predictions http://www.wisebread.com/taxonomy/term/8199/all en-US Why the Dow Will Hit a Million, Eventually http://www.wisebread.com/why-the-dow-will-hit-a-million-eventually <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-the-dow-will-hit-a-million-eventually" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/businessman_building_business_graph.jpg" alt="Businessman building business graph" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>At an event earlier this month, Warren Buffett, one of the most successful investors of all time, revealed his prediction that the Dow Jones industrial average (DJIA) will be &quot;over 1 million&quot; in 100 years.</p> <p>With the DJIA currently sitting at about 22,400, is it even reasonable to think that the stock market could grow that much? Growth from the current value of the Dow to 1 million would represent an increase of about 45 times over. My first impression was that a value of 1 million for the Dow is very high, and Mr. Buffett must be either confused or overly optimistic to put forth such a prediction.</p> <p>But since this prediction came from someone who <em>clearly </em>has a good understanding of investments and the stock market, I decided to check out the math behind this prediction to see if it makes sense.</p> <p>An important part of Warren Buffett's prediction is the &quot;in 100 years&quot; part. One hundred years is a long time, and although it may be surprising, Warren Buffett's prediction of the Dow topping 1 million is actually quite reasonable given the historical performance of the market. In fact, the prediction of the Dow reaching 1 million in 100 years may even be <em>conservative</em>.</p> <h2>Here's the math</h2> <p>Let's look at what kind of growth rate would be required for the Dow to reach 1 million in 100 years. As I mentioned, the Dow would need to grow by 45 times its current value. When thinking about investment growth, it is informative to look at the growth in terms of the number of doublings that would be required.</p> <p>2<sup>n</sup> = 45</p> <p>n ln(2) = ln (45)</p> <p>n = ln(45) / ln(2)</p> <p>n = 3.81 / 0.693</p> <p>n = 5.5</p> <p>So the market value would need to double 5.5 times from its current value to reach 1 million. Let's look at this in the form of a table to make sure it makes sense:</p> <table> <tbody> <tr> <td> <p><strong># of Doublings</strong></p> </td> <td> <p><strong>Resulting Dow Value</strong></p> </td> </tr> <tr> <td> <p>0 doublings</p> </td> <td> <p>22,400 (current Dow)</p> </td> </tr> <tr> <td> <p>1 doubling</p> </td> <td> <p>44,800</p> </td> </tr> <tr> <td> <p>2 doublings</p> </td> <td> <p>89,600</p> </td> </tr> <tr> <td> <p>3 doublings</p> </td> <td> <p>179,200</p> </td> </tr> <tr> <td> <p>4 doublings</p> </td> <td> <p>358,400</p> </td> </tr> <tr> <td> <p>5 doublings</p> </td> <td> <p>716,800</p> </td> </tr> <tr> <td> <p>6 doublings</p> </td> <td> <p>1,433,600 (Dow over 1 million)</p> </td> </tr> </tbody> </table> <p>From the table above, you can see that doubling the current Dow five times yields 716,800, and doubling six times yields <em>over</em> 1 million, so the number of doublings for the Dow to reach 1 million must be somewhere in between. Our estimate of 5.5 doublings makes sense.</p> <p>So the Dow would need to double 5.5 times in 100 years &mdash; or in other words, it would need to double every 18.2 years: 100 years / 5.5 doublings = 18.2 years to double.</p> <p>The next step to checking out Mr. Buffett's prediction is to figure out what rate of growth would be required for the value of the Dow to double every 18.2 years.</p> <p>For a quick estimate, I turned to the &quot;Rule of 72.&quot; The Rule of 72 is a handy approximation to find how many years it will take an investment to double &mdash; simply divide 72 by the annual rate of growth. I flipped the Rule of 72 formula around to check the rate of growth required:</p> <p>72 / growth rate = years to double</p> <p>72 / growth rate = 18.2 years</p> <p>Solve for growth rate:</p> <p>72 = 18.2 x growth rate</p> <p>growth rate = 72 / 18.2 = 3.96 percent annual growth</p> <p>So the &quot;Rule of 72&quot; approximation tells us that an annual growth rate of 3.96 percent would be required to double the Dow every 18.2 years, which is the rate of growth needed for the Dow to hit 1 million in 100 years.</p> <p>If you don't want to settle for an approximation, or if you are just geeky in a cool sort of way, you can do a more exact calculation:</p> <p>2P = Pe<sup>Yr</sup></p> <p>2P = Pe<sup>(18.2)r</sup></p> <p>ln(2) = 18.2r</p> <p>r = ln(2) / 18.2</p> <p>r = 0.038 or 3.8 percent</p> <p>The approximation from the Rule of 72 matches pretty closely with the exact calculation, so it seems we have nailed down the rate of growth that is required for the Dow to reach 1 million.</p> <p>It turns out that that an annualized growth rate of 3.8 percent is well within the historical growth rate of the stock market over the past 100 years. The average rate of return from the stock market is typically considered to be as high as 7 percent.</p> <p>Of course the stock market does not march steadily along at an average rate of growth year after year. The market swings up and down from day to day and follows longer upward and downward trends during bull and bear markets. But over the long haul, the average trend for the stock market has been upward at a rate of well over 3.8 percent average growth over the past 100 years.