Showing posts from May, 2018

UK House Price Update and Attempts to Model it...

I haven't update my UK house price graph for a while, but this time, I thought I'd also include my attempt at modelling it. I've previously   mentioned that I found an interesting correlation between the population and house prices. In a very simplistic way, this makes sense. The UK is a fixed size, but its population is increasing, therefore prices go up. This is certainly the headline that's repeated endlessly on mainstream media. However, the subtlety that not everyone buys houses is lost in the noise. I doubt anyone under the age of 18 or over the age of 75 is buying houses for example. These days, it's also safe to assume that very few people under the age of 30 are either. (The average age of a first time buyer is now 30, compared with 23 in the 1960's.) The other major factor in house prices is how much people are able to pay. Note that this is different from how much they are willing to pay. Unlike almost everything else we buy (with perha

The Slow March of Inflation...

I went shopping this morning and noticed something that reminded me of inflation. "Different pack size. Great regular price" I knew straight away what it meant. What used to be a 260g pack is now a 240g pack, but not to worry, it's the same regular price! Sounds like a good deal to me! This is a real-world example of why you should invest in assets in addition to a cash savings account. The problem, as I've detailed here and here , is that cash savings don't keep up with inflation. A better way of looking at inflation is not that the prices of goods go up (they don't, unless supply of those goods is falling or demand for them is increasing), but that the value of the currency used to pay for them is going down. This is what inflation really means. The value of the GBP has fallen by 90% since 1975 (using figures from Nationwide ). Let's keep it simple and say you put £1000 in a savings account in 1975 (about 6 months' annual

Market Timing vs. Buy & Hold...

I've previously mentioned that I experimented with market timing to determine when to buy/sell stocks. See my posts on the topic - here , here , here and here . That theory, and those indicators, was based on some simple backtesting I did with a few large indices, such as the S&P500 and FTSE, for which I was able to easily plot and get data for using Google Finance. Sadly, Google seem to have removed all their lovely charts and data, presumably under pressure from financial companies who earn money for providing data that Google was providing for free. In any case, the backtesting I did at that time was manual - i.e. I would follow the graph and make a note of the trades once the indicators were hit. I wanted to automate this process to make it easier to test different timings, so I made an epic spreadsheet (and learned some new Excel skills along the way): Here's an extract of an exponential moving average and SSTO (slow stochastic) to indicate when to buy