The big machine, also called the market, spits out thousands of datapoints every day. A data point is a discrete unit of information. In general, any single fact is a unique data point. The term data point is roughly equivalent to datum, the singular form of data. In a statistical or analytical context, it is the factual information derived from a measurement or research and can be represented as a numerical data point, a statistical display or a graph.
Data points can be used to support or refute a hypothesis or a strategy. They can be used to spot trends or patterns. And they can be used to make predictions and they can tell us where we are in an economic cycle. In short, data points are the building blocks of data analysis.
Once we understand and trust these datapoints, they can be used to build real, unbiased and accurate models of the state of the market with a very high probability of pointing to where it will be going the future. This is a no-nonsense approach to understanding the future market movements so we can make sure our investments or trading strategies are aligned with these movements.
The business cycles are concerted cyclical upswings and downswings in the broad measures of the economic output. The alternating phases of the business cycle are expansions and contractions (recessions). Recessions often start at the peak of the business cycle when expansion ends, and end at the trough of the business cycle when the next expansion begins.
Growth and inflation affects all aspects of the economy, from consumer spending, business investment and employment rates to government programs, tax policies, and government interest rates. Understanding both growth and inflation is crucial to investing because it will greatly affect future cash flows and the value of you investment returns.
The most important figure in a model is the actual speed of the changes observed in the periods of data points. How fast is the growth or inflation increasing or decreasing, compared to the last measurement? is it accelerating or slowing, adjusted for base effects? This will give valid signs of the momentum of the changes going forward, helping us determine if a top or a bottom in the cycle has formed..
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