</p> <p>In addition to the mathematical consideration of the rate of growth required for the Dow to reach 1 million in 100 years, another consideration is whether the world's people and natural resources will continue to sustain economic growth over the next 100 years. With development of exciting new technologies and emerging global markets to drive growth, it seems reasonable that the <a href="http://www.wisebread.com/why-does-the-stock-market-keep-going-up" target="_blank">stock market could keep going up</a>.</p> <p>So it looks like Mr. Buffett's thinking makes good sense as usual, and the prediction of the Dow 1 million makes perfect sense.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhy-the-dow-will-hit-a-million-eventually&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhy%2520the%2520Dow%2520Will%2520Hit%2520a%2520Million%252C%2520Eventually.jpg&amp;description=Why%20the%20Dow%20Will%20Hit%20a%20Million%2C%20Eventually"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Why%20the%20Dow%20Will%20Hit%20a%20Million%2C%20Eventually.jpg" alt="Why the Dow Will Hit a Million, Eventually" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/why-the-dow-will-hit-a-million-eventually">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-does-the-stock-market-keep-going-up">Why Does the Stock Market Keep Going Up?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market">7 Reasons Millennials Should Stop Being Afraid of the Stock Market</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-dollar-cost-averaging-the-right-strategy-for-you">Is Dollar Cost Averaging the Right Strategy for You?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-buy-berkshire-hathaway-and-other-blue-chip-stock-for-17-off">How to Buy Berkshire Hathaway and Other Blue Chip Stock for 17% Off</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-we-headed-toward-a-bull-or-bear-market">Are We Headed Toward a Bull or Bear Market?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News Investment 1 million calculations djia dow jones industrial average estimates growth math predictions stock market Warren Buffett Fri, 29 Sep 2017 08:30:10 +0000 Dr Penny Pincher 2028010 at http://www.wisebread.com Are We Headed Toward a Bull or Bear Market? http://www.wisebread.com/are-we-headed-toward-a-bull-or-bear-market <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/are-we-headed-toward-a-bull-or-bear-market" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-485863805.jpg" alt="Learning if we&#039;re headed toward a bull or bear market" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The stock market has been on a roll over the last year. Since the winter of 2016, investors have enjoyed a delightful bull market that has seen the S&amp;P 500 index rise by more than 25 percent.</p> <p>Whenever there is a lengthy run-up like this, investors always want to know how long it can last. Are we due for a big correction or even a record-breaking crash? Or will we see the markets continue to rise?</p> <p>Trying to time the market's movement is a fool's game, but it's always smart to look at the various indicators that may foreshadow future performance. With the current market, there is evidence to back up both bullish and bearish predictions.</p> <h2>Indicators of a bull market</h2> <p>The good times won't end anytime soon.</p> <h3>Most economic indicators are strong</h3> <p>For the most part, the American economy is stable. Unemployment is at its lowest point in a decade. Inflation is not out of hand. Manufacturing output is up, along with consumer confidence. There are some concerns about overall growth and productivity, but nothing that spells immediate doom for American investors at this point. Generally speaking, if the underlying foundations of the economy are sound, a sudden drop in stock prices is unlikely.</p> <h3>Interest rates are still historically low</h3> <p>We've seen interest rates creep up a bit, but they are still very low by historical standards. If you're placing money in a bank account, don't expect to receive much in the way of income. Bond yields are also very low. Thus, there's a good chance we'll see people continue to invest in stocks, as they have recently offered much better returns than most other options. As long as interest rates remain low, demand for stocks will be high.</p> <h3>Technical analysis supports it</h3> <p>Many analysts and financial planners prefer to examine a technical analysis of the stock market's performance, which looks at long-term trends that have historically repeated themselves. Most observers of these trends believe we are halfway through a growth cycle that began around 2010 and will continue another five to 10 years.</p> <h3>Corporate earnings are good</h3> <p>The stock market has been known to take a dive when stock prices are high, based on the underlying earnings of companies. In other words, when stocks are overvalued, the market will eventually find out, and you'll see a big correction. Recent earnings reports suggest that the stock market growth is justified. Earnings reports for the first quarter of 2017 look to be among the best in more than five years, so there's no indication that stocks are generally overvalued as a whole.