'Don't forecast the future, but always forecast the present' - Marks
Howard Marks keeps reiterating this. Never try to predict where we're going, but its important to always know where we're at. Given his strong views on market cycles, I take this to mean to never try to predict the future of the business cycle and the economy (with leading market indicators) (duh), but always know where we're standing in the cycle (coincidental indicators, and sprinkle in some lagging indicators to confirm our view).
My question: How is this any 'different'? To know where we're at, we have to look back at history, and Marks himself does this when he's figuring out the present. But we all know investments trade on a forward looking basis. We all know the mediocre ER reports (which, sadly, are most of them) are the ones which merely report on consensus thinking, gives a running commentary on the stock (or even worse, the company) and provides no unique angle on the future or forward multiples. By looking back at history (to know the present), all we learn is stuff that's already priced in, that is heavily known to consensus.
Marks also says, 'we can't predict, but we can prepare' (by knowing the present). How do you 'prepare' by only working with historical info that's already been priced in?
So yeah, disregarding macro forecasts as a futile endeavor is a unique and useful take on investing, but I can't really see how 'now-casting' provides any unique angles
Thoughts?
He is saying we should not make top-down macro forecasts and then base our investing decisions off of that. Like most bottom-up investors, he believes that it is an unrealistic task. So he is saying, be macro-aware but focus on investment opportunities that are bottoms up. Understand everything you can about the investment opportunity -- including drawing out implications for the future -- but the main driver of the investment decision should not be predicated on your prediction of where macro is headed. That's all -- or at least that is my take. Like all of his "insights", though, he is not saying anything new, profound, or helpful. But he will be sure to spend 30 pages talking about it.
But, but, but, helps building a brand for his books :D And whatever he plans to sell next.
Same playbook for Ray-Ray Dalio and David Rubinstein.
Dalio trades on macro lol - his fund lost most of their gains for the year being massively short rates/long commodities last month. Very different style from Marks
Dalio and global macro is like the complete opposite of Marks and bottom up lol
Not talking about investment styles - Talking about how they are all trying to use their brand to sell books or other merch.
Dalio has even branched out to selling productivity journals to write out your own principles lollll. Does he even need that money? Idk about Rubenstein's merch but I feel that the Rubenstein show is hugely overrated - very surface level info which is very often repeated elsewhere by the guest
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