Wouldn't it be nice if a company's business is completely predictable, just like a model train? Once wound-up, you know exactly where and how fast it is going to be. Unfortunately in the real world there is no such thing as a total predictability. But if you observe long enough, you will find out some companies are more predictable than others.
Predictability is a loathed word in the financial world. Nobody wants to make a prediction and appears stupid when the numbers don't match. People like to use the word "forecast" instead. Just like a weather forecast, it is somehow "acceptible" and less stupid to be wrong and if it happens, we just joke about it. But in the end, they are the same thing. No matter whether we predict, forecast, project or extrapolate, predictability measures how well a company's past and present can be projected into the future, and how little or no surprises it usually gives along the way.
Predictability is a loathed word in the financial world. Nobody wants to make a prediction and appears stupid when the numbers don't match. People like to use the word "forecast" instead. Just like a weather forecast, it is somehow "acceptible" and less stupid to be wrong and if it happens, we just joke about it. But in the end, they are the same thing. No matter whether we predict, forecast, project or extrapolate, predictability measures how well a company's past and present can be projected into the future, and how little or no surprises it usually gives along the way.
