Investing, Finance and Predictions of the Future

Investing skills boils down to taking actions in the present resulting in beneficial outcomes in the future. Stuff about finance, predictions, investing and money you may not know.

Investing
30. October 2024 by Clickinsider / Money

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Investing is hard. Why? Because predicting the future is hard. Actually, hard isn't the correct word. Predicting the future is impossible.

Still, there are ways to drastically improve your prediction skills.

Predict The Future 101: Create The Future

A classic example: The best way to predict the future is to create it.

Want to predict the next market crash with almost near certainty? Well, there you go and now you know. Would you like to predict the next pandemic, the next local war, the next riot, the next anything?

The trick to make accurate predictions of the future is to have a lot of power or a lot of money (tautological).

Insider trading. Trading on knowledge about planned future events may be illegal, as in insider trading. If you have non-public information about, say, changes being made to a board of directors, and you expect this will have major impact in the company stock, you can't just legally use this information for monetary gain in the financial markets. Many people still do take advantage of this, perhaps ignoring the cost/benefit of jail time versus capital gain.

Prediction at the personal level. To illustrate the absolute impossibility of predictions, refer to your personal life. How will your day be like? Your tomorrow? Or the next five minutes? You kinda know, but you don't know for sure, alas, you don't know at all. You could, be dead five minutes from now. Crazy, but not impossible. The point is, you may have plans for the future, you may think you have control, but in reality, do you really? This illusion of control may fool everyone, pawn or king.

Numerology And Finance

There seems to be a very special connection between numbers and our society. Mathematics may be just a human construct, or it may be the case that in fact numbers are everything. Again, who knows.

Numerology could be seen as something pseudoscientific, pseudomathematical, a belief in the mystical relationship between numbers and events. Indeed this is true if you read most books on numerology. While it may be true that everything is connected somehow, things may not be connected as they appear. Things (events, numbers, anything) may seem to be closely related, when in reality there aren't any relationship whatsoever (leave for the everything-is-connected metaphysics theory).

It's easy to create the illusion of connectedness in almost anything. If you try, you could be connecting dots in a way that it would seem impossible for most people to be just a coincidence. Some wild conspiracy theories are just that, nothing but wild conspiracy theories. The easiest person to fool is yourself. Heads and tails, illusion on one side, reality on the other side. Flip the coin. Highly improbable coincidences does occur.

There study of the relationship between numbers, math and reality isn't just for superstitious lunatics. While the "dots" tend to be wrongly connected by the human mind, it does seem like the real world contains some (for most people) opaque dot-connector function.

Financial markets, economics and every social human activity have been subject to a vast array of technical analysis, machine learning and statistical wizardry. Pi, geometric functions and all kinds of mathematical artifacts have been used as a dot-connector.

Secret Method of Near-Perfect Prediction? If you really did succeed in identifying a method for predicting the financial markets with a high degree of certainty, one method that would produce incredible gains, would you reveal this to the world? Or would you keep it a secret, and use it for your own advantage?

There are ways to predict the near-term future with a high degree of certainty. Knowledge of market movements just a few milliseconds ahead may be enough to gain an advantage over the markets. Large hedge-funds have managed to do this. Do this for a while, and it will result in a massive pool of capital. But money-mountains are not particulary easy to move around. No worries, the reward of massive wealth is massive power, and now you have the tools to nudge other players in the game, yielding further advantages in the game of prediction. Next, as one grows even more powerful, one gets to determine what the future will look like. Finally, at the top of it all, and now you get to pull the strings, create the world in your image. But no human or human organization is omnipotent.

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