When trading stocks, turning a profit involves buying or borrowing for less and selling for higher.

But rather than focusing on short-term price discrepancies, it is more time-efficient to focus on future trajectories.

For example, if we think a resource is or will carry on to be limited in supply, we can invest in that resource in anticipation of it being more difficult to acquire.

Alternatively, if we think a resource will increase in demand, we can also invest in anticipation of increased sales.

Sometimes, a new resource will suddenly become desirable as well, due to marketing and hype cycles.

Although predicting these trajectories is much harder, it is still better than methods that rely on short-term price discrepancies because pricing and information travels more rapidly over time.

To make predicting future trajectories easier, we can do the following:

  1. Read from many new sources to stay up to date on key developments (e.g. inventions, wars, scientific breakthroughs, disasters, consumer trends)
  2. Describe the state of the country/world and which direction it will likely go in, and identify stocks based on that
  3. Gain a generalist understanding of industries and human behavior, and gradually create a mental model of the major moving parts of the stock market
  4. Keep modifying one’s mental model to reflect new developments and synthesize new information as quickly as possible