There is a reason why the big mac index, skirt length index and the “what your teenage daughter buy at the mall” index works. They are direct observations and research done on the ground at the front line of society.
I personally believe that these kind of research are the most important ones to perform, yet the most time consuming as well. Imaging staking out in front of a dealership counting foot traffic once per week, coffee in hand and trying to stay awake after 8 hours of normal work. It’s mundane and boring work that’s best left to the computer.
When Garth Turner said that all the houses bought by Chinese are empty, people who read his articles can choose to believe it or NOT believe it. The third way is to try and verify the data yourself. That’s the hard part though. How do you verify the data? Most people stop at this step and just go back to choosing one or the other. Me? I went on foot.
First, I wake up at 5AM in the morning and go to one of the neighborhoods where the Chinese buyers bought their houses and check out every garbage bin. This part is easy and take little time. Their houses are very obvious as all Chinese mainland buyers buys these ugly houses we call “Monster Houses” here that’s made in their image of what a house in the western world look like. 80% full lot, 2 garages, all bricks/concrete and no garden.
The next step was making up some bullshit survey and went around with a clipboard and pen. I then knocked on every door that had empty or very little garbage to see who is inside. You know what I find? Spouses of Chinese businessman with their children and children here alone in the huge house here to study.
It was not vacant like Garth had mentioned. So the conclusion I drew was that house price going down will not happen that year and here we are, 3 years later, 40% higher. Mind you, we are currently at the cusp of a potential huge collapse in Canadian economy as well as the Chinese economy, so all these gains can vanish tomorrow. The dilemma of a prophet. You are only right, if you can time the absolute bottom and absolute top. Anytime in the near future, my thesis can be proven wrong even if the timing is just off by a year. So far, they are right, but only so far.
I am currently in a place where I get to sample a great variety of people and in a position where I can inquire about their life and work innocuously. I mean I enjoy my work, but I also enjoy digging about what’s happening in the economy. It gave me a lot of insight on real world data that I am not able to get otherwise and it is the type of financial investigation that I’ve only heard of being done once before and wished that more people would do. So many times I’d ask what people base their findings on and it turns out to be some data from some data that other people compiled and is self reported. The only current interesting research I’ve read that are similar are those from writers of Freakonomics. These are the type of research that are fun and real to me.
Things like the amount of theft committed by homeless people is a forward indicator of free money that people have available that they can give out. Since the homeless shelter program relies on big businesses and individuals giving and scrimp by on 0% profit margins, it is the first place where you can feel the tightening of belt by businesses. So when there’s no more food in the food kitchen, the homeless risk theft at stores that sell food. They usually only resort to this when food kitchen don’t have enough as they risk getting thrown in jail and suffer severe withdrawal symptoms.
Observing the effect and then talking to people to find the cause is important in forecasting what’s to come. I love finances, I love programming and I love talking to people. So far I know I love these, so I am trying to find out how to stuff my face full of these and maybe… eventually get paid doing it.
This is a generic disclaimer I attach to all financial based posts to catch all disclaimers. I own everything I talk about. If you suspect I own something or have an Agenda just assume yes. Assume the worst. Assume I am not acting on your best interest.