There is some evidence that the stock market can predict economic prospects, but the correlation is unreliable.
Tony says it is difficult to predict stock market returns but relatively easy to predict volatility.
Economists, historians, and stock market analysts have crunched copious amounts of data over the years to predict market movements, and the results hold promising news for investors.
Trading VIX-related indexes may make sense for hedging near-term market fluctuations, but there is simply not going to be any way to predict market moves with any certainty.
Just as no one can predict the stock market, no one can really predict the economy, even if the Dow is doing great.
Trefis members however predict market share will be slightly higher in the coming years as indicated in the chart below.
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Get this: the initial research by University of Manchester and Indiana University academics said the emotions tracked on Twitter would predict market movements up to six days in advance with 87.6% accuracy.
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Each month, a scam artist sends 1000 newsletters to 1000 different people. 500 letters predict that the market will increase during the month, and 500 predict a decline.
Changes in futures don't always accurately predict early market moves after the opening bell.
The flu market was able to predict the colour of a given week with 80% accuracy, two to three weeks in advance.
Market research firms also predict a bright future for open source software.
Venture capital fund managers have been more in the spotlight as they invest in successful start-ups in the difficult to predict internet market.
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One common thread from the thoughts of these legends is that they humbly admit that they can't predict the market and they don't believe people should try.
He observed that, while it was difficult to predict stock market performance in the near term (one-year horizon), there was a strong relationship between the price-earnings ratio and the long-term market return (10-year horizon).
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Gary Shilling, editor of Insight, looks at the economy and the financial sector and remains a bear with claws, while Burton Malkiel, author of A Random Walk Down Wall Street, counters that trying to predict the market is folly--even though he's a huge bull on China!
These would include: an investor cannot pick the return but can only choose the level of risk, One cannot accurately predict the market, Diversification lowers risk, Invest to be on the Efficient Frontier and low cost investments can improve performance vs. high costs.
If the yen weakens to 120, then you can safely predict the Tokyo market has only one way to go: up.
Figuring out why this is might give us an idea about the current market sentiment and help us predict what might happen going forward.
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Recent returns can be used to predict whether most market experts will be bullish or bearish in their next television appearance, but those opinions rarely tell us anything about future prices.
Market cycles are impossible to predict.
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The days when the Twitter mood fell in the calmness category, they found with 87.5% accuracy that they could predict whether the market would close up or down between 2 and 6 days after a calmness reading was logged on Twitter.
Hence, we should predict that a competitive market will see standards go down.
In the fast-growing cholesterol market, it is difficult to predict which pills will be able to grow their sales fastest.
"No one can predict how much financial market instability we are likely to get when the Fed finally begins pulling back, " Jones says.
Noise often makes people try (and fail) to predict the direction of the market.
Indeed, the cost of intervention is often too high, but that is what an economist would predict in a case of market imperfection.
And even if you are better informed than most others, as many fund managers claim to be, the timing of market swings can be virtually impossible to predict.
In 1949, while at Fortune, Jones published an article called "Fashions in Forecasting, " in which Wall Street experts insisted that it was impossible to predict the direction of the market.
If you match your long term goals with long term investments, you may accept that fluctuations in the stock market are the norm and impossible to predict on a consistent basis.
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