Howard Marks: Why Follow Macro Forecasters Who Don’t Disclose Their Track Records?
The Acquirer's Multiple2021-08-06T11:58:23-04:00
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:
Q2 2021 hedge fund letters, conferences and more
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 say they have no idea what the macro future holds or beg off from expressing opinions. 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
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Operating earnings is constructed from the top of the income statement down, where EBIT is constructed from the bottom up. Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items–earnings that a company does not expect to recur in future years–ensures that these earnings are related only to operations.
Similarly, The Acquirer’s Multiple® differs from the ordinary enterprise multiple because it uses operating earnings in place of EBITDA, which is also constructed from the bottom up.
Tobias Carlisle is also the Chief Investment Officer of Carbon Beach Asset Management LLC.
He's best known as the author of the well regarded Deep Value website Greenbackd, the book Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014, Wiley Finance), and Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012, Wiley Finance). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law.
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All metrics use trailing twelve month or most recent quarter data.
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