Investing as Foresight
Do you invest? I hope you do, as investing, and teaching your children and friends to invest, is one of the classic ways people can and do put their futuring skills to the test. The great investors are all futurists to some degree, and a good study of their habits will help you improve your business and personal foresight skills as well.
There are two types of investing, conservative/long-term and speculative/short-term (six months or less), and if you can, you should be involved in both. An asset mix that is commonly recommended is 80% conservative and 20% speculative.
For conservative investing, I highly recommend starting with The Permanent Portfolio, a modified version of which I've been following for several years now. http://www.amazon.com/Permanent-Portfolio-Long-Term-Investment-Strategy/dp/1118288254/
This is the best way to capture the financial value of accelerating technology without being an active investor or trader.
You could stop there, but you will learn the most about both yourself and the world by also engaging in speculative investing so I hope you will consider doing that as well, with at least some of your savings.
The until-recently-very-hard-to-find documentary Trader (1987) follows Paul Tudor Jones, an asset manager whose firm predicted and tripled its assets during the 1987 stock market crash (during the film) by using Elliott Wave technical analysis, a method for predicting crowd psychology cycles over time. Here's more on how to find the film, which is a fun trip back to the 1980's, and worthwhile viewing to motivate and improve your speculative investing: http://www.ritholtz.com/blog/2009/10/the-missing-paul-tudor-jones-video/
Great investors (asset managers, traders) rely on superior intelligence (what’s going on), strategic agility (ability to move faster than the competition) and good risk management (hedging strategy), in addition to imperfect but better-than-average forecasting abilities. A special few investors have consistently beat the market average in returns, and those who do deserve to be studied carefully, for general life lessons in profiting from uncertainty and volatility.
What may stop most investors from speculative investing is the knowledge that the top investors will always have superior speed of execution. But it helps to remember that these folks won't always have superior intelligence, or superior forecasting ability. To succeed in speculative investing, as with most things in life, you don't need to be better than the best, only better than the average. If you make lots of small bets, and treat every speculation as a learning experience, you will gain much from it, particularly the ability to quickly sum up a situation and make a decision ("take a position" in trader speak). With practice you will improve your ability to quickly see and profit from patterns, as long as you stay in the game.
In forecasting, most successful investors follow J. Scott Armstrong’s maxim that a good forecast should be conservative. Most are also contrarian, meaning they know how to find out when the majority is acting foolishly, and when it is a good time to bet against them. Finally, the best are active learners, about themselves and the world, and they learn how to find methods that work for their psychology. The book Market Wizards, 2012, http://www.amazon.com/Market-Wizards-Updated-Interviews-Traders/dp/1118273052/
is a great study of such traders.
Financial foresight is a marketable commodity, and even systems as chaotic as the weather and markets have patterns. Lo and MacKinlay’s A Non-Random Walk Down Wall Street, 2001, http://www.amazon.com/Non-Random-Walk-Down-Wall-Street/dp/0691092567/
makes an excellent case for the market’s partial predictability. Market movement is random to a first approximation (on average), but as human nature is very slow to change, we can always find and profit from predictable patterns, trends, and cycles in markets, as well as all other economic, social, political, and technological systems driven largely by human psychology.
Good luck and happy trading!