods, according to modern researchers, is a more inclusive approach resulting in better accuracy of judgment and analysis.

Qualitative Judgment in the World of Finance and Investments

Qualitative research in the world of finance and investments, involves answering questions, understanding market phenomena and exploring key issues like efficacy of the management, factors that are ignored in quantitative analysis. Because qualitative research takes into account multiple focal points to arrive at conclusions, the method is often more precise when used in conjunction with other tools. Qualitative judgment, used alongside quantitative analysis, can provide better insight into a company as it seeks the ‘why’ instead of the ‘how’. Taking in the qualitative factors (unstructured data) such as executive opinions, Delphi method, sales force polling and consumer surveys can increase the accuracy and precision of such judgments.

Executive Opinions

In this method, a forecast model for future sales is prepared by incorporating and averaging the subjective views of the sales executive, sales experts, administrative experts and other experts from the purchasing, finance and production departments. Since elaborate statistics are not required for this forecast method, it can be done easily and quickly and it is often the only feasible means of prediction when adequate data is absent.

Delphi Method

This group technique requires the individual and separate questioning of each member in a panel of finance experts. A third party summarizes the accompanying arguments and forecasts and subjects the experts to a further round of questioning before reaching a consensus. The demerits of this method include lack of consensus and low reliability, but for long-range forecasting, nothing is quite as effective and useful as the Delphi method.

Sales Force Polling

The plus points of using this particular type of qualitative forecast are several. This method takes into account the specialized knowledge of the decision makers, besides being easy to understand. It is easy to analyze the data by salesperson, customer, product or territory. However, the pessimism or optimism of a salesperson in regard to market predictions and forecasts, and in the accuracy of results are often beyond their own control, as the market dances to the tune of broader economic events.