The “I don’t know” school of investing
From Howard Marks’ July 2003 Memo (“The Most Important Thing”):
One thing each market participant has to decide is whether he (or she) does or does not believe in the ability to see into the future: the “I know” school versus the “I don’t know” school. The ramifications of this decision are enormous.
If you know what lies ahead, you’ll feel free to invest aggressively, to concentrate positions in the assets you think will do best, and to actively time the market, moving in and out of asset classes as your opinion of their prospects waxes and wanes. If you feel the future isn’t knowable, on the other hand, you’ll invest defensively, acting to avoid losses rather than maximize gains, diversifying more thoroughly, and eschewing efforts at adroit timing.
Of course, I feel strongly that the latter course is the right one. I don’t think many people know more than the consensus about the future of economies and markets. I don’t think markets will ever cease to surprise, or thus that they can be timed. And I think avoiding losses is much more important than pursuing major gains if one is to achieve the absolute prerequisite for investment success: survival.
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Book: The Most Important Thing
- Knowing What You Don’t Know
From Howard Marks via The Most Important Thing:We have two classes of forecasters: Those who don’t know— and those who don’t know they don’t know.JOHN KENNETH GALBRAITH It’s frightening to think that you might not know something, but more...
- Excerpt From The Most Important Thing Illuminated - By Howard Marks
Combating Negative Influences By Howard Marks, Author of The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor People who might be perfectly happy with their lot in isolation become miserable when they see others do better....
- Repost: Howard Marks On Defensive Investing
Still a great summary of how I think one should think about investing today. From his July 2003 Memo "The Most Important Thing":The ingredients in defensive investing include (a) insistence on solid, identifiable value at a bargain price, (b) diversification...
- Howard Marks Memo: What Can We Do For You?
Found via Santangel’s Review. Link to: What Can We Do For You? .......... Quote from Memo:“I confess, I think about the future. So do my colleagues. If someone who’s spent decades investing doesn’t have an opinion about what lies ahead, there’s...
- Howard Marks, The Most Important Thing, And The 6th Annual Value Investing Congress West
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