Getting Comfortable with Uncertainty
The more I think about it, the bottom line is clear: Ø The world is an uncertain place Ø Its more uncertain today than at any other time in our lifetimes Ø Few people know what the future holds much better than others Ø And yet, investing deals entirely with the future, meaning investors can't avoid making decisions about it Ø Confidence is indispensable in investing, but too much of it can be lethal Ø The bigger the topic (world, economy, markets, currencies and rates), the less possible it is to achieve superior knowledge Ø Even our decisions about smaller things (companies, industries and securities) have to be conditioned on assumptions regarding the bigger things, so they, too, are uncertain Ø The ability to deal intelligently with uncertainty is one of the most important skills Ø In doing so, we should understand the limitations on our foresight and whether a given forecast is more or less dependable than most Ø Anyone who fails to do so is probably riding for a fall. (Howard Marks, Memo, Uncertainty 11 May 2020) About Howard Marks: Howard Stanley Marks (born April 23, 1946) is an American investor and writer. He is the co-founder and co-chairman of Oaktree Capital Management, the largest investor in distressed securities worldwide. In 2020, with a net worth of $2.1 billion, Marks was ranked No. 391 on the Forbes 400 rankings of the wealthiest Americans.