House Price Crash 4

mr.broderick

ManAtHome wrote:

Ah - a statistician - used to know one of them..

His definiition was "if your head is in the oven and your feet are in the fridge, on average you are comfortable".

I partially remember my head hurting reading Simon Orebi-Gann's (?) theories on random numbers...

Thats not a name im familiar with but i think that everyone at some stage in their life should read a book like that. Absolutely mindbending. I guess he was of the vein of the mathematical theory of probability and statistics carefully sidesteps the question of randomness;we all do it subconsciously, it refrains from making absolute statements, and instead expresses everything in terms of how much probability is to be attached to statements involving random sequences of events. The axioms of probability theory are set up so that abstract probabilities can be computed readily, but nothing is said about what probability really signifies, or how this concept can be applied meaningfully to the actual world.This can be applied to the house price crash theories to be honest. Much of the literature surrounding random numbers is of this vein but we are really getting off thread here...:rotfl:

Alan_M_2

The last thing I read that fried my noodle was A Brief History of time, I got about two thirds through and then reached a point where my my brain simply couldn't cope with the concepts and I had to give up. I was reasonably pleased I'd got that far through it

richgirl

I tried to find out where the mandlebrot set ends

Spendless

cwcw wrote:

Incidentally, do you think that the airport opening could be a major factor in house prices nearby suddenly stagnating/ falling in that area?

We're not that far away,(about 10-15 min drive) but not in the immediate area of the airport. I don't really keep my eye on house prices in other areas of town so can't comment if houses are stagnating/dropping around there. All I can say is the area surrounding the airport whilst not the elitest part of the town to live, it is certainly more desirable than other areas, it is also catchment area to the top secondary school, so at the moment house prices near the airport are higher than many other areas of the town.

lynzpower

thanks spendless for brnging this back on topic I was getting a bit scared there for a sec

PoorDave

ManAtHome wrote:

Ah - a statistician - used to know one of them..

His definiition was "if your head is in the oven and your feet are in the fridge, on average you are comfortable".

I partially remember my head hurting reading Simon Orebi-Gann's (?) theories on random numbers...

Would it be missing the point to say if you were physically doing this both the fridge and over doors would be open, hence most of your kitchen would be comfortable, as neither the fridge nor oven would be able to retain their intended temperature?

Also, fridge approx 0 degrees C oven over 100 degrees C, therefore average is at least 50 degrees C, which is kinda warm.

If i cook an egg in a pan of boiling water, and another in an oven at the same temperature, would they cook to the same level of "boiledness" in the same time? If so why, if not why not?

tomstickland

Right, I've had a bit more of a think on the roullete analagy.
Forgetting about the odds and probability being different entities (which they aren't), I still think the concept is actually just the "gamblers fallacy".

If you were playing roulette and you had 20 consecutive wins, then the probability of having 21 consecutive wins is very small. So would you decide to stop there and then?

Well, the fact that 21 consecutive wins has a very low probability doesn't matter; The probability of getting 20 was very very low. The probability of the next bet winning is still the same as it ever was.

In the housing market however, since it's drive by sentiment, you might well find that the gamblers fallacy works. So if you had 20 consecutive house price rises then people might say "21 is very unlikely, lets all sell".

Alan_M_2

Ok lets look at this from another angle and for a moment assume that odds and probability mean exactly the same thing.

You walk up to a roulette table that has no display showing and you wish to place a bet on red or black, ignoring the zero it's an even money shot, that never changes, it's either red or black and it's a constant.

You walk up to the same table which has a digital display providing details of the last 20 rolls (now commonplace in casinos). The last 20 rolls have all be red, what are the odds the next roll will be red? still 50/50 I'm sure you'll agree........

However (and this is where I may need correcting) I'd say the odds of the string of results continuing as red become increasing less probable as each event occurs. Therfore the probability of the next number being red is 0.5^23. Am I wrong assuming this or am I simply making a grammatical error?

You are therefore using factual historical data to influence your next action.

My analagy is, this gives you an advantage over someone who walks up to the table and has no knowledge of any historic event.

Now if you are limiting you're result only to the next spin alone it's actually still a 50/50 shot, same as it always is, but we aren't limiting it to one single event, we're making a decision (buying into a market) that will span, say another few hundred spins of the wheel.

This is starting to fry my noodle, but it's interesting never the less:)

PoorDave

Aren't the action of the homeowner selling and the direction the market takes linked? Not like whether i choose red or black and the outcome of the spin...

People seem far more likely to say "we've had 20, why wouldn't there be a 21st?" where houses are concerned

irnbru_2

Alan_M wrote:

However (and this is where I may need correcting) I'd say the odds of the string of results continuing as red become increasing less probable as each event occurs. Therfore the probability of the next number being red is 0.5^23. Am I wrong assuming this or am I simply making a grammatical error?

Each spin is independent of the previous one. Past history isn't counted.

In fact, you seem to be calculating the likelihood of picking 23 reds before playing.

Are you the man who bet on black and lost it all