REFS is
a mine of invaluable information for the private investor.
Selecting shares without its help is like trying to
clap with one hand tied behind your back.
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Calculating
the date-weighted consensus
Having excluded
any elements which fall into the categories above, the consensus
can then be calculated. The calculation has been refined to
reduce the impact of maverick forecasts. A date-weighting method
is applied which gives progressive emphasis to the most recent
forecasts, after first excluding any which fall significantly
outside the norm. The steps followed are:
- A
date-weighted average of all qualifying forecasts is calculated.
- When
there are more than two qualifying forecasts, the
standard deviation.is established.
- Any
forecast more than one standard deviation either side of
this date-weighted average is eliminated.
- A
date-weighted average of the remaining forecasts gives the
consensus.
To summarise,
the consensus is the date-weighted average of those forecasts
lying within one standard deviation of a date-weighted average
of the whole population of forecasts.
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