The visual above suggests there are only two kinds of forecasters.

Those who don’t know and those who don’t know they don’t know. The third type of forecaster is missing from here (who is extremely dangerous) – the one who knows he doesn’t know but pretends to know and keeps bullshitting. 

Every year begins with forecasts. Economists predict interest rates. Analysts forecast earnings. Market experts explain where equities are headed. Television studios fill with confident opinions about what the next twelve months will look like.

The remarkable part is not that these forecasts often turn out to be wrong. It is that we continue treating them as if they were right.

Markets are simply too complex. They are influenced by millions of people making billions of decisions every single day, shaped by innovation, politics, human psychology, technological breakthroughs and unexpected events that nobody could possibly anticipate with precision.

That is why I am less interested in finding people who claim to know the future and far more interested in finding people who know the limits of their own knowledge.

Humility, is one of the greatest investment advantages.

The investor who admits, “I don’t know,” is far more likely to diversify, remain patient and build a portfolio that can survive many different futures. The investor who believes they have already figured everything out often ends up making concentrated bets on a future that exists only in their imagination.

That is why successful investing has never required extraordinary forecasting ability. It has required extraordinary preparation. And I don’t mean preparing for one future but preparing for many.

The future has a remarkable habit of surprising everyone…even the people who are paid to predict it.