Mini Book Review – Timing the Real Estate Market (Campbell)
Posted by markharrison on May 13, 2007
Another book that isn’t (currently) available in the UK – I had to buy this one from Amazon.com.
There’s probably a parable in there somewhere about the global interconnectedness of markets, and globalisation, but that’s another story for another day.
The book is very much aimed at the reader new to property investment – for almost 200 pages, there are a relatively small number of insights, each with a fair amount of explanation, and several case studies.
My initial reaction to the book, therefore, was that it spent a lot of time saying not much – but having re-skimmed it today, the points it makes are definitely worth making, and actually points that I ought to work into my own mentoring programme! As someone (either Robert Kiyosaki or Tony Robbins, or maybe both say – you only need ONE critical insight from a book or a seminar to make an important change to your business.)
The key thing that Campbell stresses is that property is a market, and that therefore there are times when it is more sensible to buy, and times when it’s more sensible to sell. [As an aside, I believe that the way that the UK financing and taxation systems work mean that in the UK the ground is more weighted to “buy and hold” than “buy and sell”, but this is deliberately a US book.]
So far, so good.
He then goes on to outline a method that he has used for predicting when market movements will take place… He has five critical indicators, and takes the view that taking these 5 data series, and generating a graph of the 12-month change on a 12-month geometrical rolling average, then looking at when the change crosses zero is an ideal way to make these predictions.
If you followed that last paragraph, then you are pretty much all the way there, short of knowing what his signs are. If, however, your eyes rolled at that, then you’ll be grateful that he takes the time to build it up step by step, rather than just jumping in with the paragraph in question🙂
I have an issue with the way he’s picked his indicators – though it may be an issue with the way he explains how he arrived where he did, which feels very over-simplified. It is possible, neh, likely, that if I sat down with him for a few hours to understand the background, I’d be a lot happier with them. The problem is, as ever, I can see the OUTPUTS of his conclusions, but can’t see how he arrived at them, and I’m always more comfortable with things I understand.
I do understand (from other reviews in the US) that his methodology has proved quite effective. And he does make the point that just because it’s worked in the past is no guarantee that it will in the future (as any stock market investor will vouch.)
What I absolutely took away from the book is that we shouldn’t lose sight of the market cycles. I’m guilty of saying “I can’t predict the market cycles perfectly, so I’ll ignore them”…
… what I ought to be doing is saying “I can’t predict the market cycles perfectly, but even predicting with 75% accuracy will improve my overall performance.” And the Campbell Method for Timing the Real Estate Market has given me a tool for doing that.
Good insight… thank you Mr. Campbell.
… Oh, and what were the 5 indicators? You’ll have to read the book for that!