Help? I need your expertise

Mosaic theory. It’s in Lv1 curriculum

You’re an engineering student you probably think there’s some equation or something. There’s not. Let’s take Ford as an example. Ford stock depends on how many cars they can sell (and many other complex factors.) This is affected by the supply chain (which itself is very complex), competitors products (which are just as complex as fords), the weather, consumer debt levels, the macroeconomic cycle, consumer preferences, etc etc etc. Not a single factor can be confidently forecasted 6 months from now. Stocks discount the future for 30 years… So why do we forecast? For sensitivity numbers. If you know the price of steel really affects fords COGS then you can put it into your model and see how much it changes valuation. Typically to make money in investing you need to get the direction right and the magnitude somewhat right. Hope this helps.

There are many different ways to forecast. Some analysts prefer very granular bottoms-up builds where they analyze key operating metrics and make assumptions for how they will trend moving forward (ex. to project revenue for a movie theatre chain, you could forecast the number of screens, average attendance, ticket prices, concession, etc.). Others use simple YoY growth or % of sales. A more detailed build is not always better. It is important to strike a balance between detail (which helps in substantiating your view more than anything else) and ease of updating to quickly evaluate/showcase the impact of material information.