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Guest magnoliawalls

Gut Instinct Vs Charts And Statistics

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Guest magnoliawalls

A few threads on here today have got me wondering about the difference between those posters who need to have their theories backed up by evidence in the form of charts and statistics (e.g. Zorn) and those who rely on gut instinct (e.g. Dogbox).

Apologies for starting another poll but it seemed the easiest way: personally I think that the facts and figures, while reassuring, tends to say more about what has happened than about what will happen.

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A few threads on here today have got me wondering about the difference between those posters who need to have their theories backed up by evidence in the form of charts and statistics (e.g. Zorn) and those who rely on gut instinct (e.g. Dogbox).

Apologies for starting another poll but it seemed the easiest way: personally I think that the facts and figures, while reassuring, tends to say more about what has happened than about what will happen.

Generally i get the gut feeling then look for evidence to back it up. Though if someone shows me evidence that i cannot refute then i dont need the gut feeling. I think Dogbox takes evidence as too black and white and therefore relies on his gut, if he could look at the evidence and use his gut feeling to reach a conclusion i think it would work for him.

Apologies for talking about you in the 3rd person dogbox, its more the mentality that you have rather than 'dogbox' that im talking about. Works both ways of course , someone who just relies on facts and figures and uses no gut instinct will show the same flaws.

I see it like the bible (for want of a better example) its down to your own interpretation of it. It can lay down facts and figures but it needs interpreting properly.

Have i actually said anything worthwhile there? i dun know

:)

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Generally i get the gut feeling then look for evidence to back it up. Though if someone shows me evidence that i cannot refute then i dont need the gut feeling. I think Dogbox takes evidence as too black and white and therefore relies on his gut, if he could look at the evidence and use his gut feeling to reach a conclusion i think it would work for him.

Apologies for talking about you in the 3rd person dogbox, its more the mentality that you have rather than 'dogbox' that im talking about. Works both ways of course , someone who just relies on facts and figures and uses no gut instinct will show the same flaws.

I see it like the bible (for want of a better example) its down to your own interpretation of it. It can lay down facts and figures but it needs interpreting properly.

Have i actually said anything worthwhile there? i dun know

:)

Dont trust charts as far as I can throw them. Fundamentals, Quaterly and annual reports are where its at. Combined with a little knowledge can be a very powerful tool. Would never go off a graph and blindly say "Prices will go up/down blah blah blah".. . you have to go deeper than that. Guessing market sentiment, reading market psycology I reckon is the key to big short term gains, Good fundamentals in underinvested small caps lead to large long terms (albeit at an increased risk for both)

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I think that you need both a good conceptual model of house prices and an ongoing set of HP indices, mortgage lending, transactions, and so on – the aim, obviously, is to build a coherent view that successfully combines both while providing some basis for figuring out what happens next.

For example, the price-to-earnings ratio (p/e) and the idea of historical levels is a good start, but when the p/e moved much higher than expected it was clear that the effects of affordability had to be included – adding this made it fit together much better. And if things diverge again the ideas would need further tweaking.

It's really about integrating each new bit of evidence and updating as needed.

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Dont trust charts as far as I can throw them. ... Guessing market sentiment, reading market psycology I reckon is the key to big short term gains,

I'm intrigued. How does the average bloke "guess market sentiment" without charts?

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Right,

Im the only one who chose "Study reports, surveys, charts, MPC minutes etc."

The reason behind this is simple. The crash is coming/happening not because I want it. Its because it DOES NOT MAKE ECONOMICAL SENSE that prices can be sustained at this level. I strongly believe that we are heading towards a recession/depression and this is the MAIN reason why prices are going to fall rapidly.

In history, its always been a FINANCIAL reason why property crashes. The same way that it was a FINANCIAL reason that property rose. If the banks stuck to the 3.5 time rule THEY would not have got that high!!! They didnt so there was NO CEILING price. Every sucker in the country got credit - coz they could - without thinking about the paying back? The reason retail sales are down is because EVERYONE has ran out of CASH and now RAN OUT OF CREDIT. If spending stops (as it has) we have NO ECONOMY.

