Tuesday, August 20, 2019

Median-based Trend Analysis – despite being Industry Standard – must be Challenged

(Click on the image to enlarge)

Ryan is interviewing for the Market Data Analyst position with a major think-tank.

Question # 1
Interviewer: These two graphics are derived off the same housing market and reflect the same time period. Why do they look so dissimilar? In order to keep the conversation more professional, let’s address the Monthly Median Sale Price as the Champion or Champ and the Monthly Median Sale Price per Square Feet as the Challenger.

Ryan: This dissimilarity proves that an industry standard Champ must always be validated or challenged. A prudent market analyst must not take a set of established assumptions for granted; instead, such assumptions should be subjected to frequent tests and validations.

Question # 2
Interviewer: Why do you think that is important? What’s wrong with a time-tested Champ? Why do you need to introduce an untested Challenger?

Ryan: The Challenger helps identify any on-going shifts in the market; for example, when the prospective buyers are gradually moving towards smaller homes, the demand pattern shifts. The Champ will not capture and reflect that shift in the demand pattern, but the Challenger definitely will. That is why the Champ must be meaningfully challenged.

Question # 3
Interviewer: Why is the double top bearish? Shouldn't the double bottom be bearish as well?

Ryan: A double top is bearish because it fails to break out of the congestion, generally trending downward. A double bottom, on the other hand, is bullish as it’s a breakout event with an up-sloping linear trend and potential for new highs.  

Question # 4
Interviewer: Explain the difference between the two in more quantitative terms.

Ryan: After peaking at $320,000, the Champ remains sideways, congesting between $300,000 and $310,000. The Challenger trend is almost diametrically opposite with an extremely bullish up-sloping double bottom, even eclipsing the prior high of $180/SF. The moving average is confirming the breakout as well.

Question # 5
Interviewer: If you have to show one of the two graphs to our clients, which one would you choose and why?

Ryan: Obviously, the Challenger graph, as it captures and depicts the underlying fundamentals of the market.  

Question # 6
Interviewer: Is there a missing piece in this presentation that would explain as to why these two solutions are diverging? If so, how would you present that data?

Ryan: Yes, the Monthly Median Home Size (SF) is missing. The movement of SF would explain why they are diverging. I would use a simple table showing all three monthly data variables, without having to show these two-dimensional graphs.   

Question # 7
Interviewer: Why do you think the bullish R-squared is so much higher than its bearish counterpart?

Ryan: Because that’s the right trendline for that slope of the curve. The bearish one does not demonstrate a linear trend so the resulting R-squared is low.

Question # 8
Interviewer: In that case, what type of trendline would you fit and how much difference would that make?

Ryan: I would fit a polynomial trendline of the 6th order, expecting fairly similar results.   
Interviewer: Give me a minute and let me check it out. Yes, you are right; it’s 0.794. That’s great data visualization. Congrats!

Question # 9
Interviewer: Would you use the median-based analysis in business decision-making? If not, how would you improve upon it?

Ryan: The median-based analysis is necessary (for quick and dirty analysis) but not sufficient in taking business decisions. I would use an extended percentile data curve like the 5th to 95th, without the outliers.   

Interviewer: Did you learn this data analysis on your own?

Ryan: No. My dad is a valuation expert so I get to learn a lot from him.

Interviewer: So, who do I hire – you or your dad?

Ryan: Got to be me because it’s BOGO.

Thank you,

Sid Som, MBA, MIM
Homequant, Inc.

Coming soon: Sid's New Book: Modern Interviewing Techniques and Skills - Live Simulations with actual Market Data

Wednesday, August 14, 2019

Homequant Offers Property Tax Appeals AVM on Revenue Sharing

Homequant Offers Custom Home Sales and Assessment Stats

Monday, August 12, 2019

Modern Home-based Businesses for Stay-at-home Moms

By stay-at-home moms I am here referring to the parents who choose to stay home, taking care of their growing kids. Thus, whether a parent is mom or dad is immaterial. Conversely, the folks who are working “remote” for their employers are obviously excluded from the purview of this post. 

According to Pew Research, "Stay-at-home moms and dads account for about one-in-five U.S. parents."

Of course, the vast majority of those parents are either professionally self-employed or are running some home-based businesses, but those who are planning to take the plunge in not too distant future may, among others, explore the following options as well.

