Wednesday, February 6, 2013

Can we trust forecasts of machine vision market growth?

Economic forecasts are notoriously inaccurate. In fact, after reading Nate Silver’s “The Signal and the Noise” I’m convinced a coin toss would be a better predictor of whether the market will rise or fall. So it was with great interest that I read Winn Hardin’s prediction on the AIA website. (“Indicators Point Upward for Machine Vision Market in 2013” January 30th, 2013.)

Winn reports Alex Shikany, Director of Market Analysis at the AIA, as saying that 2013 will be a good year because the Purchasing Manager’s Index (PMI) says so.

PMI has a pretty good track record, but I can’t help thinking how Mr. Silver poured scorn on those who place their faith in such indicators. First, he notes that the global economy is incredibly dynamic, meaning that which indicators are most useful changes frequently. And second, he asks if the mere fact of following an indicator can change it’s worth, thanks to all the complex feedback systems within an economy.

Nate suggests we might do better to follow stories rather than indicators, and that’s what Donal Waide of Bitflow seems to be doing in the same AIA article.

Donal talks about potential growth in China, flowing from rising wage costs and increased focus on quality. Now that is a far more persuasive argument than just saying sales will grow because the PMI is up.

The bottom line is that, however you approach forecasting, it looks like 2013 will a good year. That’s something we can all be pleased about, but might I suggest that, when dusting off our crystal balls we heed Silver’s advice and focus on the fundamentals?

No comments: