Friday 21 September 2012

Maths? I hate maths!

When people try to forecast a future event, they usually use a pattern that they are aware of which lead to a similar situation.

For instance, if the economy slows down and ends up in recession, many people will assume the problem was caused by the first indicators of the recession.  This might be financial organizations becoming insolvent. Using this pattern, if you prevent financial organizations becoming insolvent, this would prevent the economy ending up in recession.  However, this is far too simplistic, and is just going to lead to a different problem. Forecasting the future involves more variables than this. 

The most important image for making any form of forecasting is the sin wave.





Does it look complicated?
It shouldn't, its just a never ending signal that goes up and down at a very regular interval.

Mathematically, this is the most basic forecast you can do. The amplitude will reach a certain level at every multiple of the wavelength.  Its the core idea behind forecasting the future.

And that is the first problem.  In the real world, it isn't as easy as just saying, its just like this in the past, so it will happen again.  That is what introduces the new problems which makes the future different.

Maybe we should call it harmonics




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