How to Build a Crystal Ball and Predict the Future

How do some people in the upper echelons of business seem to make the right decision every single time?

Some of them seem to have the Midas touch, investing in the right people working at the right companies that dominate the right markets at the right time. Watch them long enough, and you’ll begin to think they have a crystal ball that lets them predict the future.

And they do.

It’s not a paranormal phenomenon, per se, but a method that allows them to make extraordinarily accurate guesses. They know exactly which type of data to look for and how to interpret it. Sometimes they’re wrong, but they’re right often enough to make themselves very, very rich.

Fortunately, it’s not a skill that’s exclusive to billionaires. You can learn how to predict the future too. This post will show you how to build your own crystal ball.

Predicting the Future in Everyday Life

Almost every decision we make in life contains some element of predicting the future.

If you go to work for a company, you’re predicting that they’re going to stay in business long enough to pay you. If you buy a stock, you’re predicting the value is going to go up. If you step on the brake in your car, you’re predicting it’s going to stop before you run into the car in front of you.

Whether it’s conscious or not, every human being has a “Guessing Machine” that’s doing its best to figure out what’s going to happen and position you favorably. It’s nothing mystical; it’s just a part of everyday life.

Of course, some people’s guessing machines work better than others. A teenager might slam on the brakes too late and plow into the car in front of him. Maybe he wasn’t paying attention, or maybe he just guessed incorrectly on when he needed to step on the brake. Regardless, he made a poor guess.

It works the same way in business.

Some people buy stocks and earn more than 15% per year for decades, while others lose everything in a year. Certainly, some of it is due to skill, experience, and intelligence, but the bottom line is those earning 15% are making better predictions than others.

The key to becoming wealthy is learning how to improve your guessing machine, more or less building a better crystal ball that shows you a more accurate picture of the future.

The Past Is the Best Indicator of… the Past

There’s an old saying that, “The past is the best indicator of the future.” Personally, I think that’s nonsense. Not only is there a better indicator for the future (I’ll get to that in a minute), but the past is 100% accurate at predicting something else: itself.

Let’s say you bought some Microsoft stock and lost money. Now you’re thinking about buying stock in Google. Because you lost money before, does that mean you’ll lose money again? No. They are two entirely different situations, and they have nothing to do with each other.

Instead of extrapolating from the past to the future, it’s much more effective to focus on cause and effect, all of which occurred in the past. Ask yourself, “Why did I lose money on Microsoft stock?” Then, once you’ve figured out the answer, you can create a rule of thumb to follow in the future.

For a simplistic example, let’s say you bought stock in Microsoft without considering the competitive environment. You thought the balance sheet looked good, but you failed to realize that Google, Apple, and Sony developed products that would reduce their market share and revenues.

Do you decide that Google, Apple, and Sony are better companies and buy their stock instead? No. In this situation, you would probably derive a rule of thumb that says, “Always consider the competitive environment.”

In other words, you wouldn’t use your loss as a basis for predicting future events. You would use it to develop a new way to interpret future events. It’s the only area in which your knowledge is relevant. I’ll talk more about this in a moment.

How to Predict the Future

So then, if the past isn’t the best indicator, what is? The answer: the present, interpreted through the past.

The most successful moneymakers are the people with the greatest understanding of what’s going on in the present, filtered through the lessons that they’ve learned from the past.

What do I mean?

First and foremost, they are what I call “data freaks.” They’re consumed with knowing more than everyone else about what’s happening right now.

For instance, a friend of mine recently started his own realty franchise. He’s trying to gain market share in a very competitive, high dollar area of town.

And he’s doing phenomenally well. He’s selling the majority of his listings within 60 days, while the market average for the price range is hovering between 90-120 days.

How? He’s a data freak. He goes to preview every house that goes on the market, carefully tracking its price and how long it takes to sell. The MLS also notifies him of every sale, and he usually stops by the day after to check it out and figure out why it sold.

When he goes on a presentation to list someone’s home, he can not only tell people how they need to price their house and why, but he can also support his claims with data. And he’s right. The houses sell, the customer is satisfied, and word spreads.

The point is, he uses a thorough understanding of what’s going on in the market right now to make spot on recommendations. The reason his predictions about when the house will sell and for how much it will sell are so accurate is because he is also interpreting that data through the lens of the past.

The Past Is Only a Lens for Interpreting the Present

Data alone is not enough for predicting the future. You have to know how to interpret that data, and only the past can show you how.

My friend has spent about five years watching sales trends around our city. He owns over a dozen investment properties, and he’s learned through trial and error what works and what doesn’t. For a realtor, he is remarkably experienced.

The reason he is so effective is he filters all of the data about what’s going on in the present through the lessons he’s learned in the past. His success results from unparalleled knowledge about what’s happening right now and unparalleled experience that helps him interpret it.

This is where the past has its place. It’s not so much a predictor as a lens, kind of like a magic pair of sunglasses that allow you to look at the present and see the future.

If you know how to put the two together, it’s a very, very powerful combination.

The Power of Predicting the Future

The question hanging in the air is, “So what? Why is it important to be able to predict the future?”

Well…

Imagine that you could see what customers are going to want five years from now and you could start those products and services now.

Imagine that you could know which stocks were going to rise and buy them at precisely the right time.

Imagine that you knew where NASCAR is going to build their next race track and you could buy the land next door six months in advance.

You can make millions, or even billions, of dollars from making accurate predictions about what’s going to happen in the future. Generally, the better you are at predicting, and the more money you’ll make.

So if you want to increase your income, start watching what’s going on very closely and then use what you’ve learned from the past to predict the future.

Want one last example? I’ll make it a quickie.

If you’ve read this far, then I know that I have your attention. And if I have your attention, then I know you’re enjoying what you’re reading. And if you’re enjoying what you’re reading, then I know that you have a high probability of wanting more.

And… surprise, surprise. Predicting that people would want more, I created a way for you to subscribe. So now I’m predicting you’re going to click this link and sign up to receive free, automatic updates.

Don’t you go proving me wrong, now.