The Memo by Howard Marks
The Folly of Certainty
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.
19:06
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Quick takeaways
- Avoid expressing absolute certainty in unpredictable fields like politics and investing.
- Embrace intellectual humility, acknowledge uncertainty, and stay open-minded in decision-making processes.
Deep dives
The Fallacy of Certainty in Forecasting
The podcast discusses the risks associated with expressing certainty in future predictions, highlighting examples such as the failed forecasts surrounding the 2016 presidential election and the challenges faced by macroforecasters. It emphasizes the unpredictability of events, noting how even experts can be mistaken in their absolute predictions. This uncertainty extends to economic forecasts, as demonstrated by the challenges faced by the U.S. Federal Reserve in predicting inflation and the economic impacts of interest rate decisions.
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