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Can predictions make you rich?

July 06, 2007 09:21 IST

The surest way in theory to become rich is to know tomorrow's stock prices today. The moment we master the art and science of understanding market trends, and harness our skills of accurately predicting the trends, we will start rolling in wealth.

Once we acquire the skill, the only thing we need to do is purchase stocks when they are going to be at their bottom and sell them at their peak. If we keep repeating this again and again and again, we shall accumulate infinite wealth.

There are several things we can do to acquire this knowledge. To begin with we can purchase books on the subject. Bookstore shelves are full of titles on "how to beat stock market."

Next consider going to individuals who draw lines. They can create logic and sense from any kind of chaos.

Another option is to speak to our friends, neighbours, colleagues who have 'immense' foresight about stocks. It is a known fact that once they predict something, even stock market will change its course and follow their prediction.

Lastly, go to an astrologer. There is no better person than an astrologer who can predict future. There are varieties of astrologers. There are palmists. Then we have crystal ball glazers. We also have parrots that pick up cards and predict future.

Now obviously not everyone will be able to master this art of predicting future stock prices. However, even if you cannot master the art do not lose heart. If you are unable to acquire the predicting skills follow the advice of legendary investors who have created 'massive' wealth for themselves.

Some of the well known investors and economists have said the following:

We've long felt that the only value of stock forecasters is to make fortune tellers look good. -- Warren Buffett

I never ask if the market is going to go up or down next month, I know that there is nobody that can tell me that. -- Sir John Templeton

I don't know anyone who's ever got market timing right. In fact, I don't know anyone who knows anyone who's ever got it right. -- John Bogle

There are two sorts of forecasters. Those who don't know, and those that don't know they don't know. -- John Kenneth Galbraith

If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting what's going to happen to the stock market. -- Benjamin Graham

So, choice is yours. Either follow the legendary investors who created immense wealth for themselves and their investors. Alternatively follow those who by predicating future prices have not been able to create good future for themselves also.

By the way until today nobody has got a Nobel Prize in economics for a theory on "predicting tomorrow's stock prices today."

The author is a Certified Financial Planner. He may be reached at gmashruwala@gmail.com.

For more on mutual fund investments, log on to www.easymf.com.

Gaurav Mashruwala, Moneycontrol.com