Most financial advisors say you can't predict the future. These experts claim you can't pick a market's top or bottom. And since you (or they) can't predict the future, they advise that you just leave your money with them for the long term.
For most people, this is good advice. But for those who want to get rich, being ahead of the future is one of the best ways to amass wealth.
The best way to predict the future is to study the past, or prognosticate. My rich dad often said, "There's a difference between a fortune-teller and a prognosticator." That's why he encouraged me to take the study of history seriously.
Read the Future
Starting in the fifth grade, my development as a prognosticator began with the study of the great explorers such as Columbus, Cortez, Pizarro, Marco Polo, Magellan, and others. They traveled the world in search of gold and international trade, and I try to follow in their footsteps.
Over the years, I've read some great books on economic history that have opened my mind to the world we face today. Some of the books that have altered my vision of the future are:
- "Critical Path" by R. Buckminster Fuller: Not an easy book, but one of the best I've ever read; it changed the direction of my life. Even though Fuller died in 1983, his predictions are coming true today.
- "The Worldly Philosophers: The Lives, Times and Ideas of the Great Economic Thinkers" by Robert Heilbroner: This book is essential for anyone who wants to see history through the eyes of economists. A very interesting read, even though it's somewhat dated.
- "The Dollar Crisis: Causes, Consequences, Cures" by Richard Duncan: This book is essential reading for anyone who wants to survive the next 20 years. It explains why the world is entering a global financial crisis, and explains why savers are losers.
World-Class Prognostication
I also follow the prognostications of James Dale Davidson and Lord William Rees-Mogg. Their 1987 book, "Blood in the Streets," predicted that year's stock market crash and the bankruptcy of the savings and loan industry. When their forecast came true, millions of average investors who had followed the standard advice to "invest for the long term" lost billions of dollars. But the 1987 crash made me millions, because I followed the advice of these two prognosticators.
Their next book, "The Great Reckoning: Protecting Yourself in the Coming Depression," predicted the break up of the Soviet Union, as well as the secession and break up of Yugoslavia and the ensuing tragedy of ethnic cleansing.
In 1997, my wife Kim and I were invited to Washington, D.C., for the launch of Davidson and Lord Rees-Mogg's latest book, "The Sovereign Individual." Many dignitaries, business leaders, and investors were there. Obviously, we had all gathered to listen to the authors' predictions for the year 2000 and beyond. Until then, I thought I had a pretty open mind. But as we listened to their predictions, Kim and I had a tough time grasping the magnitude of what they had to say about the near future.
Predictions Come True
As the saying goes, "Your mind is like a parachute -- it only works when it's open." Rather than object, question, and criticize -- as many in the audience at that reception were doing -- I simply took the book home and studied it. And the closer I studied it, the more I realized it was similar to past prognostications. As a result, between 1997 and 2000, I radically altered my thinking, my businesses, and my investment strategies.
In previous articles for Yahoo! Finance, I predicted the real estate crash, the fall of the dollar, and the rise in commodity prices. In future pieces, I'll continue to keep my mind open and peer into the future. In the meantime, if you're anxious to see what's coming up in finance, I recommend reading "The Sovereign Individual" and "The Dollar Crisis." Yesterday, these books were about the future. Today, they're about today.
In closing, remember that there is a difference between a fortune-teller and a prognosticator. I'll see you in the future.