Financial analysis

Engineering view of Financial housing model and the cause of the BUBBLE explained  

Modeling and  analysis  are always useful to understand the effect of the noise and  the influence of the external factors..  As known SP500 index  has  the best rally  since 1974 .  One of the reason is  low interest rate   mortgage   which is causing housing market recovery.  Well  don't forget  : Worst bubble for a country  is always real estate crash . 


Here the  analysis for the bubble generation


What happens  when  a ( saturation limit )   :  Number of houses are limited. i.e  there is no new construction   then   model has saturated output fed to the system  .   Control engineering point of view , wrong  output is  used as  feedback ,  then system goes unstable . BUBBLE.   


Financial analysis 2

Why Switzerland does not have up and down economy as other developed countries and inflation is zero … . My argument is


When you analyze any financial crisis the first crisis is always at / due real estate business. Then why Switzerland is robust in the real estate business? It is because of their hard policy towards real estate business. They do not treat real estate as a business ground, it is considered as basic necessities rather than business i.e. you cannot buy and sell frequently using mortgage plans. There is a locking period to buy and sell house ….


Is income always  proportional to the investment ?

Is income is always proportional to the investment  ?. 

If you say YES , then you have not started doing business  :) .Why check out this example


1. You invest in selling Beer during the festival season

your investment is 100CHF . you gain profit 50CHF  .It is possible because people need  Beer at any price during festival seasons

If you  think 

  50CHF profit for 100CHF   then  50000CHF for 100000CHF.  Wow Good business

But in real life

You cannot carry and sell  so many  cans of beer and cannot find  lots of festival season to sell your 100000CHF worth cans of beer :)

It is simple argument but most of us  forget  that  there is a limit ( saturation )  for the investment