    1. E-book Creation for 3rd Party Writers – Due to the fast-growing popularity of self-publishing platforms like Amazon’s KDP, Barnes & Noble Press, Lulu, etc., the publication of E-books has skyrocketed in recent years. Of course, the idea of “creating” the E-book forces many writers on to the sideline, meaning they could use some technical help in going live. Stay-at-home moms exploring new business opportunities should seriously evaluate this technical option – connecting future writers to the hosting platform – as part of their overall mix of alternatives. All one needs to get started is a simple landing page (e.g., Word Press website) which could be easily marketed via the social media.     

    2. E-book Marketing Service – One of the basic differen ces between the traditional book publication and E-book publication is the marketing and promotion. Publishers take full responsibility to market and promote traditional books, while self-publishing comes with self-marketing. While the E-book writers possess the domain knowledge or technical expertise to write their books, they are not necessarily experts in marketing and promoting them, making them stand out and narrowing the competition down. The stay-at-home moms with good knowledge and understanding of social/marketing may explore this home-based opportunity. Specialized 3rd party marketing tools are available for subscription. Some platforms have built-in marketing/promotion tools like affiliates, cross-selling, referrals, mailing lists, special discounts and coupons, etc. This can be a standalone service or can easily be run as an add-on to # 1 above.

    3. E-Book Writing and Editing Service – Many people have brilliant ideas but do not have the necessary time or professional writing skills to take them to the finish-line. The stay-at-home moms with good writing skills may step in and fill in that economic void. Those with very limited time may simply consider the “Editing” service. On the other hand, those with backgrounds in fine arts or visual arts may seek out the prospective writers needing such skills, including the designing of children’s books and science fictions. As the business grows, other similarly-qualified stay-at-home moms or local students majoring in those areas could be trained as sub-contractors. Again, all an entrepreneurial mind needs to get started is a landing page coupled with targeted social marketing. Later, this service could be vertically integrated with aforesaid # 1 and # 2.

    4. Local Restaurant Brand Promotion Service – While the national and regional chains have their own brand promotion and market research services, there are many smaller non-chain restaurants, especially the ethnic varieties, which lack proper marketing efforts to promote their brands to remain competitive. Such restaurants could be targeted and signed up for a fixed monthly fee for the first six months or so, connecting later to the traffic growth. With the help of a landing page and targeted social marketing, the online traffic could be directed to the client restaurants. Any traffic analytics software including Google Analytics can help analyze such campaigns. In order to target such (restaurant) clients, a 30-day free trial could be thought of. Owners can be met in the evening/weekends for face-to-face discussions and presentations. Once the clients see the growing traffic, they would love to stay with the service. And, as the word goes around, other restaurants struggling to stay afloat or are vying for growth would come on their own. Down the road, other research and analytics services – rewards, survey, satisfaction, etc. – could be added.

    5. Airbnb-style Online Matching of Long-term Adult Daycare Services – With the growth of our aging population, the need for adult daycare services has been rising around the country. Of course, unlike the child daycare services, the adult daycare services are more unstructured and primarily home-based. Subject to the local laws and legalities, the online matching of such care-givers and care-seekers will be an emerging trend, which the stay-at-home moms could take advantage of. A flat monthly fee to subscribe to the marketing program or a percent of the revenue from each sale could be charged to the care-givers. Of course, the long-term contract, say at least one month, would be the key, with a non-circumvention clause binding upon both parties within a certain period post initial introduction or at the completion of the first contract period. A simple mobile site (where the site automatically works as an App as well), being promoted socially, would be a good starting point.

    6. Conducting Online Surveys for Research Institutions and Political Parties – Market research houses and political parties need constant help with online surveys. Those who have backgrounds in market surveys, polling and conducting online interviews can explore this business opportunity. Alternatively, some stay-at-home moms can do the survey/polling on their own and then package and sell the services to various institutions or political parties in need of such survey results. This business may have a longer gestation period, but with proper social marketing and networking, it could be very rewarding over a period of time. Of course, sound technical knowledge regarding online sampling, survey methodologies, polling techniques, etc. are imperative. Political elections, from local to state to national, have become extremely poll-driven so the parties have been learning to evaluate myriad of external poll results to challenge their internal results. Again, excelling in local political polling would require significant interactions with the grassroots (could be time-taking!).    

