fbpx

Click here to get this post as a PDF and read it later!

It’s the one power every single investor on the planet wishes they had – the chance to make wholly accurate predictions about every market. But of course, most of our general experiences with life tell us that predicting the future is a bad idea, and often an approach scuppered by daily reality.

 

That being said, plans for the future are predicated on the idea that predictions can be made with some certainty if appropriately measured and risk-mitigated. So, to what extent can this approach help your investing? Where might you begin if hoping to ascertain value, approach the future of a market, and make clear predictions with a reasoned focus?

 

Well, this cuts to the heart of investment strategy, and you could be as good at it as any Wall Street investor. With that in mind, let’s consider some of the best principles to help your predictions gain more weight:

 

Deep Research & Market Understanding

 

Ultimately, it’s never worth investing in a market unless you understand how it operates and what the tectonic forces exercising their power over that market could be. For example, asking how much do solar farms make can be an exceptional starting point to consider what point renewable energy is at right now, and how such a yield is improving with every year. Moreover, keeping an eye on regulations, tightening standards and new adoptions could be ideal. These are the parameters looking to shape fields such as the crypto industry, which had once been an essential element of the market. You can use these measures and news updates as guiding posts for when and how to invest.

 

Using Historical Data

 

It’s a mistake to think the past will automatically define the future. You wouldn’t use historical platitudes gleaned from the cell phone industry in the 90s to determine the value and relevance of social media in 2024. However, sometimes you can notice trends and patterns emerging. For example, defining what happened to the stock price after Microsoft was challenged with anti-monopoly legislation, or how Nvidia has now rocketed to become the most valuable company in the world thanks to the AI craze (this was once predicted by graphical units and their relevance in crypto mining). Using historical data or trends can inspire you to make more informed decisions, not based on patterns, but general principles that inform your focus.

 

Determining Appropriate Trends

 

It’s also essential to consider appropriate trends and how important they are to manage. Not every trend is a winner, nor worth investing your entire strategy upon. In fact, some are quite ephemeral, as those who put their life savings into fidget spinners quickly found out. Watch trends over time, see which ones rise and which ones dwindle. You may find that you become adept at identifying hype from substantive change, and that in itself can help you predict the shift of a market, or avoid being oversold on a stock or opportunity that doesn’t hold water.

 

With these three insights, you’ll be able to predict the general travel of a market, if not the market itself.