Howard Marks wrote, “You Can’t Predict. You Can Prepare,” back in 2001. He’s still repeating that mantra in 2018. He recently sat down with Tim Ferriss to talk about his forthcoming book, Mastering the Market Cycle: Getting the Odds on Your Side, and just about everything else (literally, from Bitcoin to the Japanese concept of mujo). For a less financial terminology heavy conversation than most people get into with Marks, probably due to Ferriss’ own comfort level, it’s an excellent chance to hear him talk largely at the philosophical level.
Admitting you can’t predict while stating you can prepare may sound contradictory, but Marks explains it leads investors to admit more things could happen than actually will happen, and then focus on taking inventory of current conditions. We don’t have to know exactly where we are going, but we should have an idea of where we are. From there we can draw comparisons to historical patterns and future expectations at a broad level.
One thing Ferriss and Marks clearly have in common is a thirst to acquire applicable knowledge in order to better understand our current conditions. They talked about Charlie Munger and how widely he reads across disciplines. Marks quipped that while Munger may be more widely read than him, Munger’s also 20+ years older – and that’s a time advantage. He’s not saying it to be competitive, but he is showing his keen awareness for how knowledge compounds.
Seth Godin recently wrote, “We learn as we go. If we stop going, we stop learning, and if we’re not willing to keep learning, we should probably stop going.” As we admit the futility of predicting the future and guide our clients away from unreasonable expectations like calling the next crash/recession/perfect investment, we can instead choose to embrace learning and awareness. We don’t have to be clairvoyant geniuses today, tomorrow, or ever. As Marks would attest, we should take the opportunity to reach into history, stretch outside of our discipline, and keep our minds open to anything.
We may never be as smart or successful as any of the people listed above, but we can compound knowledge in exactly the same way as they do. With a little focused effort, we can be a better communicator of relevant information to our clients tomorrow than we are today. That’s an attractive future to invest in.