The Archive: You Bet!
The Memo by Howard Marks
Embracing Uncertainty in Decision Making and Investing
Great decisions stem from good processes involving an honest representation of one's knowledge, which often includes acknowledging uncertainty. Decision quality is about improving outcomes, not guaranteeing them. Embracing uncertainty is crucial to becoming a better decision-maker, focusing on the likelihood of various outcomes rather than seeking certainty. Both poker players and good decision-makers understand and accept the unpredictable nature of the world. Expertise provides an advantage in predicting outcomes, but certainty remains elusive even for veterans. The essence of decision-making under uncertainty is illustrated through examples from poker and the oil patch, highlighting the parallels to investing. Games and investment decisions differ significantly based on information availability, luck, and skill, with uncertainty present in some but not all scenarios.
Remember Everything You Learn from Podcasts
