0
0

Meaningless statistics


 invite response                
2005 Dec 27, 2:44pm   15,094 views  84 comments

by Peter P   ➕follow (2)   💰tip   ignore  

TWIT suggested this:

Perhaps a post about meaningless statistics would be in order.

Comments 1 - 40 of 84       Last »     Search these comments

1   Peter P   2005 Dec 27, 2:45pm  

How about number of eyeballs per square-foot per open house?

3   DinOR   2005 Dec 28, 3:03am  

Robert Cote'

Can you back that up?

I agree. I'm nearing the point of exhaustion chasing fundamental analysis to measure the extent of the boom/bubble etc. Does M3 matter? How much of the yield curve is under water? Anyone that has tracked the housing markets in even a casual way over the last several years has been presented with reams of data and yet many remain unmoved, unconvinced. In that case there is very little that can be done for the true believers.

If we take the author of Another F'd Borrower at his word don't look for any sobriety from the lenders! He shares horror stories of management telling the sales force they now have "Zero Aging" on BK's and late payments etc. This reminds me of when the Lehman Bros. had a lofty target price on Enron just prior to the ultimate demise. Then again why shouldn't they? They just made a huge underwriting spread handling their most recent bond offering so they had a vested interest to prop up the stock price. News flash: It didn't work!

You can't lend your way out of a hole. The way I see it, this serves two purposes for the lenders. (1) It generates immediate business in a challenging environment. (2) This practice helps to "stabilize" home prices and lessens the impact of loss mitigation, default and foreclosures by providing even more unwarranted liquidity.

As far as I can tell this has become what Bulls are becoming increasingly dependent on. We can lend our way out of this thing boys! Now quit being such a whiney little wuss and get on those phones!

4   DinOR   2005 Dec 28, 7:03am  

Robert,

You bring up some good points. I've met with and spoken to many money managers over the years and the longer they have been around (business cycles) the less conviction they seem to exude. I do know this though; pure "chartologists" generally don't last long. Managers that take the time to weigh fundamentals at least thought about it before taking a position. Chart guys have everything set up for automated trading, so they are having orders filled based on the movement of indexes or pre-set parameters. If you're like me you've made (and lost) money with both.

The difference (in my mind anyway) is that I would rather be the manager that has to go back and explain to clients that when we bought this property/stock for our REIT/Fund it really was a well researched and thought out investment. It just didn't pan out the way we envisioned, vice the guy who explains that based on their "computer model" it was added to inventory.

I don't want to be accused of "Deo Bating" but the truth is that most money managers are "road show salesman" and spend little time with either school of thought. Like Deo needs any MORE ammuntition!

5   Peter P   2005 Dec 28, 7:09am  

Chart guys have everything set up for automated trading, so they are having orders filled based on the movement of indexes or pre-set parameters. If you’re like me you’ve made (and lost) money with both.

Not really. Chart reading can be highly subjective.

Black boxes can work if you know when it may stop working.

6   losstotheworld   2005 Dec 28, 7:20am  

I think that the house prices will continue to go up but only5-10%. thanks to the fed printing money. my coworkers previously would constantly tell me about the virtues of getting married. The same ones now want me to own a house now and extol the virtues of homeownership.

isnt it funny, these people cannot comprehend freedom.

7   Peter P   2005 Dec 28, 8:37am  

I think that the house prices will continue to go up but only5-10%.

Why would people continue to pay 100% over equivalent rent if prices apreciate only 5% - 10%?

There is no such thing as a soft-landing for a bubble boom.

8   Peter P   2005 Dec 28, 9:55am  

Prices in less desireable locations WILL unwind, but good locations will finally show up as being worth something when the shit hits the fan, in my opinion.

If there is a way to correct the price/rent imbalance though. :)

9   Peter P   2005 Dec 28, 10:10am  

Bay Area snobs can malign Vegas all they want, but the fact is Vegas is consistently the #1 fastest growing city in the nation - therefore there MUST be some ounce of “desirability” or reason for it.

I vote the Las Vegas Strip as having the best collection of restaurants. There is not many places in the world with so many different cuisines with such excellent quality on one street.

10   Peter P   2005 Dec 28, 10:39am  

Buy real estate in japan? Is it possible?

Huh?

I think we are in interesting times. Passive investments may not work well in the future.

I don't know...

11   Peter P   2005 Dec 28, 10:55am  

Found this link. Statistics galore from the NAR nonetheless

Yes, keep quoting lagged data for the past year definitely qualifies as the most meaningless. Who are they trying to fool?

