Introduction

Most forecasts are extrapolations from the current level or the recent thrend. The problem is that everybody extrapolates, so an expectation of extrapolation is built into security prices. When it happens, it has a strong market impact - but most divergences don't happen very often. So if you put those two things together, in my opinion, the logical conclusion is that most forecasts are not valuable and do not produce profitability. This is the memo by howard marks to day.