Agnosticism is probably wiser than self-delusion

Howard Marks is a real master of investment. To appreciate his valuable thoughts, I amgoing to share his investment memos with my own ideas. This is the second section about macro.

Many investors think their job requires them to develop a macro outlook and invest according to its dictates. Successful stock pickers or real estate buyers often make pronouncements regarding the macro outlook, even in the absence of evidence linking their investment success to accurate macro forecasts. Nonetheless, since macro developments are so influential, many people think it's downright irresponsible to ignore them when investing.

However, most macro forecasts are likely to turn out to be either unhelpful consensus expectations or non-consensus forecasts that are rarely right.

Marks says that he can count one hand the investors he know who successfully base their decisions on macro forcasts. The rest invest from the bottom up, one investment at a time. The rest invest from the bottom up, one investment at a time. They buy when they think they've found bargains and sell things they consider overpriced – mostly without reference to the macro outlook.

It may be hard to admit – to yourself or to others – that you don't know what the macro future holds, but in areas entailing great uncertainty, agnosticism is probably wiser than self-delusion.