</p> <h3>Lawmakers are pushing pro-business policies</h3> <p>President Trump was elected in part because of promises to lower corporate taxes and reduce business regulations, and he has the majority support of Congress. These are policies that are generally favored by the business community, and investors have responded positively. As long as businesses remain optimistic about policy changes, the stock market will be propped up.</p> <h2>Indicators of a bear market</h2> <p>On the other hand, maybe the good times are about to end.</p> <h3>Companies are heavily leveraged</h3> <p>U.S. companies have more debt than ever, and a lot of it comes due in the next few years. Moody's Investors Services estimated that a record $2 trillion corporate debt will come due between now and 2021, and warned that the market's ability to absorb all of these maturities is &quot;below average.&quot; Few analysts are predicting a massive wave of corporate bankruptcies, but an inability to refinance debt could curb corporate profits and cause stock prices to fall.</p> <h3>There's a possible epidemic of auto loan defaults</h3> <p>When the stock market last suffered a big crash in 2008, it was largely due to a flurry of defaults on mortgage loans. Many Americans obtained home loans that they ultimately could not afford, and ended up in foreclosure when home values dropped.</p> <p>These days, it appears that there may be a similar concern facing the quantity and quality of auto loans. It may not be as big a crisis as the housing bubble, but Americans ended 2016 with a record $1.2 trillion in auto loan debt, an increase of 9 percent from the previous year. Nearly one-fourth of these outstanding auto loans are considered subprime, and the delinquency rate from these loans is at its highest in seven years. This doesn't pose the same systemic risk as the mortgage crisis, but the auto industry is a key part of the American economy.</p> <h3>Europe is facing uncertainty</h3> <p>The United Kingdom is in the process of leaving the EU. There are rumors that other countries (France?) may follow suit. There are lingering concerns over terror attacks in the region. On one hand, economic trouble in the EU may benefit U.S. companies, but many American firms operate in Europe and are impacted by geopolitical uncertainty anywhere.</p> <h3>Political concerns</h3> <p>President Trump and members of Congress have been pushing pro-business policies, but eventually, they will have to deliver the goods. Their struggles in passing a repeal of the Affordable Care Act has been viewed as a sign that they may not have the wherewithal to accomplish big things, such as tax reform. A failure to follow through on any of these major promises could eventually cause a pullback in the markets.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/are-we-headed-toward-a-bull-or-bear-market">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-does-the-stock-market-keep-going-up">Why Does the Stock Market Keep Going Up?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-the-dow-will-hit-a-million-eventually">Why the Dow Will Hit a Million, Eventually</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-mental-bias-is-harming-your-investments">This One Mental Bias Is Harming Your Investments</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-stocks-to-buy-before-black-friday">6 Stocks to Buy Before Black Friday</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-creative-ways-to-invest-during-a-weak-market">5 Creative Ways to Invest During a Weak Market</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment bankruptcy bear market bull market businesses corporations crash Crisis Economy Europe politics predictions stock market Mon, 15 May 2017 08:00:09 +0000 Tim Lemke 1942751 at http://www.wisebread.com 7 Cool Things Bonds Tell You About the Economy http://www.wisebread.com/7-cool-things-bonds-tell-you-about-the-economy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-cool-things-bonds-tell-you-about-the-economy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/kid_investing_happy_000065886749.jpg" alt="Learning cool things bonds teach us about the economy" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Bonds are often cast as the boring stepchild of investments, but they can actually offer some great insights into the machinations of our economy. Their yields and interest rates that are affected by overall economic conditions, so you can learn a lot by owning them. And they may even predict how certain aspects of the economy will evolve. (See also:&nbsp;<a href="http://www.wisebread.com/5-crucial-things-you-should-know-about-bonds?ref=seealso" target="_blank">5 Crucial Things You Should Know About Bonds</a>)</p> <p>Here are seven things that bonds can tell us.</p> <h2>1. They Can Tell You If the Economy Is Healthy (or Not)</h2> <p>Some bonds perform well when the overall economy is in good shape. Others perform better when times are tough. High-yield bonds, emerging market bonds, and corporate bonds with low ratings tend to perform best when the economy is strong. But U.S. Treasuries &mdash; which are seen as less risky &mdash; don't perform as well when the economy is doing well.</p> <p>So, if you want to get a general sense of how the national or world economy is doing, pay attention to the types of bonds people are investing in. Generally speaking, a rush to riskier bonds means things are going well. But when times are tough, Treasuries are often the place investors flock to. Here's a <a href="http://bonds.about.com/od/bonds101/a/The-Economy-And-Bonds.htm">helpful chart</a> that shows how different bonds perform in various economic conditions.