Predictors
Real-life context
Financial forecasts, whether about the specifics of a business, like sales growth, or predictions about the economy as a whole are unformed guesses based on historical data and other analyses. There is no guarantee that the conditions in the past will persist into the future. It is also impossible to factor in unique or unexpected events.
GDP, economic indicators
the stock market is based on emotion and thus not predictable. If the
r2 value was 100% in an increasing stock, we anticipate something fishy is going on, since our stocks should fluctuate instead of following a linear trend. So we might be just as safe shorting the stock (betting it will decline) as investing in it. Many people invest in the long term and diversify their stocks (like with mutual funds) with the idea that those stocks who stay in business will do much better than a corresponding savings account at a bank, and can balance out those that go out of business. In the short term anything can happen. In fact if a stock is completely linear, it probably means it isn't being actively traded.
sample size and random nature of a
representative selection is what is important---not the percentage of the overall population (like for chicken
soup). If a sample is representative then the sample size determines the margin of error and the confidence
level determines how likely the interval is to represent the true population.