To determine capital market expectations, analysts use a variety of approaches. We examine three of the most common methods: (1) econometrics, (2) economic indicators, and (3) a checklist approach.
For economic indicators , the major drawback is
(from Kapaln)
• Not consistently accurate as economic relationships change through time.
• Forecasts from leading indicators can be misleading by giving false signals.
Is time lag also a serious issue for economic indicators?