Edward Quince's Wisdom Bites: Nobody Knows (Yet Again) – Embracing History's Rhyme

 Welcome back, clear-headed thinkers! In our ongoing quest to navigate the unpredictable currents of financial markets, today we revisit a timeless mantra from Howard Marks: "Nobody Knows." His April 9, 2025 memo, "Nobody Knows (Yet Again)," echoes a theme he first explored during the tumultuous Global Financial Crisis of 2008 and reprised during the COVID-19 pandemic. This enduring lesson powerfully aligns with our blog’s emphasis on embracing uncertainty and learning from human nature's consistent patterns.

Marks' original "Nobody Knows" memo, published shortly after Lehman Brothers' bankruptcy on September 15, 2008, affirmed his "ignorance of the future as usual, but to an even greater degree given that all prior expectations had been upended". Faced with a market that felt like a "downward spiral without end," he concluded that investors had to "assume it would [be arrested], and thus that we should plow money into financial assets at their highly discounted prices". He reapplied this logic during the "COVID-19 pandemic (which he titled 'Nobody Knows II')".

His 2025 memo re-emphasizes this point, particularly in light of current "economic shenanigans" and the way "global trade norms have been tossed out the window". Marks argues that trying to "analyze the future" in such times is "about as useful as trying to find a rational take on LinkedIn these days – it's an oxymoron". He cautions against relying on "experts" whose predictions are often speculative rather than fact-based.

 We constantly highlight that "history never repeats itself. Man always does". Marks’ recognition that "there are themes that rhyme throughout history" reinforces our belief that "human nature is predictable" even if specific events are not. His admission that "nobody really knows what's going to happen" aligns perfectly with our "I don’t know" mentality.

The wisdom here is not to become paralyzed by uncertainty, but to understand its pervasive nature and act accordingly. Marks’ approach—assuming the world will, in fact, not end and investing with that long-term perspective—mirrors our blog’s advocacy for patience and the understanding that "The ability to stick around for a long time, without wiping out or being forced to give up, is what makes the biggest difference". Even when "chaos is always loud", "patience never trends on X", and "discipline wins over drama". Marks’ insights serve as a powerful reminder that "by focusing on timeless principles, cultivating self-awareness, and maintaining a long-term perspective, you can navigate the inherent uncertainties of life and markets with greater resilience and wisdom".

Edward Quince's Wisdom Bites: Ownership vs. Debt – The Fundamental Choice

Welcome back, intellectually curious investors! Today, we explore a foundational concept in investing, one that Howard Marks distilled with his characteristic clarity in his October 23, 2024 memo, "Ruminating on Asset Allocation." This memo provides a powerful framework for thinking about risk management and aligning your investment decisions with your deeper financial goals, a core tenet of the Edward Quince blog.

Marks begins by simplifying the complex world of asset classes to their essence: "at bottom, there are only two asset classes: ownership and debt". He emphasizes the "enormous difference to own vs. to lend":

• Owners (equity holders) have "no promise of return". Their potential upside is uncapped, but so is their potential for loss.

• Lenders (bondholders, creditors) have a contractual "fixed outcome" – assuming, of course, the borrower fulfills their obligations. Their upside is capped, but their downside is theoretically limited to the amount lent.

The most basic decision for investors, Marks argues, is choosing between these two fundamental approaches. To anchor this decision, one must first identify a "risk posture". This involves determining how much emphasis you want to place on "preserving (defense) vs. growing capital (offense)". He calls this "preservation vs. growth" an "inescapable truth in investing," acknowledging that these two objectives are mutually exclusive.

This aligns perfectly with our blog's long-standing philosophy. We've often stressed the importance of identifying your goals as the first step towards good risk management, recognizing that "taking a risk without having a specific goal in mind is like driving around aimlessly and hoping to end to up somewhere good". Marks’ framework underscores that this crucial choice should be informed by your "investment horizon, financial condition, income, needs, aspirations, responsibilities, and, crucially, intestinal fortitude, or their ability to stomach ups and downs".

Marks also cautions against deviating from one’s "sweet spot" in terms of risk level, a reminder of the blog’s core belief in discipline and self-awareness. He concludes by pointing to the current opportunities in credit at current levels, which he sees as offering attractive returns.

Ultimately, Marks' "Ruminating on Asset Allocation" reinforces that "A prudent way to navigate the inherent uncertainty in the world and economy is by maintaining some flexibility, a buffer, a margin of safety and a level of creativity in planning". It's about making deliberate, informed choices about your risk posture, understanding the fundamental trade-offs, and focusing on what truly matters for your long-term objectives, rather than getting swayed by market noise or fleeting narratives. 

Edward Quince's Wisdom Bites: The Human Calculus of Value – Beyond Prices and Pundits

Welcome back, discerning investors, to Edward Quince's Wisdom Bites! In our fast-paced world, where markets swing on every headline and narratives shift quicker than a meme coin's price, it's easy to get lost in the "noise and false stimuli". But as this blog consistently reminds us, true understanding comes from looking beyond the superficial, embracing uncertainty, and focusing on timeless principles. Today, we dive into a recent memo from investment titan Howard Marks, "The Calculus of Value", a piece that, despite its August 2025 publication date, offers profound insights perfectly aligned with our core investment philosophies.

