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Ryan is interviewing for a Supervising Analyst position with a major think-tank.
Question # 1
Interviewer: These two graphics are derived from the same housing market and reflect the same period. Why do they look so dissimilar? 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 needs to be validated or challenged. A prudent market analyst must not take a set of established assumptions for granted; instead, the analyst should subject such assumptions 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 analysts should meaningfully challenge the Champ.
Question # 3
Interviewer: Why are the double top and double bottom formations bearish and bullish, respectively?
Ryan: A double top is bearish because it fails to break out of the congestion, generally with a downward trend. On the other hand, a double bottom is bullish as it's a breakout event with an up-sloping linear trend, often making new highs.
Question # 4
Interviewer: Explain the difference between the two in more quantitative terms.
Ryan: After peaking at $320,000, the Champ remained sideways, congesting between $300,000 and $310,000. The Challenger trend was almost diametrically opposite with an extremely bullish up-sloping double bottom, eclipsing the prior high of $180/SF. Even the moving average has confirmed the breakout.
Question # 5
Interviewer: If you have to show one of the two graphs to our clients, which one would you choose and why?
Ryan: I would choose the Challenger graph, as it captures and depicts the market's underlying fundamentals.
Question # 6
Interviewer: Is there a missing piece in this presentation explaining why these two solutions are diverging? If so, how would you present that data?
Ryan: Yes, the Monthly Median Home Size (SF) is missing. SF would explain why they are diverging. I would use a simple table showing all three monthly data variables without showing 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 the 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 reasonably similar results.
Interviewer: Give me a minute and let me check it out. Yes, you are right; it's 0.794. That's excellent 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 isn't sufficient in making business decisions. I would use an extended percentile data curve like 5th to 95th, without the outliers.
Question # 1
Interviewer: These two graphics are derived from the same housing market and reflect the same period. Why do they look so dissimilar? 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 needs to be validated or challenged. A prudent market analyst must not take a set of established assumptions for granted; instead, the analyst should subject such assumptions 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 analysts should meaningfully challenge the Champ.
Question # 3
Interviewer: Why are the double top and double bottom formations bearish and bullish, respectively?
Ryan: A double top is bearish because it fails to break out of the congestion, generally with a downward trend. On the other hand, a double bottom is bullish as it's a breakout event with an up-sloping linear trend, often making new highs.
Question # 4
Interviewer: Explain the difference between the two in more quantitative terms.
Ryan: After peaking at $320,000, the Champ remained sideways, congesting between $300,000 and $310,000. The Challenger trend was almost diametrically opposite with an extremely bullish up-sloping double bottom, eclipsing the prior high of $180/SF. Even the moving average has confirmed the breakout.
Question # 5
Interviewer: If you have to show one of the two graphs to our clients, which one would you choose and why?
Ryan: I would choose the Challenger graph, as it captures and depicts the market's underlying fundamentals.
Question # 6
Interviewer: Is there a missing piece in this presentation explaining why these two solutions are diverging? If so, how would you present that data?
Ryan: Yes, the Monthly Median Home Size (SF) is missing. SF would explain why they are diverging. I would use a simple table showing all three monthly data variables without showing 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 the 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 reasonably similar results.
Interviewer: Give me a minute and let me check it out. Yes, you are right; it's 0.794. That's excellent 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 isn't sufficient in making business decisions. I would use an extended percentile data curve like 5th to 95th, without the outliers.
-Sid Som, MBA, MIM
homequant@gmail.com
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