Re: percent increase vs regression line as a predictor

For a pair of dichotomous variables, the percent difference in Y between the two values of X is mathematically equivalent to a regression coefficient.

Average crude percentage change in the past (independently of predictors) may be a very poor forecasting tool. To mention just a famous example, remember the (in)famous Fisher blunder in 1929, predicting continuous growth in the stock exchange by simply projecting average past increases, even after the initial crash. The future does not always repeat the past.

Hector

Pawsers,

Stats question. I’ve not done any forecasting before other than with multiple regression analyses. What is the difference between multiple regression and using average past percent change to make predictions? Based on one scenario I’m dealing with it looks like percent change results in a positive curvilinear (possibly logistic?) relationship.

Thanks,

matt