A little insight can go a long way
I think often about two things; the well-circulated story of how the Rothschild family first came to have the controlling stake in the Bank of England, and also the quote shown in the picture to the left...
In 1815, the Battle of Waterloo was fought. The Napoleon led French Army faced off against a coalition force led by Prussia and England. The battle was a significant milestone, ending Napoleon's campaign of war, ending his rule as emperor and ending the first French empire. The Duke of Wellington was in command of the British forces and back in England people were aware of its importance and were eagerly awaiting news of the outcome.
When the battle ended Wellington sent an envoy back home to inform everyone of the good news. Nathan Rothschild however, had his own envoy keeping an eye on the battle, who made it back to England first and informed Mr. Rothschild of the outcome of the battle. Nathan Rothschild quickly sold his English bonds, giving all those who looked to him for guidance on the financial markets the impression that England had lost the Battle of Waterloo, causing them to also start selling off their English bonds in fear that their value was about to plummet. Of course the mass unloading of bonds decreased their value and once they had bottomed out, Nathan Rothschild then bought them all up at a significant discount, before the rest of the country realised that we had in fact won the battle.
Now, the specifics of how it all unfolded and exactly how much profit he made are debated though it is widely agreed that events did take place roughly as I've described. What cannot be debated is the shrewdness of Nathan Rothschild. You can see not only the results of what a little forward speculation can do to a market, by looking at the actions of traders following the battle, but you can also see how the insight of someone like Nathan Rothschild really sets them apart from your average person. Indeed it's two quite separate things to have money and to have power or influence and the lengths one has to go to in order to establish power as opposed to merely gaining money can be extreme.
Setting aside the short-term gains Nathan Rothschild may have made, his greatest gain was that he became the single largest debtor to the English government which ultimately gave him control over the Bank of England, and anyone with substantial control over a country's central bank undoubtedly has a level of control over the country as a whole, so you can see how he was really playing the long-game and focusing not just on obtaining long-term wealth but really on gaining sheer power and control. Of course, these days the Bank of England is no longer privatised, or so they would have us believe.
Look out for a separate article that goes behind the scenes of the Bank of England, I will be writing one soon...
Even prior to the Battle of Waterloo, Nathan Rothschild had negotiated a deal to supply cash to Wellington's army. The family made huge profits over a number of years from this governmental financing, and it's an example that really the best gains in any kind of investment come from accurately predicting the future, which I think can be easier than it sounds, and attainable even for those who deal with only modest sums of money and have no formal training in economics, finance or business. Let me share one of my own brief experiences of foresight.
I used to read New Scientist magazine, a great weekly publication that covers an incredibly broad range of topics mostly centred around science and technology, in articles that range from the technical to the philosophical. It's really well worth reading for anyone who has even the vaguest interest in the changing world around us. The only reason I don't currently read it is that I can't afford it. But anyhow, the time period that I was an avid reader coincided with the brief period of time that I decided to try my hand with trading on the stock market.
So I set myself up on a trading platform and set aside some money to invest. I was on the lookout for companies to invest in. When I turned my eye to the New Scientist magazine around this time there were two things that caught my eye. The first was something about Tesla, the electric car manufacturer. Now this must have been at least 5 years ago, when electric cars were a relatively new concept. I can't remember the specifics of the article on Tesla but it was basically saying that they were working on the first mass-produced, stylish, practical electric car. The second article that I found interesting was about ARM the company who make the microchips and processors that go into most smartphones. They had just begun working with Microsoft who wanted to develop their new mobile operating system to work on ARM chips.
Using my own powers of prediction, I saw two opportunities. Firstly, I realised that electric cars were definitely going to be popular and that Tesla were clearly leading the way in the technology. Then I realised that Microsoft working with ARM was going to change the layout of the smartphone world- until that point Microsoft's mobile operating systems were only compatible with certain specialised hardware, the change would mean a huge new potential market opening up to Microsoft and would end the tradition of Windows Mobile being very proprietary, making it compatible with and similar to the other mobile operating systems from the likes of Apple or Nokia.
I invested my money into Tesla and ARM and let it sit there for a little while. I didn't leave it long before I took the money out as I needed it for something, and I was more concerned with buying whatever it was I wanted than leaving the money to steadily grow. The shares were worth more than when I bought them, but only marginally so. I hadn't bought many and I hadn't left it long before selling. However years later when I look at the shares value and compare it to when I bought, the difference is huge.
It's clear that even with just a little research, and a bit of confidence in one's own intelligence, there is money to be made off of insight. I encourage anyone who does have money to invest to take a look and have faith in their own ability to predict the future. Even if you don't make much off it, I can tell you the feeling that you correctly predicted a trend is very satisfying indeed.
Let me leave you with another random anecdote on insight: In 1677 a man married; he was 21 and his wife to be was only 12. She had inherited some land, part of the Manor of Ebury and her portion was swampy marshland, no good for human use. Of course when the man married her, he too gained possession of the land.
That man's name was Thomas Grosvenor, and the land is today Mayfair, Park Lane and Belgravia. Over the years the family completely changed the landscape from the swamp it was to what is now the city's most high-end district.
I don't personally know to what degree the Grosvenors predicted the future desirability of the land, but they must have had some idea. With regards to anyone who may have pointed in jest or revulsion at the sight of a man marrying a 12 year old girl, I think we know who had the last laugh...
