House Price Crash 4

Alan_M_2

PoorDave wrote:

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

Actually you're probably right, and I'd suggest that's the very sentiment that creates bubbles, or boom and bust economy.

Whereas it would likely lead a gambler to bet it against it occuring, the ever optimistic house purchaser will predict it continues it's everlasting run:)

Alan_M_2

irnbru wrote:

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

Ahh right, the odds of the next event occuring are 50/50.

In that case, I'll not calculate picking 23 consecutive correct numbers, so mathematically how would you express the string of 22 consecutive numbers becoming 23 consecutive numbers, the probability is 50/50 for each individual roll, but what is the probability of that sequence continuing?

I'm suggesting that is where the historical information is relevant, that the sequence continues unbroken or not as the case may be.

As I pointed out in previous posts, the fact I understand the odds of the games in a casino should lead you to believe I don't bother with any of them, that's why you'll find me playing only +EV games, i.e. the many varieties of poker in which the house isn't involved:)

abaxas

Boom-Bust-Boom-Bust-Boom-Bust-Boom-Bust-Boom-Bust

Red-Black-Red-Black-Red-Black-Red-Black-Red-Black-Red-Black

irnbru_2

Alan_M wrote:

In that case, I'll not calculate picking 23 consecutive correct numbers, so mathematically how would you express the string of 22 consecutive numbers becoming 23 consecutive numbers,

That's a conditional probaility and assuming picking each number is independent then it's just 0.5^22 * 0.5 i.e. 0.5^23:

That is 0.5^22 is the probability of the first event (22 correct picks) and the condition of picking the next one correctly 0.5 (50/50).

Alan_M wrote:

the probability is 50/50 for each individual roll, but what is the probability of that sequence continuing?

0.5^r where r is the number of roles.

If you've ever watched Deal or No Deal, you'll see psychology overrule probability when the contestant gets down to the last two boxes and is offered a swap. It's 50/50, it doesn't improve their odds. Psychologically, it makes you question your judgement.

Back to school.

tomstickland

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.

Aha, this is the nub of it.
The historical data on Roulette makes no difference whatsoever.
ie: having a large display showing the last 20 numbers is of no use to anyone.
If you had stood and watched 50 consecutive Reds you would have no betting advantage over someone who just walked up to the table.

Yes, the probability of 22 consecutive Reds is 0.5^22
Yes, the probability of 23 consecutive Reds is 0.5^23
Ie: ever lower probabilty.

However, when you got to 22 consecutive Reds the probability/odds/chance of the next ball being Red is still 0.5.

The cunning part of this, the slip of the hand, as it were, is that it is very unlikely to have 22 consecutive Reds and even more unlikely to have 23 consective Reds, but the gap between 22 and 23 is still just a multiple of 0.5.


I agree that Roulette is a rubbish game - pure chance, no skill and a resonable large house advantage. At least Blackjack requires some knowledge and can reduce the house advantage to 0.5% if the correct strategy is used. Long term poker by someone who understands the card odds and pot odds can be a positive expectation game.

Alan_M_2

Ahh right, yup, I was confusing the odds of predetermining the 23 roles whereas in fact it's irrelevant. Interesting.

So nothing more than sentiment is effecting your decision, the cold hard maths says it actually makes no difference at all.

Now you see why I didn't go to university!

dougk_2

All this said , there are not two options with house prices there are three... Higher, Lower and staying the same, so really its a 33.3:33.3:33.3 situation.

Its also worthwhile remembering the price of houses are influenced my many things (almost infinate) and thetre is no uniform approach that can be taken. eg. prices in one area can be affected by local rather than national issues (eg flooding, road building, crime, power station being built, new company moving in).

The bottom line is NOBODY knows or can accurately predict for certain whether prices will rise or drop , if they could then they probably wouldn't be on this board in the first place. A single world incident could instantly push prices up or alternatively cause things to drop.

This is all deja-vu , same thing was being discussed last year...2 years ago... 3 years ago... 4 years ago.... its getting very boring! zzzzzzzzzzzzz

meanmachine_2

dougk wrote:

This is all deja-vu , same thing was being discussed last year...2 years ago... 3 years ago... 4 years ago.... its getting very boring! zzzzzzzzzzzzz

But it ISN'T getting boring.

That's just wishful thinking on your part. You're from the "it didn't crash when they said it would, therefore there's nothing to see here, move along" brigade.

If we were in soft landing mode, as ALL the property bulls claimed that we'd achieved in 2005, then yes, it would be fairly boring. But we're not. We're in boom and bust mode.

Thinkgs are going to get really interesting from now on. Logic tells us that prices should be slowing, but they're doing the opposite.

No wonder property is a high risk investment. It's all hugely irrational. I'm loving watching all this from the outside.

aderbyshirelad

Personally, I can't wait for this long predicted crash.

Then also those who've been predicting it can crow on for a few weeks about how right they were and then we can all enjoy some piece and quiet.

I'm not sure quite what they'll be crowing about as it hardly takes a genius to predict that prices will go down, stabilise, or slowdown - but hey, whatever makes them happy...

dougk_2

meanmachine wrote:

That's just wishful thinking on your part. You're from the "it didn't crash when they said it would, therefore there's nothing to see here, move along" brigade.

Not exactly true - but then since you mention it you were one of the people predicting the crash some 2 years or so back. Maybe you are now subconciously feeling you should have bought then when prices were lower. after all a 10 or 15% drop will be only inline with things how they were back then?

Anyhow why I said it was boring is because its exactly the same thing being said year after year and nothing changes, same pros and cons, same crash and boom comments, same predictions , just different dates. As said before best thing is just to wait and see what ACTUALLY does happen....very little I suspect as we will be here in the next year saying similar things.