Investors love making bold forecasts of the future. The problem is that the investor’s success then hinges on their predictions coming to pass. Rather than attempting to predict a certain version of the future, investors should prepare for an uncertain future by seeking discounted valuations. By demanding a margin of safety, investors don’t limit themselves to only succeeding under predetermined circumstances. Investors should admit they are unlikely to correctly predict the complexities of the economy and focus on the things they can control such as the valuations they are willing to pay.

Don’t Predict the Future