Recently in our management classes we have been discussing the advantages and disadvantages of forecasting for operations management, and the implications these forecasts have on company operations. As useful as these forecasting tools are for conventional corporations, I had come across an article in the wall street journal that talks about forecasting in a whole other type of perspective: personal investing and creating wealth http://online.wsj.com/article/SB10000872396390443493304578036544188395374.html?KEYWORDS=forecast+analysis What I found interesting about this article is that it essentially discusses the same topics we have in class about business operations, but it relates it to investors both, big and small, and relates to many different investing opportunities in todays markets.
What I found interesting about the short term forecast analysis was all of the factors that are taken into account before an investor should make a decision about what investments they should consider. In class we also discussed all the different factors that should be considered before a business makes a decision to go forward, with business operation decisions such as production level, or actively seeking new employees to meet production demand. In the short term this article discusses many different points that investors should be wary of before they invest, including factors that will impact the markets in the future such as volatility, uncertainty and the European debt crisis. This however does not vary too much with factors that business operations face such as short term factors such as immediate demand and materials available. However forecasting is a very useful tool when deciding what type of business decision’s should be made, and it can make all the difference between having a profitable quarter, or suffering substantial losses from lack of preparation.
Counter to the short term analysis for investors, it seems the long term analysis goes more in depth because there is more historical data that can be used to forecast the trends that could appear in the markets. The long term forecast of the markets however does not seem to have a good outlook, and it looks as if it could be risky for investors looking to get substantial returns without having significant risk. The article goes on to explain the different options that are available to investors, much like forecasting for management operations gives managers different options for how they should proceed forward, as well as what different strategies they have at their disposal. The question I would like to propose to you is made up of two parts, first do you think that historical data is relative for forecasting when recently the markets, and the economy in general has been so volatile? Do you feel like traditional methods of forecasting markets are relative to forecasting business operations? Can careful data analysis help management make sound decisions even if past data collections have not been consistent in the past few years?