Billionaire investor Howard Marks quoted Warren Buffett to stress the impossibility of predicting the coronavirus pandemic
- Billionaire investor Howard Marks quoted Warren Buffett in his latest memo to underscore the impossibility of forecasting how the coronavirus pandemic will play out.
- "Forecasts usually tell us more of the forecaster than of the future," the Berkshire Hathaway boss said in a Fortune article in 1977.
- Marks argued the combination of the virus, the US economy's contraction, the oil-price collapse, and the federal response to the outbreak made it tough to predict what's coming.
- "While unique developments like those of today make forecasting unusually difficult, the presence of all four elements at once probably renders it impossible," he said.
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Billionaire investor Howard Marks quoted Warren Buffett in his latest memo about the immense uncertainty caused by the coronavirus pandemic and the impossibility of predicting how it will pan out.
"Forecasts usually tell us more of the forecaster than of the future," Buffett said in a Fortune article in 1977.
The Oaktree Capital boss included the Berkshire Hathaway chief's comment in a list of similar quotes from George Orwell, Albert Einstein, and other luminaries. His favorite ones included:
- "We have two classes of forecasters: Those who don't know — and those who don't know they know" — economist John Kenneth Galbraith.
- "No amount of sophistication is going to allay the fact that all of your knowledge is about the past and all your decisions are about the future" — Ian Wilson, former chairman of General Electric.
Marks' inclusion of Buffett's quote underlines their mutual respect for each other.
"When I see memos from Howard Marks in my mail, they're the first thing I open and read. I always learn something," Buffett famously said.
Predicting the future
Marks underscored the multiple, shifting aspects of the pandemic in his memo. He pointed to the virus itself, the US economic contraction, the oil-price collapse, and the Federal Reserve and Trump administration's response to the outbreak.
"While unique developments like those of today make forecasting unusually difficult, the presence of all four elements at once probably renders it impossible," he said, especially as the factors interact with one another.
Marks posed more than a dozen questions about the virus alone. They included:
- How many asymptomatic people will there be?
- How effective will social distancing and masks be?
- Will a treatment be developed and how much will it help?
- Will the virus mutate?
- How long will it take to create and distribute a vaccine?
The investor also laid out numerous factors that make forecasting particularly difficult now.
Economics is an imprecise discipline, there's "little or no history that's relevant today," people's behavior is unpredictable, and randomness plays a role, he said.
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