In his most recent memo, Howard Marks considers the future of “Investing Without People.”
Howard Marks - The Memo Investing Without People
Hello I'm Howard Marks. It's after hours here at Oak trees Los Angeles trading desk. But this quiet room wasn't so quiet a few hours ago. The question posed in my latest memo is in the future will it be like this all the time in short. Will we be investing without people as I see it. Securities markets seem to be moving toward dispensing with us mere mortals and relying more and more on index investing and other forms of passive investing. Quantitative and algorithmic investing and artificial intelligence and machine learning. There's no doubt that computers can do an unmatched job dealing with the things that can be counted things that are objective and quantitative but many other things qualitative subjective things count for a great deal and I doubt computers can do at the very best investors do exceptional investors have creativity taste discernment and judgment and thus the ability to see the merit and qualitative attributes that other investors miss. Unless computers develop these things too. I doubt the best investors will be retired anytime soon. If the day comes when intelligent machines run all the money won't they all see everything the same way they reached the same conclusions designed the same portfolios and thus perform the same. What then will be the route to superior performance. Humans with superior insight. At least that's my hope. Regardless of how you lean on this subject the markets will open tomorrow morning and trading floors including oak trees will be buzzing with people and activity. Without that buzz life around here would be too quiet for me.