The markets are all over the place, the predictions are wild, not consensual and change by the day.
It's time to take a breath and lean into some real wisdom.
You may not have heard of Howard Marks, but he could fairly be described as the "Warren Buffet of bonds".
He has made billions, over decades during times of high duress.
And so, his recent memo is well worth a read (link at the bottom), but to save you the bother I have used AI to succinctly summarise it as follows:
"Nobody Knows": Embracing Uncertainty in Today’s Markets
In his latest memo, renowned investor Howard Marks reminds us of a fundamental truth in investing: nobody knows what the future holds.
After decades in the industry, even he admits that he’s never been able to consistently and accurately predict what’s next for the markets.
And he’s not alone—because the future, by nature, is unknowable.
A New Set of Unknowns
What makes the current environment especially tricky is that we’re facing a combination of factors we haven’t really seen before—at least not all at once.
Interest rates have risen significantly after years of ultra-low levels, inflation remains stubborn in some areas while fading in others, and global dynamics—geopolitical tensions, evolving supply chains, shifting consumer behavior—are creating new challenges for economies and businesses alike.
These elements make it incredibly hard to draw on past patterns or models.
The economic “rules of thumb” that worked in the past may not apply in the same way today.
So even the most experienced analysts and strategists are working with more guesswork than certainty.
The Limits of Analysis
Investors often try to rely on data and models to forecast outcomes. But Marks points out that there are just too many variables in motion—too many possible scenarios.
Even if we had perfect information about today, we wouldn’t be able to predict tomorrow with confidence.
Why? Because markets are driven not just by facts, but by psychology, sentiment, politics, and unpredictable events.
In short: the future can’t be modeled. Not reliably.
So What Should Investors Do?
Instead of trying to guess the next move in interest rates or time the next market cycle, Marks encourages something far more grounded:
Stay balanced. Avoid extremes—don’t get overly aggressive chasing returns, but don’t retreat to complete defensiveness either.
Be realistic. Accept that there are no guarantees or perfect strategies.
Stick to your plan. Build an investment approach based on long-term thinking, not short-term predictions.
We agree and adhere to each of these at TCFP and if we can get you to too, we will have earned our fee many times over.
Bottom Line
Howard Marks isn’t saying we should stop thinking or analyzing.
He’s saying we should acknowledge the limits of what we can know and avoid overconfidence.
In today’s unique and uncertain environment, the best strategy might just be one of humility, patience, and discipline.
Because at the end of the day—nobody knows."
And, for maximum emphasis, I draw your attention to this quote from the article:
"I was limited to gaming out my conclusions, which were as follows (especially the last point):
we can’t confidently predict the end of the world,
we’d have no idea what to do if we knew the world would end,
the things we’d do to gird for the end of the world would be disastrous if it didn’t end, and
most of the time the world doesn’t end.
https://www.oaktreecapital.com/insights/memo/nobody-knows-yet-again