</p> <h2>2. They Can Predict a Recession</h2> <p>In the 1980s, economists began to realize that they could predict economic activity by looking at something called the bond &quot;yield curve.&quot; In simple terms, this is the difference in the interest rates between three-month and 10-year Treasury notes. If the interest rates on 10-year notes are higher than the shorter-term rates, then the <a href="https://www.clevelandfed.org/our-research/indicators-and-data/yield-curve-and-gdp-growth.aspx">chances of a recession</a> in the next 18 months are not very high, according to information published by the Federal Reserve. When the yield curve is inverted &mdash; meaning long-term interest rates are lower &mdash; then look out. This was the case in 2006, and America was in a recession within two years.</p> <h2>3. They Can Predict If You'll Pay More for Stuff</h2> <p>One of the downsides to investing in Treasury bonds is that they can lose value due to inflation. That's why the government introduced something called Treasury Inflation Protected Securities (TIPS). These are like bonds, in that they have a fixed-rate yield and regular interest payments, but the principal is adjusted according to the Consumer Price Index.</p> <p>Generally speaking, you can determine the possible rate of future inflation by examining the spread between the yield in a bond and a TIPS with a similar maturity date. So for instance, if a three-year Treasury note has a yield of 4% and a three-year TIPS note has a yield of 2%, then the expected rate of inflation over the next two years is 2%. This is not an exact science, however, as there are a multitude of factors that can drive inflation.</p> <h2>4. They Can Tell You If Stock Investors Are Skittish</h2> <p>When investors flock to bonds, it's often because they are feeling less confident about riskier investments, such as stocks. Bonds are popular investments among those close to retirement, but when all investors are drawn to bonds, it could be a sign that the stock market has taken a dive or is underperforming. Conversely, less interest in bonds could be a sign that the stock market is doing well.</p> <h2>5. They Can Tell You If Companies Are Investing in Themselves</h2> <p>Corporate bonds can give you a glimpse of what companies are doing with their money, especially whether they are looking to expand. Even large companies with a lot of cash will issue bonds in order to make big capital improvements, fund an acquisition, or invest in research and development. (Even Apple, which reported $55 billion in cash in the last quarter, also reported $10 billion in bond debt.)</p> <p>Be careful, however, as many companies go into debt simply to stay afloat. Pay attention to the ratings on corporate bonds to get a better understanding of how companies may be using debt. A company with a strong credit rating is more likely to be raising funds for investment or expansion rather than to simply fund operations.</p> <h2>6. They Can Impact What You Might Pay for Your House</h2> <p>The government does not set mortgage rates. Banks do that. But banks will often keep mortgage rates in line with those of long-term Treasury notes. That's because Treasuries and mortgages are offered for similar terms, usually in the 10- to 30-year time frame. So when Treasury notes rise, mortgage rates usually rise, as well.</p> <h2>7. They Can Let You Know if Your City Is in Trouble</h2> <p>Municipal bonds can offer insight into the economies of cities and states. Municipalities will sell bonds in order to raise money for capital projects. The size and quality of these bonds are clues into whether a city is investing properly or has too much debt. Bonds with high interest rates may come from cities with less-than-stellar credit &mdash; a sign of a city that has been struggling. (For an example, take a look at Atlantic City, which is struggling to make debt payments after years of declining tax revenue.) Moreover, bonds will tell you whether a municipality is selling bonds just to fund normal operations, or for investments in things like infrastructure that will benefit the city's financial health over the long term.</p> <p><em>Still bored by bonds?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/7-cool-things-bonds-tell-you-about-the-economy">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-investments-that-may-soar-during-trumps-term">8 Investments That May Soar During Trump&#039;s Term</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/could-trump-bring-higher-interest-rates-and-inflation-consider-these-money-moves">Could Trump Bring Higher Interest Rates and Inflation? Consider These Money Moves</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-foolproof-ways-to-protect-your-money-from-inflation">4 Foolproof Ways to Protect Your Money From Inflation</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/cash-might-make-you-happier-but-investments-will-make-you-richer">Cash Might Make You Happier, But Investments Will Make You Richer</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment bonds Economy inflation interest rates predictions recessions Thu, 12 May 2016 09:00:05 +0000 Tim Lemke 1705414 at http://www.wisebread.com Get Paid