Market prediction based on macroeconomic indicators - page 42
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Predicting the market based on macroeconomic indicators
It makes no sense. The current market is close to being efficient. Everything has already played out, including the predictions.
I use (x[i] - x[i-1]) / (x[i] + x[i-1]). Negative data is no worse than positive data. Normalization in [-1, +1] is imho better than in [0, 1].
Predicting the market based on macroeconomic indicators
It makes no sense. The current market is close to being efficient. Everything has already played out, including the predictions.
Thanks for the opinion. Maybe it really is effective. I don't give up easily.
It's important to know that.) For predictions. It all falls into place.
As an old acquaintance of mine who lives in Canada says: your number eight, you will be asked afterwards.
It's important to know your place in this queue.
ZS I started a blog here, a few hours ago, read it. It's a close subject. Not to be repetitive.
My Matlab code first removes the predictors that have NaN in the simulated history, then converts all the data by the same method, then runs through all the history trying each of the 2 thousand predictors and their delayed versions for predictive capability of the past future, calculates the accumulated prediction error of each predictor and finally gives a list of predictors sorted by their error. If this is done for every past moment in history and takes the best predictors and predicts the future, the result is pretty decent for a few years until a recession happens. At such times the past best forecasters do not predict the fall of GDP well and are replaced by new forecasters. And so it goes on until a new recession occurs. Whether there is a universal formula for the dependence of GDP on some key forecasters I do not know. If we add another hundred years of history then at the end of these hundred years we have a list of prognosticators that predicted all recessions more or less well but when the next recession comes they can be replaced by new predictors again.
Intuitively picking predictors is also wrong. For example, is the unemployment rate a leading or lagging predictor? Does a high unemployment rate cause a recession or vice versa does a recession cause a high unemployment rate? It seems to me that recession causes high unemployment so using unemployment to predict recessions is not an option. But the decision to use any predictors in the model is made by my code based on accumulated prediction errors. So far the leading role in my model is taken by predictors based on private investment in house building and domestic consumption. This is probably logical, because houses and appliances are a big part of GDP. If people don't buy houses, refrigerators and televisions, production goes down, GDP goes down, factories fire workers, unemployment goes up, consumption goes down even more. Republicans and Democrats are getting the country out of recession in different ways. The democrats give money to the low wage population (vouchers) to increase their consumption or encourage immigration to create a new consumeristocracy. Republicans argue that a one-time $500-700 allowance for poor families will not allow them to buy a new house or car and move the economy forward. They prefer to give money to the poor by lowering taxes, especially on investments. Their theory is that the rich, by saving more money in lower taxes, will buy more expensive things (houses, cars, etc.) which will increase consumption where it matters, or they will invest the money in businesses which will reduce unemployment, increase the ability to pay and increase consumption. Reaganomics was based on that.
Vladimir, what about the aerospace industry and its businesses .....
Everything written here about GDP is great, correct and strictly according to the economics textbooks.
But here is the question: does the US economy have anything to do with the economy? Does everything written here about real economic indicators apply to what is happening in the US?
I once saw a figure that about half of US GDP is the result of the activities of various financial institutions. And since when has finance had anything to do with the economy? The main purpose of finance, of money, is to serve the exchange of real goods and services. In the U.S., we are witnessing a time when financial institutions have become an independent form of commercial activity, based on the IMPORTANCE of prices on exchanges, in the form of money given out as loans from the Fed to banks, and most importantly, in the form of an immense number of FUTURES, which do not involve delivery (settlement futures).
Therefore, the US economy has nothing to do with what is written in economics textbooks and predictions have to be made from patterns derived from classification algorithms, and identifying relationships between economic indicators of the real economy is certainly correct, but not in a children's game called "Monopoly" .....
Once saw a figure that about half of US GDP is the result of a variety of financial institutions.
Somehow has someone somewhere seen something once?
Interesting....
Somehow has someone somewhere seen something once?
Interesting....
You're right, I believed Hazin.
But.
The picture given is GDP based on taxes paid, and the biggest financial institutions in the US are offshore and don't pay taxes.
So Hazin is right about something, but I don't want to look into it.
My opinion remains the same: the US economy is not driven by supply and demand. It is very easily ruled through futures. Therefore, the purging of lists of predictors based on economic linkage should be more than cautious.
Well, here's a clear thought by Hazin.
For 2010, total financial instruments on NYCE NASDAQ = $17.796 + $12.659 trillion. And GDP is half that. And finance's share of GDP is laughable. How can this be?
Everything about statistics in the US has to be done with extreme caution. One has to delve into the methodology of calculating GDP... Is this necessary?