The mental work that it takes to imagine a future state... serves as a kind of creative wake-up call for the subconscious. to plan for that image and make it real. Backcasting and the premortem work on the same fundamental principle. They both involve using creativity and imagination to picture a future state, with a follow-on challenge of working backwards. challenge of Frederick Law Olmsted, the designer of New York City’s famous Central Park. At the time he designed it, Olmsted had to imagine NYC’s Central Park as it would look when populated with mature trees and foliage of all kinds, even as the present state was barren land. Olmsted had to conjure an image of reality that didn’t yet exist in order So which is more useful: backcasting or the premortem? It’s a trick question, because the degree of usefulness of one versus the other wholly depends on the situation – and because they ultimately work best in tandem. Backcasting is a great way to develop positive mental attitude (PMA) by focusing on the success you seek and all the benefits that will flow from it. As you reverse engineer the details of your goal, the steps you need to take will come into sharper focus. The premortem, as a joint exercise, can then further increase the probability of success. If done right the premortem exercise, which is
Dr. Richard Smith has a PhD in Math and Systems Science and is the founder and CEO of TradeStops. He has spent the last 10 years researching and developing algorithms and services that give individual investors the tools they need to succeed and better manage their investments. optimistic spirit, and reinforce self-discipline habits to stick with the plan you created. Imagine where you’d like it to be and what you’d like to accomplish, and backcast your way to achieving your goals... in 2019 and beyond. pessimistic in nature, can even add to PMA. The logic here is that focusing on what can go wrong, and then taking care of the risk, increases the odds of things going right. It gives you confidence that you’ve done what you need to do to make sure that your positive outcome materializes. For investors, backcasting has yet another significant value. It puts the focus squarely on the factors you control – your own behaviors and actions – as opposed to stuff you can’t control, like where the market is going to go. You can’t control what markets will do, and you can’t guarantee the outcome of any individual investment. But you can develop a plan for success, and then stick with that plan day in and day out. Backcasting can really help investors here. By imagining, in full technicolor, your future state as a successful investor, with financial goals realized or well on the way, you can boost your PMA levels, maintain that
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