The Futility of Prediction

Howard Marks came out with his new memo titled 'Uncertainty'. I usually do not read all of his memos & have read only one book of his. But what resonated with me this time was his take on the futility of predicting the future. I am in touch with very experienced investors and novice ones on a daily basis. One clear pattern I see is that the seasoned ones rarely make predictions. They try to look at history and then try to intuitively layout the possible outcomes. On the other hand novice investors especially the ones who have read a book or two and watched some videos on investing say with certainty that the market will be 12376.90 the day after Christmas in 2021.

A series of quotes (inspired from the memo by Marks & mentioned there).

It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.
- Mark Twain

We have two classes of forecasters. Those who don't know - and those who don't know they don't know.
- Kenneth Galbraith

Those who have knowledge don't predict, those who predict don't have knowledge.
- Lao Tzu

Forecasters create the mirage that the future is knowable.
- Peter Bernstein

The future you shall know when it has come; before that forget it.
- Asechylus

Forecasts usually tell us more of the forecaster than of the future.
- Warren Buffett

If someone today says 'I don't know' he is perhaps the smartest person in the room.


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