    7. Online Property Tax Appeal Filing – Property tax assessment is one of the most controversial services local governments are generally tasked with. In larger jurisdictions, almost every other property assessment is frowned upon, leading to sizeable appeals. Unfortunately, a good percentage of homeowners are either unaware of or are too afraid to challenge their values. While the old-fashioned consultants are still hanging on to their antiquated solutions, a new generation of problem solvers is on the horizon posing existential threat to them. The stay-at-home moms with the basic knowledge of the local residential market can easily get into this online business and claim a piece of the forward-looking pie. All it requires is an online comparable sales (comps) program, along with access to the home sales database (they generally come bundled together from the data vendor). This is a marketing oriented business but rewards are significant considering the tax savings are generally evenly split. Stay-at-home moms with Data Science/Quantitative background can easily take the solution to the next level, potentially doing away with the old-fashioned competition altogether.

    8. Blog Marketing Service – The popularity of blogs, both consumer and commercial, has grown by leaps and bounds in recent years. While most bloggers are passionate at what they do, meaning good at presenting their viewpoints, many nonetheless succumb to the competition due to inadequate or ineffective marketing. Given their passion, they would more likely to spend on marketing to stay afloat and grow than concede and ring down the curtain. This creates a new small business opportunity. The stay-at-home moms who majored in English, Literature, etc. can easily turn things around for them by creating intelligent campaigns out of their blog posts and marketing them on the social media. In fact, there are AI-based social media applications that automatically identify the appropriate target audience and then place the content in front of them.

   9. Owning and Marketing Niche Job Sites – Nowadays ready-made job sites can be purchased or licensed for as little as $99/year from a whole host of well-known developers. Of course, as purchased or licensed, those sites are simply empty shells without any jobs to offer. The easiest way to get started is to become a licensee (generally free) of a major site operator like Indeed, CareerBuilder, SimplyHired, ZipRecruiter, etc. which allows the licensee’s site to be instantly populated with tens of thousands of current jobs from the parent site. Since the jobs are already available and are constantly updated, the stay-at-home moms can concentrate on targeting candidates. When a redirected candidate (from licensee site to parent site) is hired from the parent site, the fee is shared. Ideally, instead of running the site as a generic site like the parent’s, it would be prudent to run it as a very specialized site (preferably in line with the stay-at-home mom’s area of specialty) with highly targeted jobs and candidates, e.g., travel nursing, airline crew, new STEM, appraisers, etc., to avoid having to compete with the major players from the get-go. While streaming in the jobs, filters can be set up complementing the niche. The sites can be hosted by well-known US-based companies like GoDaddy, Bluehost, etc. for under $15/mo.

Nowadays, there are numerous online business opportunities for stay-at-home moms, aligning very well with their strengths. The marketing-oriented opportunities (surveys/polling) will take longer to yield results than their counterparts requiring much lesser marketing efforts (E-book creation). Similarly, the high-ticket-value opportunities (job sites) will require more creative marketing than those requiring straight forward marketing (blog marketing).

Thank you.

Sid Som, MBA, MIM
President, Homequant, Inc.
Coming Soon...Sid's New Book: 
Life, Logic and the Power of Nine (Branding)

Sunday, August 11, 2019

Are You a Future Superstar? Take the Test...

-- Intended for New Graduates --

Save the obvious: You aced the SAT and GMAT, graduated from Ivy, completed a top MBA program and joined a Dow component. Despite these astounding achievements, you are not a superstar -- yet. Just being brilliant does not make you a superstar. Let's put it this way: It is necessary, but not sufficient. In fact, only a very small percent of brilliant minds goes on to be recognized as true superstars. In order to be a superstar, you must uniquely and spontaneously rise above the smart peers, with a higher persona and more humane qualities. So, what are those additional qualities?

1. They Protect and Promote Staff and Peers -- Superstars are some of the most selfless leaders, always putting the interests of staff members and peers ahead of their own. Protecting and promoting others is not only their second nature, but they also go the extra mile in doing so. Atop, they achieve all this quietly and consistently, without letting anyone know that they are being so selfless in taking care of their immediate environment. As a kid I was confused about something so I sought my mom's advice. Her spontaneous reaction was, "Son, whatever you do, always think of others first. If you act that way, you will never have to worry about yourself; God will always take care of you." That's the universal mantra all superstars subscribe to.

