Forecasting Methods

(9/25/2012) Moving Average
One way I like to show students about moving average method is to check a stock price. Use Apple's stock price as an example, you can see apple's historical prices by clicking a "5Y" (5-year time frame).

1. Now click the left bar "Basic Tech. Analysis"
2. Click moving average "10" and see how the chart changes. You will see another moving average price line in a different color. 
3. Click moving average "50" and "200," you will see another two colored lines. 

What do you think from this chart?

The following is the historical gold price from 1833 to present, can you construct a moving average chart from it?

(9/25/2012) Cross-Impact Analysis

It assume that some future events are related to the occurrence of an earlier event. One famous example is "Redskins Rule" to predict US presidential election. It says "If the Redskins win their last home game before the election, the party that won the previous election wins the next election. If the Redskins lose, the challenging party's candidate wins." Since 1937, this forecast has been accurate 17 out of 18 times (missed 2004 election). Let us see whether it will be correct again.