Soon they will say that prices are much higher than 50 years ago and that this generation is going to be record-setting. (debt, that is)

12   Peter P   2005 Dec 28, 10:57am  

Trying to generalize so much as to EQUATE Vegas with the Bay Area, or make the case that it is PREFERABLE to the Bay Area… sheesh dude! Get me some DUST will you? I want to make my house more like Vegas now… gotta love those Vegas intangibles…

Well, let's see...

Weather: Both LV and BA, nice and dry
Economy: BA - shrinking, LV - booming
Food: BA - good, LV - good
Condo quality: BA - horrible, LV - pretty nice :)

13   Jamie   2005 Dec 28, 11:01am  

"gotta love those Vegas intangibles"

Besides its blatant and unique tawdriness and the sheer magnitude of the neon spectacle, Vegas has only one intangible going for it: legalized sin. This is a huge draw, judging from the epic line of traffic going between LA and Vegas each weekend.

14   Jamie   2005 Dec 28, 11:07am  

"Trying to generalize so much as to EQUATE Vegas with the Bay Area, or make the case that it is PREFERABLE to the Bay Area… sheesh dude! "

Jack is right (oh god he's taken over my damn brain again!), you've inhaled too much desert dust if you think Vegas wins over the BA. I've spent a lot of time in both places, and to continue Peter P's list, but making the opposite case...

Landscape: Vegas, monotonous but pretty if you like brown; BA, varied and stunningly gorgeous

Culture: Vegas, cool if you like Blue Man Group; BA, has something for everyone

People: Vegas, middle America-ish; BA, where all the weird and smart and creative people converge

15   Peter P   2005 Dec 28, 1:24pm  

Now lets talk about PRICES PeterP… why do you think a vegas condo is so much cheaper than a bay area condo? Could it be that desireability is reflected in the PRICE?

Actually, strip high-rise condos are usually more expensive per sqft than BA SFHs.

16   Peter P   2005 Dec 28, 1:29pm  

Yes and that’s probably because the typical BA condo is 35+ years old, outmoded, functionally obsolete construction (i.e., no garage, no in-unit laundry, etc.)

I am a big fan of condos. It is sad that developers do not take condo construction seriously. Garage and in-built laundry should be as essential as floor and ceiling.

17   Peter P   2005 Dec 28, 1:31pm  

Landscape: Vegas, monotonous but pretty if you like brown; BA, varied and stunningly gorgeous

Culture: Vegas, cool if you like Blue Man Group; BA, has something for everyone

People: Vegas, middle America-ish; BA, where all the weird and smart and creative people converge

True. ;)

Also, Vegas is good only if you have money to burn. Outside the strip it is pretty scary.

18   DinOR   2005 Dec 29, 12:03am  

What's with all the Vegas bashing?!

Portland has it's share of undesirables, believe me. Tune in and you'll find plenty of "Cops" episodes filmed here. The Mayor had to come out right before the shopping season and reassure people ( in spite of numerous random shootings) that downtown was safe! The difference is that in Vegas you can have REAL fun! Whatever that means to you. I could never picture myself as a full time resident but when you haven't seen the sun in Oregon for six weeks?

I love San Francisco, really I do. Portland for all it's efforts will never be in a league with S.F. No matter your vocation you'll get paid less for doing it here! Up until recently our RE prices reflected that dynamic. Thanks to free money and greed we now rank in the Top 10 least affordable places year after year. Buy my home posted on Craigslist before I list with an agent in the spring!

19   DinOR   2005 Dec 29, 2:25am  

Yeah, I don't get what Steve is up to either. A $500 round of golf? Try explaining that to the accountant, and from what I've been told you can't actually see the course itself. It's blocked from the prying eyes that can't afford $500 outings.

Recently a client asked me if I could help out a friend that was in arrears on a "resort property" up in Idaho. Coming up with "hard money" lenders in the 11th. hour isn't really my bag but I said I would try. These guys are more plentiful than I'd imagined and it only took one phone call. Long story short, the guy in arrears starts giving me this sales pitch about what an up and coming area this is and how "the billionaires are moving the millionaires out"! Sheesh! That seems to be Steve's message but I'll translate that to mean millionaires that WISH they were billionaires. We can't have the "riff-raff" in here now can we.

Pricing "other" people out has been a large part of the appeal of the housing bubble as many flocked to fake "gated" communities. I'm an ambivert (I'm told most of us are) but even in my best years I never thought I was better than anybody else.