2. They are Very Humble, Pleasant and Soft-spoken -- Superstars tend to be incredibly humble, delightfully pleasant and esthetically soft-spoken. Though the departments or agencies they lead invariably outperform all others but it is beneath their dignity to ever brag about it or take any personal credit for their achievements. In fact, they generally give full credit to their staff, or to a collective effort, at best. Of course, the evil folks around them interpret these great virtues as signs of weakness. It's always the average and overrated that tends to be snob and arrogant. On the other hand, superstars are like saints and, therefore, are uniquely qualified to smile away all evil stimuli. 

3. They are Least Confrontational, Move on when Environment becomes Intolerant -- Superstars are usually the least confrontational and mostly the low-key kind. They never waste time and energy on meaningless or greed-filled confrontations and exercises. On the contrary, they are extremely smooth operators, uplifting the environment with unprecedented intellectual faculty and superior emotional stability. As they know their mission all too well, they rarely stick to one job for too long. Despite the conventional wisdom, they move on for newer and bigger challenges when they realize they do not have much more to contribute to that environment. Alternatively, when they face intolerant environments (e.g., psycho boss, confrontational peers, unmanageable staff, hostile labor unions, etc.), they move on, knowing very well that there is a better home elsewhere. Money, power and prominence do not entice them. Contributing at the highest level is the sole mission of their existence.

4. Steve Jobs' Manpower Plan is tailor-made for them -- Steve Jobs (RIP) used to say, "It does not make sense to hire smart people and and tell them what to do. We hire smart people to tell us what to do." In other words, great institutions hire the best and let them work on projects of their own choosing, thus allowing them the opportunity to maximize contributions to the business objective. Superstars always look for such flexible environments, with adaptable supervisors. They do not enjoy environments where they have to constantly take instructions from the second-rate supervisors. As they get started, they quickly learn and understand the big picture, figuring out where they could be the most productive and contribute optimally. A great operations manager is a great employee, but not a superstar. A superstar is an original thinker, a consistent enterprise-level solutions provider, a selfless team player, and a passionate protector of all. They love what they do. 

5. They Prove their Vision in important Management Meetings -- While superstars tend to be low-key, they take control of the important management meetings, ensuring that their vision sets the agenda. This is not a selfish act; this is done to educate the attending senior management of the availability of the forward-looking agenda that aligns more effectively with the corporate objective than the erstwhile agenda often promoted by the incompetent supervisors (in place due to political appointments, nepotism, favoritism, quotas, etc.) to maintain the status quo and control. When the incompetent steals the limelight, the irrelevant agenda disparages the big picture, denigrating the greater good and weakening the power of the institution. Superstars' DNA forces them to fight tooth and nail to strengthen the institution, not ever weaken it. 

6. To Them, Quality is Everything -- Their lives revolve around quality, leaving the quantity to the great employees. So, they carefully research and join environments that continually emphasize and consistently promote quality ahead of quantity. Steve Jobs used to say, "One home run is much better than two doubles." Many brilliant minds dilute themselves by trying to strike a balance between quality and quantity. Fortunately, the budding superstars figure out from the get-go that they are mutually exclusive, so they learn to focus on quality, i.e. research and innovation. In order to entice and hire the superstars, the great visionary entrepreneurs offer disruptive opportunities leading to world-class creativity and innovations, coupled with an unrestricted domain of flexibility with power of decision-making -- the two elements that helped fashion the great institutions like Apple, Google and others.

7. They Know the Importance of Time in Professional Life and how to Optimally Manage it -- This is one area where the superstars beat the other brilliant minds. Superstars come to terms that time is the most precious thing in professional life so they learn to efficiently utilize every moment of it. Their inherent aversion for arrogance teaches them to accept mistakes honestly, making it part and parcel of their professional learning and growth, which in turn help them grow into natural perfectionists. In a way, superstars' lives closely resemble those of the cake decorating champions who never fail to complete their masterpieces on time, every time. Whether they are decorating the next masterpiece or working on applying more intelligence to the Rover on Mars to seek out water under the surface, they are constantly monitoring and managing time, with utmost precision and respect, considering how brief the human life span is and where time waits for none.

