Don't just base your financial planning strategy on what you have seen and what you can predict. Intelligent finance requires more than a crystal ball.
Your financial situation is about smart planning, not prophecy.
Wouldn’t it be so much easier to make investment decisions if you had all the information, and more, than everyone else? Imagine if you had unlimited financial resources for research, and a brilliant team of people to guide you. That’s the position of Bill Gates, the second richest man in the world. You would think that Gates, with above average intelligence, and with access to so much data, especially in the high-tech world, would be able to have a good sense of what technology is on the brink of development.
Bill Gates gets it wrong
In an article that appeared in The Atlantic, “Bill Gates: More Profit Than Prophet,” Gates’ ability to predict the future is challenged. The article looks at his book, The Road Ahead, published 15 years ago, and examines how his predictions have or have not materialized. They note that he missed the mark on predicting the path of e-mail, wireless networks, online shopping, the internet and the web, privacy and more. A smart man learns from his mistakes, but a wise man learns from other people’s mistakes. So what can we learn from Billionaire Bill?
Access to all the information you can possibly want does not translate into accurate predictions of what may happen. In fact, as my recent article, “When Too Much of the Latest Investment News,” shows, too much information can sometimes even be counterproductive.
Furthermore, when determining which stock to pick, don’t assume that past performance will help you determine future events. And if your advisor, friend, bus driver, or other pundit spews some adroit analysis, ask yourself if he has greater resources than Bill Gates to make that prediction. Unless he’s Carlos Slim, the richest man in the world, he doesn’t have anything more than Gates himself.
It’s possible to gather all the information you want. It’s possible to hire analysts to interpret the information for you and draw charts predicting the future. But no one, not even Bill Gates, can compel the future to match predictions. Since neither Mr. Gates nor the novice investor can depend on prophecy, they stand on the same playing field. Proper investment portfolios come from assembling a responsible portfolio, given your situation in life, your goals, and your resources. Your financial planner may be in a better position to help your financial portfolio than the best economic prophet.
Disclaimer: This article is for educational purposes and is not a substitute for investment advice that takes into account each individual’s special position and needs. Past performance is no guarantee of future returns.