Lots of tools are available to predict the future results of businesses. I have been reading about predictive analytics and how it takes data mining and business data build a model that will predict which ads to put on a website, or what customers will want to purchase from the department stores.
The Wikipedia definition is "predictive analytics encompasses a variety of techniques from statistics and data mining that analyze current and historical data to make predictions about future events." Developing a model is necessary to capture the relationships between the data This enables prediction of future results. Predictive analytics uses confirmed relationships between explanatory and critеrion variables from past occurrences to predict future outcomes. The predictions are most often values suggesting the likelihood а particular behavior or event will take place in the future.
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3 comments:
So if these tools actually work, why can't you use them do to stock market predictions and make lots of money? My guess is that they work for a very small set of cases and only in the short term. They work at all because they are based on a mathematical model of the process and these models seem to break down as you scale up the complexity.
Nigel
Yes. That is the purpose of Predictive analytics. The models can only be as accurate as the mathematical model itself. The tools are not useful for forecasting very far in the future either.
Carol,
I saw this blog about predicting the future. Here is a small excerpt.
Predicting the future is tough business. Pesce knows that most of his predictions will turn out false. Yet, it is still worth predicting because predicting helps us accept the world as it is instead of yearning for the "good old days", predicting the future allows us to embrace change, and maybe, just maybe, a couple of those predictions may turn out to be right. We can then proudly say "I told you so"!
http://ramblingonthisandthat.blogspot.com/2008/05/predicting-future.html
Basically the message is the future cannot be predicted, we just pretend that we can.
John
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