Thoughts On Absorption Rates – Need Feedback From The Readers

Hi everyone – a quick note about something I’ve been considering for awhile … I’m interested in what your thoughts are, so please consider it, email me, use Plugoo on the lefthand side of the blog, Twitter me … doesn’t matter how you do it, just let me know what you think!  Man, do I give you enough communication tools!  Can you say overkill?

It all came from the fact that I was listening to the radio one day and an "expert" was saying how the stock market was even that week.  He went on to say that on Monday it had been down, Tuesday and Wednesday it had been up, and Thursday it was down a bit lower than Wednesday’s close.  He THEN went on to say that this was negative news, that two downward spikes in the course of the week indicated a negative trend and that investors were pulling out of the market left and right.

I had lunch with an insurance friend of mine today, and we were talking about the idea of risk vs. reward in investing, and as we talked we discussed how you can’t look at the stock market on a daily basis, or a weekly basis, or maybe even a monthly basis.  You have to look at it long-term, and measure your comfort level with risk vs. reward based on long-term, rather than short-term, market performance.  Now, I’m the biggest hypocrite when it comes to long-term vs. short-term.  Anyone who knows me is going to tell you that I’m all about instant gratification.  Case(s) in point – I purchased an investment property this year after walking in and seeing it for the first time … VACANT.  No renter, no idea where I’d get a renter, but I knew it was a good investment and I went for it. Instant gratification.  My iPhoneInstant gratification, I was going to wait for my contract to be up in 2009, I waited 9 days from the first release.  Hell, I bought a car on eBay once – if "Buy It Now" isn’t an example of instant gratification, I don’t know what is.

So what’s that have to do with anything?  I don’t know … no, my point is that when I put these absorption rate figures out, I’m looking at a very specific snapshot of the market.  It’s instant gratification, real estate-reporting style.  But one month worth of data might not be giving us as accurate a snapshot of the market as say, three months might.  If you find the monthly reports helpful, great!  Let me know that.  But my thought right now is that we might get a better feel for how the market is doing if we expanded the time between reports.  So I’m interested to know what you, readers who are all WAY smarter than I, have to say about it.  HMMMMMMM …?

2 thoughts on “Thoughts On Absorption Rates – Need Feedback From The Readers

  1. Scott Rogers

    I average the past three months of sales and compare it to available inventory. This allows for monthly absorption rate updates, but always is using the past three months…
    http://www.scottprogers.com/blog/archives/2007/11/hows-the-market–it-depends-on-the-price-range_1194592977/index.php?f=1
    Here is an example of the danger of using just one month’s data…
    http://www.scottprogers.com/blog/archives/2007/11/home-sales-down–percent-in-september_1194430825/index.php?f=1

  2. Scott Rogers

    I average the past three months of sales and compare it to available inventory. This allows for monthly absorption rate updates, but always is using the past three months…

    Here is an example of the danger of using just one month’s data…

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