Trying to predict the future is still by far the most common approach when it comes to investing in stock markets.

The predictor takes a short-term approach, buying and selling shares based on what they think they will be worth in the near future. And some predictors are very successful for a while down to great research and their gut instincts.

But at the heart of this philosophy is trying to predict the future. No one can do that consistently well, and the outcome can be extremely damaging for investors. For a recent example, type Woodford pension fund into Google.

The tracker works on the principle of ignoring short-term ups and downs, trusting that stock markets work over the longer term.

In the 70s a group of economists and scientists proved that stock markets have always risen over time. So, based on this principle, the tracker invests their clients’ money in a fund that aims to replicate the performance of a specific slice of one stock market. And then leaves it there to grow.

While tracking feels like a much stronger philosophy than trying to predict the future, it does have its limitations. Tracker funds can only trade at specific times of the year, which reduces potential performance. And you are still restricted in terms of the shares you can buy