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[weijian]

I enjoyed reading the memos of Howard Marks. But the more I read, the more I get confused. Is he an agnostic?

If the future is unknown or the fluid outcome of collective efforts, as Howard Marks seems to suggest, then how does the market price the risk? How does the investor prepare for it?

hi shiyi,
I do not think he is at that extreme end of the spectrum (been agnostic). Nonetheless, we humans tend to get to the other end of the spectrum by being over confident and also falling for biases like confirmation bias and seeking social proof for reinforcement. I think this is what he is talking about.

We can't really deal with unknown. But rather than frame the future as an unknown, the future is being framed as been complex. Now, we could probably work out a framework to deal with complexity. And this complexity has to be understood in terms of probabilities. We personally have to get comfortable with uncertainty and uncomfortable with "certainty" in the markets. This is probably part of the pendulum swing that we read often from Howard Marks' books and memos.

And finally, I thought the tenets of value investing is really a good framework for us to deal with complexity. I thought everything all goes back to this little book called "The Intelligent Investor". For example, why do we need to really understand how the market price the risk?  - Do not we have this "Mr Market and me" sort of personification that the book described so vividly? Also, if we did our homework and bought with a margin of safety, aren't we prepared for this "unknown future" that you talked about?