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If There’s Lies, D@mned Lies, and Statistics, What Are Forecasts? August 30, 2007

Posted by David Card in Media.

Especially Wall Street forecasts? Snort. Henry Blodget updates the the Morgan Stanley YouTube video ad revenue “forecast“:

    Morgan Stanley’s Mary Meeker and team rechecked their YouTube advertising calculations and produced a new set of estimates this morning. As expected, if Mary had stuck with the assumptions used yesterday, the correct math would have produced a ludicrously small estimate. So she changed the assumptions to boost the estimates.
    …And now that the math has been fixed–and the calculation has produced an immaterial revenue estimate–the assumptions have been changed. This is what’s known in the trade as “backing into the numbers.”

Or “making shi- stuff up.”

We call it “triangulating,” or “balancing a top-down against a bottom-up approach.”

The Journal’s Numbers Guy quotes the Morgan Stanley report: “In fixing the error, we also took the opportunity to dig deeper into our assumptions and … we provide an updated scenario analysis of the opportunity …”

Keep digging.

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