8. They believe that the Total is Greater than the Sum of the (Contributing) Parts -- Superstars never waste time and energy in looking at the glass as half full or as half empty; to them, it's always full. They know the sum total of people's strengths far outweighs their weaknesses so their management style is always strength-based. From their young life, they learn to figure out how to harness the strength of an available resource pool to the max. As a result of their ever-positive attitude and outlook towards life and work, the departments or agencies they manage perform incredibly efficiently, remaining consistently ahead of the competition. While the competition evaluates each resource as a combination of strength and weakness, they look at resources as an all-strength event or a composite which, in turn, helps them to deploy and utilize resources at a much faster pace, more effectively, and often incredibly cheaply. 

9. They are Incredibly Efficient Budget Managers and Lead by Example -- While the average and over-rated perennially cry for an ever-expanding budget (that's the only thing they are really good at!) to run from their incompetence, the superstars, on the other hand, constantly prove to the world the need for and the ultimate use of asset management. They are the living proof of: If you place a group of average people under a great leader, they will rock -- just a matter of time. Of course, the flip side is equally true. The reason some great institutions go down the tube is the poor leadership with bankrupt vision. On the way down, they keep pointing fingers at everyone and everything except themselves. Superstars never pass the buck. They also develop an excellent eye to seek out talent, putting them in charge of the key and strategic nodes to strengthen their departments or agencies, setting examples for others to follow. Setting and leading by example is inherent in them. But you will never hear them asking for a bigger budget or bragging about their performance. They are smooth and quiet operators.

When a superstar leaves, s/he leaves behind a long-lasting vacuum, rarely replaced. Evils drive them away. Fools rejoice after regaining their paradise. The smart ones share their fond memories for years, telling the world it was their once-in-a-lifetime privilege to have known and worked with a superstar.

Thank you,

Sid Som, MBA, MIM
President, Homequant, Inc.

Also Read:
How to Ace an Interview
How to Excel at Work and Outclass the Competition

Wednesday, August 7, 2019

While Analyzing Age-centric Benefits, Pay Close Attention to Incremental Growth

(Click on the image to enlarge)

-- Intended for New Graduates --

"I'm Paula Smith, SVP, Research, Dave is VP, Market Research and Maya is VP, Quantitative Trading. Can we call you Sheena?"


"Sheena, take a look at the graph and tell us what kind of trend you see."

"First off, thanks for displaying the actual Y values, instead of a generic Y axis. Makes it easier. Though it starts off as a linear trend, it becomes slightly backward-bending after age 64, thus making it an exponential trend."

"Sheena, is there a way to prove that - quickly? This graph is set up on that corner laptop. We'll return in five minutes."

"Okay, Sheena, ready for us? Show us what you did."

"Yes. I've added two trendlines - linear and exponential with respective r-squared. You can see the r-squared associated with the exponential trend is significantly higher (in basis points / not shown here) than its linear counterpart."

"Dave, do you have any questions for Sheena?"

"Thanks Paula. Sheena, if we reverse the trend to encourage early activation of benefits (leading to early retirements), will the trend change?"

"Yes. The trend will be forward tilting, so I will fit a logarithmic trendline."

"Maya, any questions for Sheena?"

 "Yes. Thanks Paula. Sheena, if you are advising a group of seniors evaluating activation, what would your two best pieces of advice be?"

"First advice: Instead of activating at age 64, I will advise them to activate it at 65 (the first inflection point when the curve tilts up, i.e. the marginal growth rate exceeding 8% for the first time). Second advice: Instead of activating at age 67, I will ask them to activate it at 68 (the second inflection when the mrginal growth rate re-hits 8%).

"When can you join, Sheena? You will be an excellent addition to our Research Team!" 

Granted, it's never that easy to land a great job, but you get the point. Please read the Part-1 (link below) for the actual prep.

Good Luck!

Sid Som, MBA, MIM
President, Homequant, Inc.

Also Read the following Posts:

How to Ace an Interview

Case-Shiller Housing Indices – Composite 10 vs. Composite 20 (Interview)

Does VIX Really Move in Tandem with S&P 500? (Interview)

How to define Options Strategy from a Technical Chart (Interview)

Do FAANG Stocks Predict Dow Jones Industrial Average (DJIA)? (Interview)

Coming soon: Sid's New Book: Modern Interviewing Techniques and Skills - Live Simulations with Actual Market Data