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Perfect forecast line |
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Perfect forecast lineGraph of a slope that matches the forecast of an exchange rate with the actual exchange rate.Perfect forecast line Similar MatchesForecastingForecastingMaking projections about future performance on the basis of historical and current conditions data. Profit forecastProfit forecastA prediction of future profits of a company, which may affect investment decisions. Market based forecastingMarket based forecastingAnalyzing future spot rates on the basis of a market-determined exchange rate (such as the current spot rate or forward rate). Fundamental forecastingFundamental forecastingAnalyzing the future on the basis of fundamental relationships between economic variables and exchange rates. Consensus forecastConsensus forecastAggregated forecasts drawn from a number of different brokers about the likely future earnings of a company.Broking firms publish forecasts of the future earnings of the companies they follow. Their analysts specialise in certain industry sectors, and often have access to directors and CEOs which private investors do not have. Using their knowledge of the sector, the company, and general economic conditions, they may estimate the profits of the companies for the coming year.The value of these forecasts for investors is that, if correct, they allow rational judgement about how much to pay for the shares. The problem is that brokers forecasts are not always correct, and if they are wrong, the investor may overpay.Consensus forecasts may provide a safety net. The idea is basically that instead of relying on the forecast of one broker, you look at the estimates from a cross-section of brokers, and find a consensus. The assumption is that a consensus is more likely to be right.Some mechanical methods of share valuation, particularly PEGS, rely on brokers' forecasts. Further SuggestionsMixed forecastingTechnical forecasting Whisper number or forecast pension forecast |
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