Most job candidates are capable of entering data to spreadsheets and creating models and report based on predefined formulas. But forecasting is a different story… You have to define the formulas, choose the model, set the variables, and that’s not easy.
Employers always prefer to hire analysts with experience in forecasting and they use this question to see whether you belong to them. But what to do if you have no experience?
“I have never done any forecasts” would be a bad answer and you should not opt for it. If you really haven’t done any forecast, try to do some prior to your interview, and talk about them later.
Everyone makes mistakes
You bad forecasts should not let you down. We are learning all the time, and employers would not expect you to be perfect, especially if you are applying for an entry level analyst job. Feel free to speak about bad forecasts you made, and don’t forget to mention the lessons you learned from that experience.
Describe not only the best forecast, but also the benefits it brought to your employer, or to the project
When you talk about a great forecast you’ve made, consider mentioning the value it brought to your employer.
I may forecast that USD/EUR exchange rate will drop next Monday. However, if the company isn’t involved in international trade or Forex, and does nor reinvest capital, it’s not an important forecast for them. The value is what matters at the end.
Once I used the Bayesian Method to forecast the prices on the local stock market. It was at school, for my seminary project. However, the real market prices differed to my estimations, and it ruined the theoretic part of my work. On the other hand, I learned that Bayesian Method is not sufficient and started to use combination of methods, especially Bayesian and Reference Class. It made my forecasts more accurate. After all, it was a good learning experience.