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Forecasting Fundamentals by Nada Sanders

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CHAPTER 6

Statistical Forecasting Models

If you have reason to think that yesterday’s forecast went wrong, there is no glory in sticking to it.

—Nate Silver

The Basics

Statistical forecasting models are based on mathematics and statistics. As a result they are objective and consistent. They have the advantage of being able to process large amounts of data and are not biased. These offer advantages we don’t have with qualitative models which are based on human judgment, are subject to biases, are inconsistent, and have a limited-attention span.

Statistical forecasting models require at least some kind of computation in order to reach a numerical value. Their forecast is simply a mathematical computation from the data that they are based on. However, ...

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