Marks, known for his incisive market observations, opens his August 2025 memo by reflecting on the 25th anniversary of his "bubble.com" memo. He updates his perspective on asset values, building on his previous conclusion that while U.S. stock market valuations were "lofty but not nutty", they didn't necessarily signal a bubble due to a lack of extreme investor psychology.

Marks distinguishes between value and price, a fundamental concept for any investor:

• Value is subjective – what an asset is "worth" at a point in time, and it cannot be definitively found, "not even by AI, as far as I know".

• Price is concrete – it's simply the amount you pay to obtain something.

The essence of good investing, Marks asserts, is accurately estimating this subjective value and then purchasing it at a reasonable price. He notes that while his education at the University of Chicago taught a purely mathematical discounting process of future cash flows and earnings to determine a fair price, "in the real world, price is set by a different discounting process, which consists mostly of people applying their subjective opinions and attitudes about what the asset and its earning power are worth".

This brings us to Benjamin Graham's enduring analogy, which Marks also highlights: "in the short run the market functions like a voting machine, reflecting assets’ popularity. But in the long run, it’s a weighing machine, assessing assets’ value". Marks himself refers to a "calculus of value" that seems "entirely logical and almost mathematical," but crucially, it's "applied by people who aren’t". This human element – the subjective opinions and attitudes – is what truly drives pricing in the market.

Marks observes several factors currently "firing investor imaginations" and contributing to bull markets:

• The positive psychology and "wealth effect" from recent gains in markets, high-end real estate, and crypto.

• The belief that, for most investors, there's "no alternative" to U.S. markets.

• The excitement surrounding "today’s new, new thing: AI".

A central theme in Marks' memo, and a powerful warning, is the "this time is different" cliché. He quotes Sir John Templeton, who said that "20 percent of the time things really are" different. Marks struggles with this paradox, stating, "I just have no idea which of those two concerns is more valid today" – whether it's the cliché always bearing scrutiny, or the failure to recognize when things actually are different. He emphasizes that failing to recognize genuine shifts "stands between the average investor and superiority".

Marks' "The Calculus of Value" deeply resonates with this blog's core investment philosophies, particularly its emphasis on intellectual humility and filtering noise. Marks' admission that he has "no idea" which side of the "this time is different" paradox is more valid exemplifies the very "I don't know" mentality this blog advocates. It reinforces that "Nobody knows anything, and that's okay", particularly when it comes to complex market dynamics.

His distinction between objective value and subjective price underscores the importance of focusing on underlying fundamentals rather than getting swept up in market popularity or "fleeting narratives". The "calculus of value" being logical but "applied by people who aren't" perfectly illustrates how human nature and behavior "matters more than your forecast". It's a reminder that emotions and psychology, rather than pure logic, often dictate short-term market movements.

Marks' call to understand "the other side of the issue," as per John Stuart Mill's quote ("He who knows only his own side of the case knows little of that"), aligns with the blog's promotion of critical thinking and seeking diverse perspectives beyond mere "group think". This intellectual rigor helps cut through the "noise bottleneck" that bombards investors daily.

Ultimately, Marks' memo, like the timeless wisdom shared here, urges investors to move beyond the "daily deluge of financial 'news'" and the "constant pressure to do something". Instead, cultivate patience – because "the big money is not in the buying and selling, but in the waiting". It reinforces the wisdom that "Never interrupt compounding unnecessarily" by reacting to every "new, new thing".

In a world constantly seeking instant answers and quick gains, Howard Marks' "The Calculus of Value" serves as a powerful reminder of enduring investment truths. It reaffirms our belief that true success in finance, and in life, comes from embracing intellectual humility, discerning value from price, filtering out the pervasive noise, and adhering to patient, long-term principles. As always, "Clarity comes from subtraction, not addition". So, understand the human element, scrutinize every "this time is different" narrative, and let your discipline triumph over market drama.

Edward Quince's Wisdom Bites: The Enduring Comedy of Being Human – As Told by the XTODs (Part 3: Societal Illusions and Finding Meaning)

Welcome back to Edward Quince's Wisdom Bites. In a world perpetually teetering on the brink of lunacy, perhaps the best way to understand ourselves is to reflect on the scattered insights found amidst the daily noise.

Let us uncork some delightfully peculiar and pointedly witty observations that have graced these digital pages, proving that even in the most serious of times, absurdity (and sometimes, brilliance) finds a way.

On Societal Illusions and Finding Meaning:

• "You’re not consuming content; you’re being consumed by a medium"

• "If you do things you don’t enjoy for long enough without understanding why you’re doing them, you develop the bad habit of doing things you don’t enjoy without understanding why you’re doing them. And you end up with a lot of people who are miserable at work."

• "Most people endure decades of work they hate, hoping one day they’ll be free. Naval calls this “the deferred life plan.” And he believes it’s a lie. “Looking forward to vacations takes the joy out of every day.” For Naval, life isn’t something to delay. It’s something to design."

• "What you want is money, but what you really want is meaning."

