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The Most Important Thing IlluminatedUncommon Sense for the Thoughtful Investor$
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Howard Marks

Print publication date: 2013

Print ISBN-13: 9780231162845

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231162845.001.0001

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

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

(p.142) 14 The Most Important Thing Is … Knowing What You Don’t Know
The Most Important Thing Illuminated

Howard Marks

Columbia University Press

This chapter looks at yet another requirement for successful investing: knowing what is not known. It is hard to know what the macro future holds, and few people possess superior knowledge of these matters that can regularly be turned into an investing advantage. However, the more the investor concentrates on smaller-picture things, the more it is possible to gain a knowledge advantage. Investors should make an effort to figure out where they stand at a moment in time in terms of cycles and pendulums. Forecasts will prove accurate much of the time, but the many forecasts that correctly extrapolate past experience are of little value. This chapter highlights the shortcomings of forecasting but suggests that at the very least one should keep his/her own forecasting track record. It also considers how risk and uncertainty can create the potential for loss when things go wrong. Comments and insights from four famous investors and investment educators are included.

Keywords:   knowledge, forecasting, risk, uncertainty, investors, investment

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