Regular readers of my memos know that Oaktree and I approach macro forecasts with a high degree of skepticism. In fact, one of the six tenets of Oaktree’s investment philosophy states flatly that we don’t base our investment decisions on macro forecasts. Oaktree doesn’t employ any economists, and we rarely invite them to our offices to share their views.
The reason for this is simple: to use Buffett’s terminology, we’re convinced the macro future isn’t knowable. Or, rather, macro forecasting is another area whereas with investing in general – it’s easy to be as right as the consensus, but very hard to be more right. Consensus forecasts provide no advantage; it’s only from being more right than others – from having a knowledge advantage – that investors can expect to dependably earn above-average returns.
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