What is the proper role of professional economic forecasting in the financial decision-making? The case presents excerpts of three leading economic forecasts before, and only after that the stock market crash in October 1929. The first set of excerpts from Roger Babson, a businessman from Wellesley, Mass., which received considerable publicity for the correct prediction of a market downturn, based on their own devices forecasting, "Babsonchart". The second set of the staff of Harvard Economic Society, an international group of distinguished economists and statisticians. To create its forecasts, HES, developed a model that traces the economic activity in three areas: speculation, business and money. Harvard group was a great success, when they presented their model in the early 1920s, but failed to predict the stock market crash of 1929. The third set of excerpts from Irving Fisher, Prime Minister of monetary economist of his time and one of the most respected American economists of all time. Despite the collapse of Fisher caught off guard, he was the main figure in the field of forecasting in 1930. The case also includes excerpts from the University of Chicago professor efforts Garfield Cox, in 1930, to assess the accuracy of forecasts made around 1920. "Hide
by Walter A. Friedman Source: Harvard Business School 21 pages. Publication Date: January 29, 2008. Prod. #: 708046-PDF-ENG
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