Jump to ContentJump to Main Navigation
The Most Important ThingUncommon Sense for the Thoughtful Investor$
Users without a subscription are not able to see the full content.

Howard Marks

Print publication date: 2011

Print ISBN-13: 9780231153683

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231153683.001.0001

Show Summary Details
Page of

PRINTED FROM COLUMBIA SCHOLARSHIP ONLINE (www.columbia.universitypressscholarship.com). (c) Copyright University of Minnesota Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CUPSO for personal use.date: 18 September 2021

The Most Important Thing Is … Knowing What You Don’t Know

The Most Important Thing Is … Knowing What You Don’t Know

(p.116) 14 The Most Important Thing Is … Knowing What You Don’t Know
The Most Important Thing

Howard Marks

Columbia University Press

This chapter examines what else is needed for successful investing: knowing what is not known. According to Henry Kaufman, there are two kinds of people who lose money: those who know nothing and those who know everything. Awareness of the limited extent of our foreknowledge is an essential component of sound investment strategy. A discussion of forecasts suggests that we have a dilemma: investment results will be determined entirely by what happens in the future, and while we may know what will happen much of the time, when things are “normal,” we can't know much about what will happen at those moments when knowing would make the biggest difference. The biggest problems tend to arise when investors forget about the difference between probability and outcome—that is, when they forget about the limits on foreknowledge. Overestimating what they're capable of knowing or doing can be extremely dangerous. Acknowledging the boundaries of what they can know—and working within those limits rather than venturing beyond—can give them a great advantage.

Keywords:   foreknowledge, investment, forecasts, investors, probability, outcome

Columbia Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us .