What is the financial domain?
The financial domain is a segment of finance that can be cut off from all other market segments to be able to analyze directly. Many market segments are so strongly linked to others that their analysis separation is impossible. With the financial domain, either the market segment is already separated from other segments, or other segments can be easily removed or ignored. This allows economists to look at one particular area to determine the overall activity. Because these segments can be studied so easily, they are often used as indicators of overall financial health.
Looking at the whole market, it is difficult to separate one segment from another. For example, all securities are together in such a conglomeration that it is difficult to separate shares, bonds and commodities from each other. This practically makes it impossible to study systems as a whole. The best one can do is look at a specific part of the market or slice of the whole market and a specific time.
with other financial areas can be isolated a small area for study. In this case, the area can be examined over time to look for trends. These trends often have a correlation with a market as a total; In principle, if one area is prospering, it is likely that areas that cannot be explored are also successful. Information obtained through these studies can be used to create a market model that can predict the way a small part will act under the right circumstances.
The most common financial domain is the real estate industry. While real estate have connections outside the actual purchase and sale of houses, for example in the cutting industry, these connections are influenced by the domain of real estate real estate rather than the real estate affected. If no one wants trees for houses, then the mills can slow down, but if the mill slows down first, the Astavian company can only get wood from another source.
because the financial domain of real estateIt is thus isolated from other markets, the way people in this area act in this area provide a good indication of how it acts in others. If many people build and buy new homes, it shows that people have a lot of excess revenue and the economy is doing well. If the market is stagnating, people do not have extra money and the economy can have trouble.
Activity in financial area is often used as a system of timely warning. If people are afraid of the future, they often stop spending, even if the economy is doing well. On the other hand, although the economy is doing bad, it will spend money if they believe they will have more early. Using these indicators, economists can predict changes in the financial segment days or months before this actually happens.