Econometric Modelling

<body><table border="0" cellpadding="0" cellspacing="0" width="100%"><tr><td> <font face="garamond, times new roman, times" mstheme> <p> Econometric Modelling </p> <p> </p> </font mstheme> </td></tr></table><table border="0" cellpadding="0" cellspacing="0" width="100%"><tr><td valign="top" width="1%"><font face="garamond, times new roman, times" mstheme> <p> </p> </font mstheme></td><td valign="top" width="24"></td><td valign="top"> <p>NO FRAMES VERSION: </p> <p><strong><font color="#C0C0C0" face="Arial Narrow" size="2">Econometric Modelling</font></strong></p> <p><strong><font color="#C0C0C0" face="Arial Narrow" size="2">This chart illustrates the way our economic forecasting model works. The level of capacity utilisation in the economy plays a central role in our models for all three types of assets - bonds, forex and shares. This has been calculated for every country analysed and, as the most important example, the chart alongside shows this ratio for the whole world. The estimate of PIT is the </font><font face="Arial Narrow" size="2" color="#FFFFFF">thick white line</font><font color="#C0C0C0" face="Arial Narrow" size="2">, and for comparison estimates by the IMF are shown as a </font><font face="Arial Narrow" size="2" color="#00FF00">green line</font><font color="#C0C0C0" face="Arial Narrow" size="2"> and by the OECD is shown as a </font><font face="Arial Narrow" size="2" color="#FFFF00">yellow line</font><font color="#C0C0C0" face="Arial Narrow" size="2">. The scale on the vertical axis represents the number of percentage points by which capacity utilisation diverges from the average over the period.   </font></strong></p> <p><strong><font color="#C0C0C0" face="Arial Narrow" size="2">There are several advantages for calculating independant estimates for this crucial variable. Firstly the PIT database   includes a broader range of countries. Secondly the algorithms are required to generate Best Guesses for financial markets. </font></strong></p> <p><strong><font color="#C0C0C0" face="Arial Narrow" size="2">The intellectual approach used in P/T projections may best be described as an elementary application of chaos theory.</font></strong></p> <p><strong><font color="#C0C0C0" face="Arial Narrow" size="2">As can be seen performance of the three series is broadly similar, despite differences in coverage. The IMF data relates only to the G7 leading economies and the OECD to developed countries only, while the PIT series also includes the emerging markets in our database.</font></strong></p> <p><strong><font color="#C0C0C0" face="Arial Narrow" size="2">While there are noticeable differences in level in some years, these are of little significance, given the purpose of the P/T series, which is to identify in good time changes in direction that are material to financial markets. </font></strong></p> <p><strong><font color="#C0C0C0" face="Arial Narrow" size="2">There were only significant divergences in two years, namely 1983 and 1990, in which P/T projected a change in direction a year earlier. </font></strong></p> <hr color="#FF0000"> <p align="center"><strong><font size="2">[ <a href="global_asset_allocation_sitemap.htm" target="_top">Site Map</a> ] [ <a href="index.htm" target="_top">Home</a> ] [ <a href="TestStation_market_timing_record.htm" target="_top">Lab Tests</a> ]</font></strong></p> <p align="left"><font face="Arial Narrow" size="1" color="#C0C0C0">Copyright © 1999 Professional Investment Tools Ltd., authoristed by the Financial Services Authority to carry out investment business in the United Kingdom. Please read Financial Health Warning and Licence Agreement. UK laws apply exclusively. Main sources: Consensus Economics, Corel Corp., FIBV, PIT and national governments. Last modified: April 29, 2004</font></p> <p><strong><font size="3"> </font> </strong> </td></tr></table><table border="0" cellpadding="0" cellspacing="0" width="100%"><tr><td><font face="garamond, times new roman, times" mstheme> <p align="left"><font face="Arial Narrow" size="1" color="#C0C0C0">Copyright © 1999 Professional Investment Tools Ltd., authorised by the Financial Services Authority. Independent Financial Adviser (UK) and member of Investorside Research Association (US). Please read Financial Health Warning and Licence Agreement. UK laws apply exclusively. Principal sources: Consensus Economics, Corel Corp., FIBV, Global Financial Data, PIT, national governments and stock exchanges. Information and opinions are based on sources believed to be reliable and accurate. However PIT does not guarantee this to be the case, and does not accept liability for any loss arising. This is for information only and does not constitute a solicitation to deal in any securities. Opinions are liable to change. Past performance is no guarantee of future success. Last modified: April 29, 2004</font><font face="Arial Narrow" size="2" color="#C0C0C0"><strong>.</strong></font></p> </font mstheme></td></tr></table></body>