for your Psychic Skills at Predictify http://www.wisebread.com/get-paid-for-your-psychic-skills-at-predictify <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/get-paid-for-your-psychic-skills-at-predictify" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/predictify.GIF" alt="" title="" class="imagecache imagecache-250w" width="228" height="68" /></a> </div> </div> </div> <p>My ex-coworker told me that he is interviewing at a startup called <a href="https://www.predictify.com/registration.aspx?BATCHID=28971">Predictify</a> <a href="https://www.predictify.com/registration.aspx?BATCHID=28971"> </a> . He showed me their website and I was intrigued. Basically, the company lets you predict the outcomes of events that happen in the future, and if you are accurate about the outcome you could get paid for it. I decided to try it out.</p> <p>At Predictify you can stake your prediction on a variety of events including the outcomes of elections or the sale price of a house. You can even add questions you want answered for free. Each of the premium questions have a payout pot amount and a limit on how many people could guess. You also have to give a little demographic information such as gender and age, but the data collected is not linked to you personally. It is basically like taking an anonymous survey.</p> <p>For the questions with no payout, you earn community points and also rankings for your predictions. It is also fun to try out your divination skills and interact with people who care about the same issues. With your prediction you can add a comment explaining why you submitted your guess and you can change your prediction as long as the poll is not closed. </p> <p>The payout you receive at Predictify depends on how accurate your are and how early you sent out your prediction. So far two of my predictions closed and I was so off that I earned nothing. The top player right now has won over $200 and has participated in over 2000 predictions. I only participate in the premium questions so I have only done a few. There are new issues added every day and premium issues tend to be fill up quite quickly. This site definitely will not make a lot of money for you, but it is fun and you could get a little bit of pocket change.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/xin-lu">Xin Lu</a> of <a href="http://www.wisebread.com/get-paid-for-your-psychic-skills-at-predictify">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/write-for-money-online-part-5-your-own-blog-or-website">Write for money online - Part 5 - Your own blog or website</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-innovative-but-obscure-sites-that-put-money-in-your-pocket">10 Innovative But Obscure Sites That Put Money In Your Pocket</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tips-for-finding-legitimate-work-at-home-opportunities">Tips for Finding Legitimate Work at Home Opportunities</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/search-online-for-a-fix-before-you-toss-that-broken-gadget">Search Online for a Fix before You Toss that Broken Gadget</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/my-disgusting-fake-game-show-asks-what-would-you-do-for-money">My disgusting fake game show asks &quot;What would you do for money?&quot;</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Technology Art and Leisure Making Extra Cash money predictify predictions website Thu, 17 Apr 2008 03:09:52 +0000 Xin Lu 2016 at http://www.wisebread.com “I see dumb people” – Learn to cold-read like a so-called “psychic.” http://www.wisebread.com/i-see-dumb-people-learn-to-cold-read-like-a-so-called-psychic <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/i-see-dumb-people-learn-to-cold-read-like-a-so-called-psychic" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/IMG_50512.jpg" alt="Paul Michael psychic sign" title="Paul Michael psychic sign" class="imagecache imagecache-250w" width="250" height="198" /></a> </div> </div> </div> <p>I don’t believe in psychics, palm readers, telekinesis or mediums. Not because I’m a huge skeptic but because I’ve been researching them for years and have found NO evidence that their skills are real. And what’s more, I’m seriously angry that these frauds prey on people who are mourning, and very open to suggestion, just to make money. It’s sick. Now, I’ll show you some of the fruits of my labor and how you, yes you, can cold read just like a psychic. Maybe this will help prove once and for all that it’s all bunk.</p> <p>By the way, I’d like to point out that I don’t think people who go to psychics are dumb. Far from it, I’m trying to protect them. The title of my article is more aimed at how psychics see their stooges. Hope that all makes sense. Ok? Good, let’s continue.</p> <p>When I first saw a psychic at work I was in my early teens. I saw a documentary on Uri Geller (a favorable one) and was blown away. What a guy, what power, what an amazing man. “How does he do that dad?” is said. “Must be magic” my dad replied, in a sarcastic tone I never picked up on at the time.