• "There are times when chasing the things money can buy, one loses sight of the things which money can't buy and are usually free."

• "The unique relief that comes from doing what you love."

• "Patience never trends on X."

• "If it won’t matter in 5 YEARS don’t give it more than 5 MINUTES attention.”

• "“Noise, the grand dynamism, the audible expression of all that is exultant, ruthless and virile.... We will make the whole universe a noise in the end. We have already made great strides in this direction as regards the Earth. The melodies and silences of Heaven will be shouted down in the end." - C.S. Lewis, Screwtape Letter #22

• "The need for certainty is the greatest disease the mind faces.”

• "The more data you get, the less you know what’s going on."

• "How about: build something good for humanity—because people don’t necessarily know what they want, and sometimes their death instinct is strong"

• "You can either be judged because you created something or ignored because you left your greatness inside of you. Your call."

In Closing:

• "Optimists will own the future—pessimists will watch it happen.”

• "Care about your CHARACTER over your REP, because it’s what you really are REP is just what others think you are"

• "Doing what everyone else thinks you should is a sure path to the same results as everyone else."

• "Believe every day is a good day. But don’t think it’ll be easy."

Edward Quince's Wisdom Bites: The Enduring Comedy of Being Human – As Told by the XTODs (Part 2: Growth, Learning and Perspective)

Welcome back to Edward Quince's Wisdom Bites. In a world perpetually teetering on the brink of lunacy, perhaps the best way to understand ourselves is to reflect on the scattered insights found amidst the daily noise.

Let us uncork some delightfully peculiar and pointedly witty observations that have graced these digital pages, proving that even in the most serious of times, absurdity (and sometimes, brilliance) finds a way.

On Growth, Learning, and Perspective:

• "You don't need to worry about progressing slowly. You need to worry about climbing the wrong mountain."

• "IN CONSTRUCTION Human beings are only healthy when they are still in construction (intellectually). Aging starts when they become a self-museum."

• "To experience time travel, read. To achieve immortality, write."

• "Take pride in your effort, not your talents. Your talents are a gift, you didn't do anything to earn them. You should take pride in what you do w/ them. True excellence comes from combining gifts with dedication and effort. (Working & studying hard/practicing consistently)"

• "The game of life is the game of everlasting learning. At least it is if you want to win."

• "The deepest insight into life: All benefits in life come from compound interest."

• "You can compound knowledge faster than money."

• "Re-reading is probably more important than reading. Seek to cognitively own a great book rather than just reading it."

• "Acquiring knowledge is easy, the hard part is knowing what to apply and when. That’s why all true learning is “on the job.” Life is lived in the arena."

• "The depth of your understanding is reflected in the simplicity of your explanations."

• "Growth comes from reflection, not rumination. Mistakes don’t define you. They are part of the process - choose growth."

• "The more he saw the less he spoke, The less he spoke, the more he heard, Why aren’t we all like that old bird?”

• "You don’t have to have an opinion on everything—and shouldn’t listen to those who do."

Edward Quince's Wisdom Bites: The Enduring Comedy of Being Human – As Told by the XTODs (Part I: The Inner Game and Our Shared Struggles)

Welcome back to Edward Quince's Wisdom Bites. In a world perpetually teetering on the brink of lunacy, perhaps the best way to understand ourselves is to reflect on the scattered insights found amidst the daily noise.

Let us uncork some delightfully peculiar and pointedly witty observations that have graced these digital pages, proving that even in the most serious of times, absurdity (and sometimes, brilliance) finds a way.

On the Inner Game and Our Shared Struggles:

• "The world is not driven by greed. It’s driven by envy."

• "Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?"

• "The only people who never feel like impostors are narcissists."

• "Being 100% sure of yourself at all times betrays arrogance and breeds complacency. Questioning yourself reflects humility and propels growth. Pangs of doubt are a normal, healthy human response to new challenges."

• "The greatest battle of all is with yourself—your weaknesses, your emotions, your lack of resolution in seeing things through to the end. You must declare unceasing war on yourself."

• "The iron rule of life is that everybody struggles.”

• "Everyone is fighting a battle you know nothing about. Everyone struggles. Take solace in that."

• "The price of success is paid in private. Visible triumphs are built on invisible toil."

• "The most socially accepted form of self-sabotage: Overthinking. It’s why you can’t make decisions, finish anything, or sleep without scrolling."

• "Intelligence without courage leads to anxiety because you will spend your time overthinking instead of acting, taking risks, improving your life."

• "Most people wait too long to go into action, generally out of fear. They want more money or better circumstances. You must go the opposite direction and move before you think you are ready."

• "Every single thing you want in life is on the other side of something that sucks. That suck might be 100 hard workouts, 100 bland meals, 100 hours of focused work, or 100 hard conversations. Embrace it as the cost of entry. The answers you seek are found in the actions you avoid."

• "Sometimes, you think you have to figure out your life’s purpose, but you really just need some macadamia nuts and a cold fucking shower."

• "If you only wished to be happy, this could be easily accomplished; but we wish to be happier than other people, and this is always difficult, for we believe others to be happier than they are.” - Montesquieu