The option of trusting judgement goes out of the window. FOr every story of a house selling for 10/20/30% lover than asking price, there is another showing some KNOBS paying full asking price.

My bro just sold his house. A TERRACED house in an OK part of Liverpool. The EA said £168K - he dropped it 3 weeks later to £165K as there were others in the street for that. A woman called and said "I cant go above £150K", my bro said "Well we cant accept that". Two days later she came back with an offer - ONLY THE FULL ASKING PRICE!

Thats why I DONT trust instinct - there are still TOO many KNOBHEADS about :(

Edited by teddyboy

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Guest magnoliawalls

Thats why I DONT trust instinct - there are still TOO many KNOBHEADS about :(

Good point - for all that many posters here have instincts that tell them prices will crash, nearly everyone I know believes they can only go up :rolleyes:

I see it like the bible (for want of a better example) its down to your own interpretation of it. It can lay down facts and figures but it needs interpreting properly.

Have i actually said anything worthwhile there? i dun know

:)

You have certainly persuaded me ;)

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Charts can gauge trends and will reveal teh crash. However, I didn't really look at housing market data until my gut instinct said, 'Everyone seems to be in shocking debt, people are taking on mortgages for huge amounts they can't comfortably afford, most new jobs seem to be poverty-pay McJobs, the economy seems to be nothing more than people buying mostly cheaply imported tat encouraged by perceptions of housing wealth or just compulsive spending'.

Data has revealed my gut instinct was miles off - it was far worse than I thought.

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I like my charts/stats as much as the next person.. but they are not the sole tool in the box, the others being categorised as;

- gut feeling : what you're sub-consciously feeling

- direct knowledge : what your seeing with family / friends.. ie information not disseminated via the media.

- indirect knowledge : what your seeing in the papers, news, this site

I work with gut feeling... but personally I need to "prove" this to myself by looking at the stats and charts, because my gut feeling maybe wrong.

I guess this is really the difference between those who use only gut feeling (ie totally believe what they feel and don't need to prove it to themselves via external data) and those that use stats/charts (personally the initial feeling comes from the gut, but proof is needed to confirm the gut feeling).

I don't think one way is better than the other... except for 1 point... how do you communicate a gut feeling? .. that is where charts / stats really come into their own... communication, and that's important.

As they say.. a picture (graph) is worth a thousand words.... and a numerical stat is just another way of painting a picture.

Edited by beerhunter

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you can't trust instinct....it's too easily swayed by the VI's.

you can't trust stats....they are produced by the VI's and there are so many variations that are designed to confuse the average punter.

the better story needs to be looked at through other means....like unemployment reports,political polls etc etc.

you can bet it's time to buy when pollsters show everyone is pissed off with labour and prepared to give the tories another go.

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I wouldn't completely write off charts. They can show you what is actually happening. For example, an ascending/descending triangle IMO is super reliable, as are identifying price channels. I try to keep it simple, 20 day SMA, Bollinger Bands, MACD & RSI. I sometimes use others but those are my babies.

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For most folks "gut instinct" is just plain wrong. They are most bullish when things are fine and most bearish when things are grim. If you wanna recipe for how to lose money in markets, using gut-instinct in a non-contrary, wrong time-frame way will just about do it.

Edited by Sledgehead

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To understand the meaning of "gut instinct" you have to look at what does it mean. I had a perfect description of it and I will post it tomorrow when I get access to it.

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Its a good question.

I operate on gut instinct but that instinct is based on experience, facts and trends. I bought my first BTL in 1970, I have seen HPC's come and go.

All my instincts tell me we are not in a HPC scenario.

Based on facts such as low stable interest rates, demand e.g mortgage approvals back up to summer 2004 levels, immigration / huge pent up FTB demand as seen on this site. Low historical unemployment levels (we are importing polish bus drivers,portuguese agriculture workers, people world wide for the NHS to do the jobs the English natives can't or won't do). Most housing surveys are YOY UP. etc etc

On national radio this week I heard adverts for BTL mortgages,houses in my areas / friends properties have sold quickly etc etc.

My gut instinct / anecdotal evidence plus the facts all show there is not and won't be a HPC.

Hope that Helps.

PG

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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