</p> <p>Then I grew up and saw another Geller documentary, this time featuring James Randi. He systematically shattered every single “power” that Uri had demonstrated. And of course, there’s the infamous Johnny Carson clip (below) in which James Randi simply made sure Uri Geller could not gain access to any prop before the show. Sure enough, he just wasn’t feeling strong that night. He sucked. He was powerless. Coincidence? I think not. </p> <p><object classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=6,0,29,0" width="425" height="355"><param name="movie" value="http://www.youtube.com/v/-9FjjrbQabw&amp;rel=1" /><param name="quality" value="high" /><param name="menu" value="false" /><param name="wmode" value="" /><embed src="http://www.youtube.com/v/-9FjjrbQabw&amp;rel=1" wmode="" quality="high" menu="false" pluginspage="http://www.macromedia.com/go/getflashplayer" type="application/x-shockwave-flash" width="425" height="355"></embed></object></p> <p>The James Randi Educational Foundation offers $1 million to anyone who can prove psychic, paranormal or supernatural powers. Thousands of people have applied for it; no one has ever come close to collecting the money. Why? Because the tests are done under strictly supervised conditions, where these people with magical powers have no access to props, stooges or hidden devices. James Randi also has a secret object placed in a vault, which he changes out every two weeks. Not one psychic or mental projectionist has ever been able to see it. How strange, when they can see other things so clearly. Could it be that their powers are weaker when under duress? Or that they have no powers at all?</p> <p><strong>Mr. James Randi, founder of the James Randi Educational Foundation.</strong><br /><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u17/1035317819_8972358821_m.jpg" alt="Randi" title="Randi" width="180" height="240" /> </p> <p>I have heard people say, “well, why should these psychics have to prove anything to anyone?” But think about that for a second. They are offering a service, aren’t they? Just like your local plumber, or to use a better analogy, your average psychotherapist. They couldn’t root around in your head without proof that they know whet they’re doing. But psychics can confidently claim your dead relative has a message for you with absolutely no proof whatsoever, and then take your hard earned cash for the “service.” I call it not only unfair but also more closely related to a crime. In fact, carnivals and sideshows have often been the breeding ground for these super-beings, until TV legitimized them and gave them fame into the bargain. Well, my strong stomach can only take so much.</p> <p>I could write a book on the phony methods and scams used by psychics, but lets just keep it to the most well known and easy to master – cold reading. </p> <p><em>Note: There is a more foolproof method called “hot reading” which has been utilized by the likes of magicians and phony faith healers like Peter Popoff. Here, a stooge surreptitiously gains real information about the “mark” and passes it to the faith healer or magician, who then recounts it to the astonishment of the crowd. Palm readers can go through wallets and purses. Some will even dig through your garbage before your appointment. But this is a difficult method for most people as it requires more people and more preparation. </em></p> <p>You can, however, garner very successful results from cold reading. Anyone with a modicum of common sense and a good eye for detail can cold read. And I know you can do it to. I’m revealing these techniques not so that you can go out and use them on other people (unless you do it as a party trick for no money) but to show you how easy it is to do. There really is no such thing as a psychic, I assure you. And if you say I’m lying, don’t tell me…apply to the James Randi Foundation and claim the $1 million. Something tells me that won’t be happening though.</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u17/35598094_7562c1dfa4_m.jpg" alt="flyer" title="flyer" width="181" height="240" /><br /><strong>Cold reading – the art of being vague</strong><br />Have you ever wondered why dead relatives are so vague? Why is it that psychics don’t get information that’s solid, but more “sketchy?” Well, the answer is simply that they’re not really getting messages from the dead. They’re cold reading. It’s a simple technique that magicians have used for centuries and it’s very effective, especially when you’re in the presence of people who genuinely want to believe what you’re saying. As Wise Bread readers, I suspect most of you were wise enough to have figured this out already, but here are the details, step by step. </p> <p><strong>1: People WANT to believe you – tell them what they WANT to hear.</strong><br />This one is a basic premise but one that’s based on the human condition. We don’t want to hear negative things about ourselves. If someone says to you “you’re a very honest person, but it takes people a while to really get to know you” then you’re almost certainly going to agree, because it’s not negative in any way. Turn that around and say the opposite – “you’re deceptive and people can read you like an open book” is awful. No one wants to hear that, it makes him or her sound shallow and evil. Other vague information, often referred to as the Forer effect, uses statements that apply to almost anyone.</p> <p>“You have a box of old, unsorted photos at home.”<br />“As a young child, you had an accident near water.”<br />“You’re having some emotion problems with a friend or relative.”