Predicting the future is notoriously hard, and that seems to have so far discouraged potential authors and readers alike.
Predicting is not as hard [1] as, say, understanding theoretical physics or algebraic geometry. There is a simple heuristic I use: assume past trends will continue. Stocks will keep going up, wealth inequality will keep widening, world peace and stability will continue, etc. It also helps to have fundamental understanding of the subject matter of the prediction, as well distancing yourself from personal biases and wishful thinking when making the prediction.
My predictions about finance, the stock market, the economy (both domestic and foreign), bitcoin, and web 2.0 have all come true.
When writing about web 2.0, I knew almost exactly which companies would fail or succeed, owing to my knowledge of the area. I’ve written about two-dozen articles about web 2.0 since 2011, correctly predicting that the valuations of Uber, Dropbox, Pinterest, Facebook, Snapchat, and AirBNB would continue to rise. Not only that, but I knew which companies to avoid. I never praised a company that subsequently failed.
HBD is my guiding principle of investing and predicting: smart people are the engines economic growth and technological progress, and rising real estate and stock prices reward smart people for the economic value they create.
Bay Area real estate, for example, which keeps going up despite the left’s insistence of it being a bubble or due for a crash:
Also Amazon.com, Google, and Tesla stock. In 2013, I was bullish on Tesla when it as at $40; the stock is above $200. Facebook – was bullish in 2012 in the $30’s; now above $110. Amazon – now above $700 on its way to $1,000. Google was $800 not too long ago; recently, it split into two classes of shares worth over $700 each. Nuts.
Now it’s Bitcoin, which as of May 30th, 2016, has already surged 20% in the past week on its way back to $1200:
I emphatically believe it’s going much higher, leaving all the doubters miffed and bemused.
All too often, people will see a chart for something like Bitcoin, Amazon.com stock, or Bay Area home prices and immediately think, ‘This is unsustainable!’ without considering the fundamentals underpinning the rally. Maybe it’s a bubble that will end badly, but in many instances it’s not.
The S&P 500 also gained 3% in the past week on its way to 2300-2500.
[1] A distinction should be made between hardness and tractability. The act of guessing lotto numbers is easy but getting them right is intractable. Playing chess is easy but solving the game is intractable. The act itself of predicting may be easy, but the difficulty in getting predictions correct may be attributable more to the intractability of randomness than insufficient brainpower.