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Perspective Environmental Scanning for Accurate Stock Price Prediction (Part 2)

11 February 2008 - Markets - Editor
Perspective Environmental Scanning for Accurate Stock Price Prediction (Part 1)

Networking for Exclusive Financial Planning

There is no established alternative to domain expertise for top stock picks through environmental scanning. You can develop a theory about a business model, and trace life cycle links through academic means. However, you will probably never be certain enough about your modeling to back it with meaningful stock investment decisions. Can you sell blue chips just because of a notion that the future for that sector or player may not be as bright as today? Can you risk your savings on pink stocks just because you feel that they may have great futures? You can certainly aspire to be invited to the right events, but how do you differentiate between small talk and real leads?

Investor clubs, consultancies for people with privileged access, lobbies, commissioned research, and sensitivity analyses, are the five top approaches to selecting variables for environmental scanning in new or unfamiliar fields. Some of these runways are closed for small stock investors because of the financial, position-based, and structural entry barriers involved, but rational and relevant environmental scanning should be within democratic and legal access. The Internal Revenue Service (IRS) specifically encourages stock investors to form clubs. Sensitivity analysis is a technique that can use statutory and public disclosures of stocks from a particular branch of the economy for outsiders to decipher key factors for success.

Betting on Stock Bubbles

It is evident that environmental scanning can be an egalitarian way of predicting which way stocks are likely to travel in future. Specific tools used by privileged stock market players can vary from those appropriate for small but active stock investors, but the latter can do just as well as elite interests. Practice matters in this game: your proficiency at scanning will improve over time as you get accustomed to tackling entirely new business sectors. We would like to try and set the ball rolling by working on some sectors and stocks which we think are exceptional business opportunities for the final years of the end of the first decade of the 21st century.


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