</p> <p>In the psychic realm, the same applies. People who go to see a psychic usually want to heal the pain left by a deceased loved one. If that’s the case, no one wants to hear that grandma was a crabby old bag that hated everyone, even if it was true. No, best to stay generically positive and let you make it apply to your loved one. </p> <p>Example of vague, positive readings: </p> <p>“Your mom was dearly loved by everyone, although she often had a difficult time of expressing her true feelings.”</p> <p>“I sense a lot of frustration from this person, he was clearly meant for bigger and better things than he was doing.” – this applies to anyone, even the President. </p> <p>“This man dreamed of things before they happened and often had a strong sense of Déjà vu.” </p> <p><strong>2: Use the SHOTGUN technique.<br /></strong>Sylvia Browne (more on her later), James Van Praagh and John Edwards are some of the many psychics that have been accused of using this technique. It basically involves throwing enough questions and suggestions out at the audience that some of it is bound to stick. You’ve often seen this parodied in comedy sketches. </p> <p><em>PSYCHIC: “I’m getting the name John. Is there someone with a connection to John in the audience? Maybe Johnny? Jonathon? Perhaps he worked with a John, or spent a lot of time in the John? Did he go to a supermarket with a cashier named John? Or Jenny? Or Jimmy? Or Timmy? Or Sammy? Samantha?”</em></p> <p><em>AUDIENCE MEMBER: “My mom’s cat’s name was Samantha!”</em></p> <p><em>PSYCHIC: “Ah yes, she’s coming through clear.”</em></p> <p>Okay, so I took it a little more to the level of parody than it usually works, but seriously it’s not that far fetched. When you watch shows by Edwards or Van Preach, you’re seeing edited content. You don’t get to see all of the countless “misses” that the psychics make. They can often throw hundreds of questions out before hitting a target. And it’s just another series of shotgun questions from there. Basically, they’re playing guessing games and your reactions and body language provide the answers for them. You should see the contracts people have to sign before going to these shows, too. They’re huge, and are basically non-disclosure agreements. What happens in the show, stays in the show. Just like David Blaine and his “flying powers”, this stuff looks way more convincing on TV. But unlike Blain, Penn &amp; Teller and even Copperfield, there is no admission of magic or trickery on the part of the psychics. Nope, they are the real deal. Trust them!</p> <p>Anyway, here are a few nice shotgun methods to get you started…</p> <p><em>“I see a father-figure with chest pains.” (A nice way to combine the very vague with a very common illness).</em></p> <p><em>“I see a woman who was very important to you, but you often disagreed.” </em></p> <p><em>“I’m getting the powerful memories of cancer.” (1 in 3 people get cancer, what are the odds?)</em></p> <p>Like I said at the start, these are not intended to arm you with anything other than knowledge. Next time you see someone pulling these comments out of thin air, you at least know where they’re getting them from. </p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u17/129124058_db30f4cebb_m.jpg" alt="two faces" title="two faces" width="153" height="240" /></p> <p><strong>3: The rainbow ruse</strong><br />This one covers all the bases. It’s so transparent it’s very easy to see through later, but at the time it gets you. Basically, the psychic gives you both sides of a personality trait in the same sentence. Usually, a very positive statement but with the addition of a negative Here’s a typical example…</p> <p><em>“ You have a bright, cheery disposition but there have been times when you have been a little down, upset and closed off.” (duh!)</em></p> <p>Try this with anything, on anyone, and it works. Just remember, tell people what they want to hear. No one wants to be a misery-guts with occasionally moments of happiness, even if they are!</p> <p><strong>4: Gimmicks are a psychic’s best friends.</strong><br />Tarot cards, bones, crystal balls, palm reading and tealeaves give the psychic a nice crutch to hold onto. If they can think of nothing to say, they can be studying the messages in their prop of choice. The props also come with some terrific psychic baggage, people do believe in their mystical powers. And regardless of what kind of palm you have, it relates to your life as much as the lines in your car parking space. Look up palm reading, learn the techniques, and then say the exact opposite things to your test subject. You will still be accurate. Try it. </p> <p><strong>5: Include the “magic” of current polls &amp; surveys and study people well.</strong><br />I’m sorry to say that quite often, judging a book by its cover works very well. If you’re a young lesbian woman with tattoos and a penchant for outlandish clothing, it’s doubtful you’re a Republican. You may well be, but it’s doubtful. Psychics will use these visual clues to guess your background, voting preferences, likes and dislikes. And they’re very good at it. Someone like Derren Brown can guess your phone’s ring tone just by looking at you. But he’s no psychic, as he himself tells you at the start of each show.