1 in 7 chance of house price falls by 2020

[DimPrawn]

http://news.bbc.co.uk/1/hi/business/6109300.stm

PriceWaterhouseCoopers based its prediction on the "Monte Carlo Simulation" which marries future prediction of house price growth with analysis of how the market has behaved in the past.

The group warned that people who relied wholly on house price growth to provide a financial cushion in retirement needed to consider the risk of price falls.

"Property is a lot safer than the equity market, but it is not like putting money in the bank - there is a downside," John Raven, senior economist at PricewaterhouseCoopers, said.

Looking further ahead, PricewaterhouseCoopers said the chances of house prices having fallen in real terms - taking inflation into account - by 2020 was one in seven.


Keeping hoping AtW!

[AtW]

Monte Karlo is based on a random number generator. I am certain that PWC losers actually use pseudo-random number generator, hence their conclusions are wrong.

[Buffoon]

PriceWaterhouseCoopers based its prediction on the "Monte Carlo Simulation" which marries future prediction of house price growth with analysis of how the market has behaved in the past.

Spot the journo with no knowledge of economics, maths, science, ……

[expat]

Monte Karlo is based on a random number generator. I am certain that PWC losers actually use pseudo-random number generator, hence their conclusions are wrong.

Can you explain the inference, if any, used in reaching your conclusion "hence their conclusions are wrong" fron the given premises?

[Mailman]

Isnt that better odds than global warming actually being real?

Mailman

[DimPrawn]

Looking further afield using the PWC model, we can see house prices drop to zero after the global nuclear war in 2057 that results in the complete destruction of mankind.

HTH

[AtW]

Can you explain the inference

With pleasure: pseudo-random generators actually just offer series of numbers following certain formulae which may appear random to an untrained sight. However these numbers are not random, and they also loop in cycles - this undermines whole premise of "Monte Karlo" method because it relies on randomness, not some pre-determined sequence which is not random.

But in any case their research is Bull - markets are driven by expectations and not even Pinocchio's Karlo will change that.

HTH

[IR35 Avoider]

Can you explain the inference, if any, used in reaching your conclusion "hence their conclusions are wrong" fron the given premises?

I also want to know. The lecturer in Quantitive Finance who wrote my textbook recommends rand()+rand()+rand().. (12 times) - 6 as a quick and dirty method for generating normally distributed random numbers in Excel, and I use this for my Monte Carlo simulations. I would like to know why this won't work, so I can tell him to correct the next edition.

[AtW]

rand()+rand()+rand().. (12 times)

This improves uniqueness of numbers, I actually used this method just few days ago.

However the premise is flawed in the first place - preudo-random number generators are just that - PSEUDO, they generate sequences of numbers that loop (often with very short cycles), and thus flawed.

To know exactly why you need to talk to a PhD in numeric analysis - Threaded.

[DimPrawn]

It won't work cos Atw says so and that's good enough for me.