20   HARM   2005 Dec 29, 3:23am  

DinOR,

Are you serious about leaving Portland? How long have you lived there? Right at the moment I'm trying to find a way to get my family up there (preferably with my job). I have friends up there and have visited Portland several times in the last decade or so. I have always enjoyed it and love the woodsy atmosphere, low population density, short commutes and clean air (my wife accuses me of being a mountain goat in a past life).

Sure, there's lots of rain and you don't see the sun much in winter (you could also say the same thing about a lot of places --Washington, Atlanta, etc.). It just doesn't bother me --personally, I love the rain and having a change of seasons. I can see how if you hate rain this could be a major "negative intangible", though. Overall, compared to just about anywhere in CA, you can have a vast improvement in your Q.O.L. without paying a huge premium for it, a-la Marin. just my 2 centavos.

21   HARM   2005 Dec 29, 3:28am  

tomg --thanks for the link.

Although it doesn't mention the bubble, it's very on-target with the whole "intangibles" vs. cost/quality-of-life discussion we're having here. It's plainly obvious that large numbers of non-wealthy Gen-Xers and echo boomers are getting fed up with paying a gigantic premium for the "privilege" of living in an overcrowded third-word cesspool. Can't wait to get my ticket out of Bubbleville.

22   marinite   2005 Dec 29, 3:56am  

If done honestly and done in a diligent manner, statistics are a powerful tool.

23   HARM   2005 Dec 29, 4:01am  

Speaking of statistics, meaningful or otherwise:

CNNMoney: "Most overvalued housing markets - Latest analysis of 299 markets: See how your hometown ranks"

money.cnn.com/2005/12/29/real_estate/buying_selling/handicapping_housing_markets/index.htm

24   Peter P   2005 Dec 29, 4:04am  

If done honestly and done in a diligent manner, statistics are a powerful tool.

Yes, when pushed correctly, statistics are a powerful propaganda tool. ;)

25   marinite   2005 Dec 29, 4:17am  

But I DO belive that Vegas will someday be our first American Ruins.

Hasn't NO won that distinction?

26   Peter P   2005 Dec 29, 4:38am  

Two of my ex-co-workers moved from the silly valley to austin. It is a smart move for families with kids.

Let me guess... I bet your house is 3000+ sf and you probably need a cleaning lady. ;)

27   Peter P   2005 Dec 29, 5:27am  

Question about the upsurge in media predictions of a real-estate crash… What is their motivation? Scare the sheeple? Ratings? Induce a ’soft-landing’?

Media is trend-following. They tend to reinforce any trend that is already apparent. Sheeples are irrational beings prone to scares. Talk of a real-estate crash necessarily lead to a crash.

The crash will come. The only question is: will there be blood on the street.

28   Peter P   2005 Dec 29, 5:41am  

I fear there will be, but I also fear the gov’t reaction to the blood.

Perhaps use it to make Blood Wine? :D

29   HARM   2005 Dec 29, 6:52am  

I also like the Desert. Somebody tell me about the BEST desert location…

Jack, with your artist's background, I think you would really like Santa Fe. One of my great-aunts lives there and the place is just amazing. Every building in town is required to be built in either the traditional "peublo" or Spanish architectural style. It abounds with Southwestern and Native American arts and crafts, in fact I believe that's the main industry. Only drawback is it's not cheap. Of course, if you're selling your pricey Marin home, then that might not matter to you ;-) .

30   DeoVindice   2005 Dec 29, 8:18am  

Deo Bating? "I'm the last to defend Deo?"

Wow, I sure wore out my welcome fast......It's not easy having many voices in your head. It makes it difficult to distill highly esoteric analysis. So I'll just propose a few questions, and let others answer.

Who benefits from this housing bubble? Who loses? What are the long term consequences? How would you use this bubble (and its effects on the GSEs) to crush your enemies?

The North/South debate is a proxy for Red/Blue. It exlains motivation. Remember, People in charge are smart and have long term vision.

I dare you to read my lat post on the last thread. I double dog dare you!

Finally, I love a good frat party! In my (ample) experience, they usually end (at least the good ones) with FIRE!

--Deo

31   Peter P   2005 Dec 29, 8:23am  

Who benefits from this housing bubble? Who loses? What are the long term consequences? How would you use this bubble (and its effects on the GSEs) to crush your enemies?

We have multiple layers of stable disequilibrium.

