Howard Marks: Why Follow Macro Forecasters Who Don’t Disclose Their Track Records?

In his latest memo titled – Thinking About Macro, Howard Marks provides his thoughts on macro-investing, inflation, the Fed, and gold. On the subject of macro forecasters he says:

That brings me to the subject of forecasters’ track records, or rather the lack thereof. Back in the 1970s, an elder told me, an economist is a portfolio manager who never marks to market,” and that description still seems highly appropriate. Have you ever heard an economist or macro strategist say, “I think there’ll be a recession soon (and xx% of my recession predictions have turned out to be right within a year)”?

Would anyone invest with an investment manager who didn’t publish a track record? Why follow macro forecasters who don’t disclose theirs?

Finally, I want to point out that the same comments apply to most investors. You rarely hear them admit they have no idea what the broader economic future holds, and they almost never beg off from expressing definitive opinions on complex fiscal policy. Retail and institutional participants alike often abandon their actual circle of competence to chase these broad economic trends. A manager might possess a distinct edge in evaluating regional bank balance sheets or parsing the regulations for a list of sweepstakes casinos and other alternative gaming entities. Yet, that same professional will frequently sideline their proven micro-level expertise to guess at unpredictable inflation targets. One of the most important requirements for success in investing is self-assessment. What are your strengths and weaknesses? If you invest on the basis of your macro views, how often have they helped? Is it something you should keep doing or discontinue?

You can read the entire memo here:

Howard Marks: Thinking About Macro