</p> <p><strong>6: Flattery gets you everywhere; stay positive. </strong><br />People don’t want negative reviews of themselves or their relatives. If your granny was an old bag, you don’t want to hear it. Luckily, you never will. Psychics are great at giving you the happy news, they rarely sprinkle in the bad stuff. Although one who does is Sylvia Browne, who has told troubled relatives all sorts of horrible things that turned out not to be true. Watch these clips and see if you can figure out why she’s still around, or why Montel would ever have her back on his show. </p> <p><object classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=6,0,29,0" width="425" height="355"><param name="movie" value="http://www.youtube.com/v/6jF-d2pE9Ls&amp;rel=1" /><param name="quality" value="high" /><param name="menu" value="false" /><param name="wmode" value="" /><embed src="http://www.youtube.com/v/6jF-d2pE9Ls&amp;rel=1" wmode="" quality="high" menu="false" pluginspage="http://www.macromedia.com/go/getflashplayer" type="application/x-shockwave-flash" width="425" height="355"></embed></object></p> <p><object classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=6,0,29,0" width="425" height="355"><param name="movie" value="http://www.youtube.com/v/hRc4LkBRjIc&amp;rel=1" /><param name="quality" value="high" /><param name="menu" value="false" /><param name="wmode" value="" /><embed src="http://www.youtube.com/v/hRc4LkBRjIc&amp;rel=1" wmode="" quality="high" menu="false" pluginspage="http://www.macromedia.com/go/getflashplayer" type="application/x-shockwave-flash" width="425" height="355"></embed></object></p> <p><object classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=6,0,29,0" width="425" height="355"><param name="movie" value="http://www.youtube.com/v/WbCvBkWx3Zc&amp;rel=1" /><param name="quality" value="high" /><param name="menu" value="false" /><param name="wmode" value="" /><embed src="http://www.youtube.com/v/WbCvBkWx3Zc&amp;rel=1" wmode="" quality="high" menu="false" pluginspage="http://www.macromedia.com/go/getflashplayer" type="application/x-shockwave-flash" width="425" height="355"></embed></object></p> <p><strong>7: Use the co-operation clause.</strong><br />This is a great way to put the blame for incorrect statements back on you. Simply tell your test subject in advance that you may not interpret or convey the messages you get as intended. Thus, your subject needs to make sure that he/she concentrates to make that interpretation work. End result – if you say you’re seeing an old man called John, and her father was an old man called Robert, it’s her fault for not getting the translation! Huh? The psychic always puts the onus on you to grab onto the generalities they spew out and make them your own. Don’t fall for it.</p> <p><strong>8: Listen.</strong><br />Always go back to part 1 when you’re in doubt. People want to believe you, and will tell you things, subconsciously, to make part 1 come true. For instance, they’ll often tell you that they want to talk to their dead mom and just want to know she’s ok (gee, I wonder if that will happen?) Many psychics will spend half of their time listening to what you have to say, then use that information against you. When it comes down to it, you’re actually doing your own reading. The psychic is simply validating what you say. Clever? Yes? Paranormal? No way.</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u17/272900992_18af4400c3_m.jpg" alt="confident" title="confident" width="240" height="180" /></p> <p><strong>9: Be confident, and give it some drama.</strong><br />Psychics could teach used car salesmen a thing or too about believability. They use great facial gestures, expand upon their points and make it seem like they genuinely are talking to the dead. There’s nothing wrong with being hammy. I believe it was Adolf Hitler who said “the bigger the lie, the more the people will believe it.” Well, these are some pretty big stinkers you’ll be telling, so add a little acting to the role. Remember, they want to believe you so ham it up. </p> <p><strong>10: See rule one.</strong><br />If there’s one thing you can learn about cold reading, it’s rule one. They are hanging on your every word, they want to believe you, like you want to laugh at a favorite comedian who’s telling a poor joke. </p> <p>That’s it. Long article I know. And I also know I will get a ton of abuse from people on this one. To anyone who is a psychic or medium, I’m sorry. Not because I apologize, I’m just really sorry you’ve taken that ridiculous avenue in life. Stop deluding people and get a real job.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/i-see-dumb-people-learn-to-cold-read-like-a-so-called-psychic">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tricks-of-the-trade-share-an-insiders-tip-about-your-profession">Tricks of the trade: Share an insider&#039;s tip about your profession!</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/it-costs-nothing-to-be-nice">It costs nothing to be nice.</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-tips-to-avoid-watching-a-crappy-movie">7 tips to avoid watching a crappy movie.</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-tips-for-making-do-with-the-right-now">5 Tips for Making Do with the Right Now</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/netspend-the-story-of-the-visa-debit-card-we-did-not-apply-for">netSpend: The Story of the Visa Debit Card We Did Not Apply For</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs cons future life palm reading predictions psychics tips Tue, 20 Nov 2007 23:51:34 +0000 Paul Michael 1414 at http://www.wisebread.com