It was a good weekend with the Eagles getting a win to start the season! Hopefully they can clean up their defense and come out strong for their home opener next Monday. Should be an exciting season going forward… and of course, Go Bills!
The Illusion of Knowledge
A very timely and well written memo from Howard Marks
“There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know.”
A great thought from the memo… The U.S. has a population of 330 million. Thus, there are hundreds of millions of consumers, plus millions of workers, producers, and intermediaries. To predict the path of the economy, you have to forecast the behavior of these people – if not for every participant, then at least for group aggregates.
- When you start to break it down it seems nearly impossible to be able to predict where the economy will go. Or what the market will do.
- And as it turns out it kind of is! We just don’t hear as much about the many predictions that were wrong. Only trumpeting of the successful ones. Creating the illusion that forecasters do have some sense of control of higher knowledge.
Cromwell’s rule “Never say something cannot occur… If something has a one-in-a-billion chance of being true, and you interact with billions of things during your lifetime, you are nearly assured to experience some astounding surprises, and should always leave open the possibility of the unthinkable coming true.”
The memo also cites this article echoing a similar message Niall Ferguson: How Long Will Inflation Last? It’s Complex – Bloomberg.
This isn’t to say that forecasting is not important or the people making forecasts are bad actors (many of them are highly educated and using the best statistical tools available to make these forecasts). It is to recognize that just as trying to time the market is nearly impossible, so is consistently making accurate forecasts of the future given the immense amounts of inputs it requires.
Which is why we continue to message the importance of long-term investment horizon and focusing on companies with strong balance sheets and good cash flows that could perform through any number of potential economic conditions ahead!
How to Get More Time - Of Dollars and Data
A common question in finance, “How do I make up for lost time? Is there a better option than ‘save as much as you can?’
Tradtionally, the answer is not really. We all know the classic charts showing the power of compounding and how critical that can be to investing success
- But what can you do if you did not start saving early?
Well as it turns out there is a non-financial solution to this financial problem. That answer is making more time!
“It is estimated every hour you spend exercising is likely to give you six to eight hours of additional healthy life”. That sounds like a pretty good ROI to me!
A smoker and someone who never eats fruits or vegetables have almost the same hazard ratio of 1.4 (meaning death is 1.4 times more likely at any time). The hazard ratio associated with someone who does not exercise is 2!
- This exercise does not even need to be strenuous activity. Things as simple as daily walks can not only help your physical health but your mental health as well
During times of market volatility like this it is important to remember the bigger picture and the purpose of investing in the first place – to gain financial freedom and enjoy a long and healthy life!
As the first week pf NFL Football wraps up one thing is certain; sports betting will be as popular as ever with it becoming legal in New York in the beginning of the year.
In light of this here is a story from earlier this year on how one lucky bettor has successfully predicted the champion of many of the major U.S. sports in consecutive years.
This bettor placed an $8 parlay in July of 2020 for the Los Angeles Lakers to win the 2020 NBA Championship, the Los Angeles Dodgers to win the 2020 World Series, the Tampa Bay Lightning to win the 2020 Stanley Cup, the Tampa Bay Buccaneers to win the 2021 Super Bowl, and the winner of a random UFC fight to help his odds. The Bucs capped this off with their win over the Chiefs and the bettor walked away with an over $20,000 payday from an $8 bet.
This same bettor was able to do the impossible again the following year, making another 5-leg parlay of champions. He correctly predicted the Golden State Warriors, Los Angeles Rams, Georgia Bulldogs, and Colorado Avalanche to win their respective leagues’ championships, with another random UFC fight winner. This time around he bet $25 to walk away with $34,116.88.
Quite the incredible feat and the type of story that keeps people coming back for more when it comes to sports betting.