The great investing myth (3): Macro investing & predicting the future 🔮

Can You Really Predict the Market? Great Companies Beat Great Forecasts
News and events—wars, inflation, interest rates, tariffs, US debt, China’s ageing population—drive markets daily. The constant headlines fuel the belief that macro-investing (top-down, event-driven) is the way to profit. Experts forecast trends and confidently claim that knowing the future equals investing success.
But is investing really about knowing the future?

Headlines vs. Reality
Many investors obsess over events—central bank meetings, conflicts, economic data. But these are often symptoms of longer processes with complex, unpredictable interactions.

High interest rates, inflation, unemployment, and regional tensions don’t operate in isolation. They interact. Governments intervene. New events emerge. Timing the outcome becomes more guesswork than insight.

Volatility in markets often reflects emotion—not reality. News may move prices, but not necessarily long-term business value.

Too Many Variables, Too Few Certainties
The equation often looks like: A + B + C – X – Y – Z = ???

There are many moving parts —economic, political, social. There will be reactions and interventions —predicting how things will play out is nearly impossible. Even if you’re right about the macro direction, how do you know how markets will respond? And when?

Sometimes the market anticipates and front-runs the news. Other times it overreacts.

Do we have an edge over the market?

Fact: There Are—and Will Always Be—Problems
The world is not heaven. There will always be dark clouds—some more severe than others. People will always find reasons to worry, complain, and be pessimistic.

The water is never clear. Pessimism sounds smart; optimism sounds naïve. But as Mark Twain once said,

“I’ve had a lot of worries in my life, most of which never happened.”

Forecasts often feel logical, but they’re frequently just emotional reactions in disguise.

Bias Shapes Our Thinking
Confirmation bias. Negativity bias. Hindsight bias. We all have them.

Our personal beliefs—about the economy, politics, or even US-China relations—can skew how we interpret information. We don’t just see reality; we fit the facts into the narrative we want to believe.

So, we can keep worrying and complaining, or we can choose to look for opportunities.
It is a conscious choice.

Beware the Expert Forecast
Experts may sound confident. But confidence is not accuracy. Or consistency.

Check their track records. Legendary fund manager Bill Miller once called the future “a coin toss.” If even the best admit it’s unpredictable, should we really rely on bold forecasts?

Morgan Housel puts it well:

“People don’t want forecasts. They want comfort.”

But comfort and clarity are illusions. Nassim Taleb calls this the “noise bottleneck”: the more information we consume, the less clarity we gain.

Buffett reminds us that forecasts usually say more about the forecaster than the future.

The Comfort of Certainty Is a Mirage
We crave clarity. As Morgan Housel puts it, people don’t just want forecasts—they want comfort.
Uncertainty feels uncomfortable. Forecasts offer a false sense of control.

But no one—not even the most seasoned investor or economist—can consistently predict the future.
Nassim Taleb calls this the “noise bottleneck”: the more information we consume, the less clarity we gain.

And as Buffett reminds us: forecasts usually say more about the forecaster than the future.

Macro vs. Value Investing: What Actually Works?
Macro investing tries to predict where economies and markets are headed. It sounds sophisticated. But even professionals struggle with it.

Value investing flips the script.
Instead of asking, “Where is the economy going?” it asks, “Which companies are good enough to thrive regardless?”

As Oaktree Capital says:

“We don’t rely on macro forecasts. Superior knowledge of companies drives performance.”

Great companies are built to adapt, not predict.
As Andy Grove said:

“Bad companies are destroyed by crisis. Good companies survive them. Great companies are improved by them.”

Long-Term Macro Trends Still Matter—but Differently
Of course, not all macro thinking is useless. Long-term shifts—like the rise of AI, green energy, or changing demographics—can offer tailwinds.

But don’t try to time them. Instead, ride them through strong businesses. As Buffett famously said:

“If you’re not willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

Your Real Edge: Great Companies
High-quality businesses—with strong moats, predictable cash flows, and disciplined leadership—tend to win over time, no matter the macro backdrop.

They don’t predict the future.
They focus on solving problems and serving customers.
They adapt. They grow.
And they turn crises into opportunities.

Instead of trying to predict the “right” macro trend, let the best companies do their job for you.

That’s also a macro response—just a smarter one.

Study Companies, Not Economies
Instead of decoding the global economy, go deep on companies.

Look for:

• Predictable demand (e.g., consumer staples)
• Durable competitive advantages
• Clean balance sheets
• Leaders with vision

As value investors, our edge comes from deep research and sharp selection—not outguessing central banks or geopolitical risks.

Generalising vs. Finding the Outliers for Great Returns
Macro investors often generalize—“Don’t fight the Fed,” “Rate hikes kill stocks.”
But the best companies are the exceptions, not the rule.

The best investors use a magnifying glass, not a telescope. They go deep, not broad. They find outliers, not averages.

Some companies thrive even during economic downturns. Others fall despite the good news. The edge lies in knowing the difference.

When in Doubt: Zoom Out
Benjamin Graham said:

“In the short run, the market is a voting machine, but in the long run, it is a weighing machine.”

Uncertainty creates opportunity. When fear dominates, margins of safety expand—and fortunes are made.

Zoom out on Amazon, Visa, or Costco. They’ve weathered recessions, wars, and inflation—and kept growing.

The world didn’t end.
Great businesses endured—and even flourished.

Conclusion: What Is Your Edge?

No one consistently knows the future—not Are there people who can consistently know the future? No
Are there companies who consistently know the future and work towards it? No!

The world is always juggling multiple macro forces at once. Trying to predict them all is overwhelming and often futile.

So what is our edge?

• Be selective: Not every company in your portfolio may deserve to stay. Revisit your thesis. Tighten your criteria.
• Stick to quality: High-quality companies survive storms. Hold them in sizes you can sleep with.
• Use volatility wisely: Don’t waste a crisis. Use macro fear to buy great businesses at good prices.
• Think clearly: Challenge your assumptions and biases. Validate your fears.

The goal isn’t to predict the storm.
It’s to build a portfolio that can sail through it.