The Memo by Howard Marks The Folly of Certainty
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Jul 17, 2024 The podcast discusses the dangers of certainty in fields like politics and investing, emphasizing the need for humility and admitting when one doesn't know. It explores the risks of overconfidence in making predictions and the impact of human emotions and fallibility in economics and finance.
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Avoid Certainty Language
- Avoid terms like "will," "won't," "has to," or "can't" when discussing the future.
- These terms express certainty in unpredictable areas like investing.
2016 Election Surprise
- In 2016, most people were certain Hillary Clinton would win and the stock market would crash if Trump won.
- Trump won, and the market rose 30% over the next 14 months.
Randomness and Predictions
- Randomness influences outcomes, making predictions unreliable.
- Correct predictions can be due to luck, not knowledge.