1) Housing bubble
2) Trade deficit
3) Bretton Wood 2.0

Will the demise of one cause the collapse of the next?

32   DeoVindice   2005 Dec 29, 8:58am  

I know some WASPS in VA that have exerted an enormous amount of power in this country since they founded the Jameston Company. They are not about to give it up, nor are they in danger of coming to the attention of John Q. Public. They have VERY long memories, and they don't like the Kennedys.

Disclaimer: That IS NOT a conspiracy theory.

33   DeoVindice   2005 Dec 29, 9:36am  

Sunnyvale:

"Who runs the media?
What is the number one news show on TV? The Factor with Bill O'reilly. Ever notice that Dagen McDowell, Shep Smith, and many guests have Southern accents? Ever hear one before amongst the New York Media? Why does the NYT and LA Times have to keep laying off people? Why is fox the number one network in the ratings?

BTW, I'd like to think that the management of the respective news companies run them for the benefit of the shareholders. Call me naive.

"Who runs banking?"
Who will go bust when Fannie and Freddie go bust? Rember, an implied guaranty is not a guaranty. It certainly does obligate the taxpayer to pay 100% on the dollar.

"Our troops, rather than being on our borders, are overseas benefiting whom?" Our troops are building a bulwark and forward base to deter Chinese agression. The Chinese are well aware that oil is their achilles heal. Diplomacy is the patient management of self interest over long spans of time. Do not make it a moral issue, or you will misinterpret events.

Jack:

Power is best used quietly. Indirection has ever been the manner of the court. He who wields power publicly is only a temporary phenomenon. Christ may have changed the world, but what good did it do him?

Yes, you will slip through the teeth of their gaping maw. You are not significant enough to be worth destroying. The ruling class never concerns themselves with the peasants. (Empiracle Fact--not meant as an insult. Neither am I).

--Deo

34   DeoVindice   2005 Dec 29, 9:48am  

"It certainly does obligate the taxpayer to pay 100% on the dollar."

meant DOES NOT obligate

35   Peter P   2005 Dec 29, 9:56am  

Very insightful, DeoVindice.

We certainly do not need troops to protect the borders (no need yet). Instead, we need civil programs that persecute businesses who knowlying hire undocumented aliens.

36   Peter P   2005 Dec 29, 10:01am  

It certainly does not obligate the taxpayer to pay 100% on the dollar.

I certainly hope so.

I am not entirely against the idea of bailing out large failing entities. However, I worry a lot about moral hazards.

I believe we should hold the executive of reckless enterprise personally responsible. If the decision makers of these entities are threaten with execution, they would be think twice before putting the system at risk for personal gains.

37   HARM   2005 Dec 29, 10:11am  

DeoVindice, are you really a Southern neo-sessionist (as your name implies)? If so, do you really see the housing bubble as a deliberate form of South vs. North economic warfare, or are you being tongue-in-cheek here? Just curious.

38   DeoVindice   2005 Dec 29, 10:16am  

Baby boomers in Blue states just built the infrastructure and ***future*** affordable housing for red states. Why? Because they have some money, and they need more for retirement. And they're sheep.

The red states will use this advantage to steal jobs from states like Taxachusetts. The blue state/red state border is easier to cross than the Rio Grande. Young, educated workers will leave for afforable housing and low taxes, sticking blue states with the tab for raising/educating them. New York bankers will get stuck in the process.

As Intended? Maybe a little. Unintended? Maybe a little. Politicians take advantage of emerging situations. Roller coaster? Maybe.

BTW, won't border jumpers make good target practice for green troops and nat'l guardsmen? Sounds like an opportunity to me.

--Deo Vindice

39   Peter P   2005 Dec 29, 10:23am  

As Intended? Maybe a little. Unintended? Maybe a little. Politicians take advantage of emerging situations. Roller coaster? Maybe.

The housing bubble is not exactly easy to manipulate though...

If what you said is true, somehow the stars aligned correctly for these politicians.

40   HARM   2005 Dec 29, 10:30am  

DeoVindice,

I agree that it's mostly blue states that are experiencing the credit/housing bubble (with FL, NV & VA being notable exceptions); however I, like Peter, have serious doubts as to it being a deliberate outcome of any conspiracy. I like a good X-files episode as much as the next guy, but if there's any "conspiracy" behind the HB, odds are it's a conspiracy of greed and ignorance.

Comments 1 - 40 of 84       Last »     Search these comments

Please register to comment:

api   best comments   contact   latest images   memes   one year ago   random   suggestions