Forecast is the art or science to predict in advance. It is applied in multiple manners and multiple industries, especially in production and purchasing environments. It is also applicable for stock markets and predicting the weather or even hurricanes. A forecast definition is given on this page, as well as some examples like financial forecast, sales forecast, economic forecast and hurricane forecast. But we will start with the main subject of this website: forecasting financial markets.
Stock market forecasting
Stock markets, or financial markets, are also very suitable for forecasting. The challenges and the do’s and don’t of different forecasting methods, like fundamental analysis, technical analysis and Elliott wave analysis, are described in the different sections of this website. The market forecasts are also applied in real time:
- dow forecast
- dax forecast
- S&P 500 forecast
- silver forecast
- gold forecast
Forecast definition
The official definition of forecasting according to the free dictionary is “to predict or calculate in advance. It is mend to serve as an early indication of actual facts of live or business. Wikipedia adds to this that the results should be interpreted with cautious, taking some degrees of freedom into account.
Financial forecast
The purpose of a financial forecast, or prognosis, is to give the management or board of directors a financial roadmap for their business. It gives an overview of the expected financial position over a certain period of time (monthly, quarterly or yearly). It is a function of expected costs, revenues and cash flows. Companies will be judged on this forecast in rising or declining stock markets if results are according to the forecast or didn’t meet the prognosis.
Sales forecast
The sales forecast is part of the financial forecast as it is only about one side of the equation: the revenues. Costs are not taken into account. It is mainly about how much products or services are expected to be sold times the averages sales price of these units. Sales managers or directors will report this as part of their plan to their superiors.
Economic forecast
Economic forecasting is about predicting the economic situation of an economy as a whole contrary to financial or sales forecasts where businesses were subject to analysis. Economic forecasts are sometimes also executed for certain parts of the economy of a country. The economic outlook of a the UK is for example done by the Office of Budget and the u.s. economic forecast is executed by the CBO (Congressional budget office).
Hurricane forecast
Forecasting does not always has something to do with money or economies. It is also applied in other industries. A great day to day example is weather forecasting. A nice tool to easily monitor the weather forecast is the firefox plugin forecastfox. A more extreme example is the forecast of hurricanes (like the infamous hurricane Katrina) in the hurricane season can save many lives.