Economics is the study of how best to allocate scarce resources in order to derive the highest mix of benefits for the investor. Econometrics, on the other hand, is a field of economics that is focused on measuring and understanding how to respond to changing economic variables. In this portion of the My-Forest.com domain we will explore which economic variables are most important to us in the forest industry, and how to understand changes in these variables.
The stock market is up today and down tomorrow. The Federal Reserve Board raises long term interest rates one quarter, and lowers it another quarter. Employment is up, employment is down. All of these events are reactions to economic indicators by a variety of people. Investors rely on the underlying value of a company and its ability to produce income to determine what they are willing to pay for shares of a stock. Much is the same in the forestry industry where forest product firms have both an underlying value of the resource being held and an income producing potential for the future. These combined help to determine the value of forest product company stocks.
For the private forestland owner it is rare that one landowner or even a small group of landowners could influence the economy sufficiently to change national or even regional economic factors. For the most part, we are forced to respond to the economic variables that change around us. That does not mean we are helpless, but it does mean that we have to be vigilant in our pursuit of timing our activities to take advantage of selling when markets are high, and spending when costs are low. To quote the infamous forest Economist, Dr. Charley Mcketta (University of Idaho - Retired, Moscow), "When the price is high, let 'em fly, when the price is low, let 'em grow!".
While this may sound great, the challenge is to know what the markets are REALLY doing. In this section of the My-Forest.com web domain we will focus on a few items.
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Index & Inflation
Supply & Demand
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