The What, Where, When and Why and the Who to?
As mysterious as equity investment can
often be, the practice actually has a basis in economic reality. Just as the performance
of individual companies is dependent on the business outlook and progress of that
enterprise,. So too the overall trend of the stock market or its components, is a
reflection of the general business outlook for the economy or for a particular industry.
While this might be simple enough to say,
it is not possible to track performance of individual companies or industries unless one
has meaningful data with which to make intelligent appraisals. While in the case of a
particular company, one will utilize sales and earnings performance to measure its growth,
the future performance will also depend upon sales forecasts and the outlook for the
To develop meaningful forecasts on the
future outlook for the economy requires solid economic data on a large number of financial
components. This data will provide detailed figures on how the economy is performing on an
ongoing basis and provide enough statistical evidence to extrapolate likely performance in
the future. While one often hears talks from forecasters referring to "the view from
their crystal balls," the fact is that these forecasts are not an effort at some
"hocus pocus," but are based on extended economic models and prior performance.
However, in the final analysis, even the best forecasts are projections and not statement
of actual fact.
With this report, we will begin a series of
article explaining the various statistical series that are reported by various government
agencies as well as private trade groups and economic groups. We will attempt to provide
some insight into the data and what the significance of the report is. We will not be
attempting to provide any forecasts of where any of the individual indicators are headed.
Some of the key indicators we will cover
are the Producer and Consumer Price Reports, Unemployment Report and Average Hourly Wages
and Average Work Week. Retail Sales, Housing Starts, Building Permits, Industrial
Production, Durable Goods Orders, GDP Numbers, Trade Deficit, Index of Leading Economic
Indicators, Employment Cost Index, API Data, Weekly Jobless Claims Report, Help Wanted
Index, Consumer Confidence, BTM Schroders, LJR Redbook, Beige Book, Regional Federal
Reserve Business Conditions Reports, University of Michigan Sentiment Survey, Purchasing
Managers Reports and others.
The purpose of these reports will be to
provide the reader with the knowledge to look at these data in an educated manner and use
them to help chart a successful investment program.
Nevertheless, it must still be stressed
that trading in equities is still fraught with risk. Being an educated investor provides
some basis for limiting risk, but there are always factors influencing individual
investments that cannot be forecasted. In addition, there are often fresh market
developments that burst upon the scene in totally unexpected fashion. These may have a
profound impact of equity prices over the short or long term. In many cases such
developments are totally unexpected, although with hindsight the forces that led up to the
event becomes more visible.
This is a lesson in itself. Observing the
past and assimilating the information provided , recognizing the emerging trends and
patterns is perhaps one of the best ways to succeed, or to at least anticipate the future.
As a wise man once said, "He who does not learn from the past, is doomed to repeat
it." In stock market parlance this can probably be translated as, if you're repeating
the past, you,re probably not reaping the future rewards.
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the documents in this website should not be construed as an offer to
sell, or a solicitation to buy, any securities referred to herein.
The information is considered reliable, but not guaranteed as to
accuracy or completeness. TheStockAdvisor specifically disclaims
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