Macro
"It may be hard to admit – to yourself or to others – that you don’t know what the macro future holds, but in areas entailing great uncertainty, agnosticism is probably wiser than self-delusion."
"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
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I don't really watch financial news any longer because I find it to be mostly opining on what so-and-so thinks is going to happen next with the markets. The best guests that do still appear (while rare) are measured, realistic, and have a wonderful mix of conviction on what matters and distance from what doesn't. I've substituted this time with more reading, podcasts and earnings calls for the companies that I own shares of stock in. And I think I'm a much better investor because of it.
Is it important to be aware of what's going on? Of course. But it doesn't give one credibility to becoming a fortune teller.
Has investing become commoditized? Yes - at least on the product side. Costs have come down. Everyone has access to high quality portfolios. Investment advisers have access to great external managers, when appropriate. It's much more of a high quality playing field for investors as compared to even ten years ago.
But to truly be a great investor, just having the right tools isn't enough. Great decision making must be layered on top of the right tools. And great decision making will never be commoditized, at least not in my lifetime. At the root of this is knowing that macro economic forecasts aren't helpful. In December 2019, amateur hour was discussing whether or not there was going to be a Santa Claus rally. Meanwhile, two months later, a global pandemic that no one was paying much attention to at the time, rocked the market.
So in this regard, investing will never be commoditized. But a step in the right direction towards better decision making around portfolios would be coming to a consensus that macro forecasting is mostly bull. The examples of disconnect between forecasts and actual outcomes are endless. I encourage you to read all about them in Howard Marks latest memo.
"No amount of sophistication is going to allay the fact that all your knowledge is about the past and all your decisions are about the future." (Ian H. Wilson, former GE executive)
To forecast is to calculate or predict some future event or condition. And that future is fickle. Morgan Housel reminds us that history hangs by a thread:
"Giuseppe Zangara was tiny, barely five feet tall. He stood on a chair outside a Miami political rally in 1933 because that was the only way he could aim his gun across the crowd.
Zangara fired five shots. One of them hit Chicago mayor Anton Cermak, who was shaking hands with Zagara’s intended target. Cermak died. The target – Franklin Roosevelt – was sworn in as president two weeks later.
Within months of inauguration Roosevelt transformed the U.S. economy through the New Deal. John Nance Garner – who would have become president had Zangara hit his target – opposed most of the New Deal’s deficit spending. He almost certainly wouldn’t have enacted the same policies, some of which still shape today’s economy."
Important? Without question. But not knowable.
Hopefully some food for thought when debating what's going to happen next.
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