At GDA we’ve often said that investing is as much about patience and discipline as it is about analysis. But a recent presentation from Marriott struck a chord: most people – including investors, traders, and even experts – mistake luck for skill because they underestimate the role of randomness in life and markets.
It’s an important reminder. Whether in sport, politics, or the stock market, chance moments can completely change the outcome. A lucky bounce of the ball can win a Rugby World Cup game. A surprise election result can move currencies overnight. And yet, in hindsight, the story is often rewritten as though it was “skill” all along.
Why Forecasts Fail
Recent years have forced investors to grapple with shocks and turning points that few saw coming:
- The impact of COVID on supply chains and economies.
- The impact of Central Bank Interest Rate Policies
- The rise of AI and the uncertainty of who will lead this revolution.
- The return of Trump to the White House.
- The threat of a global trade war.
- Even the power of a single tweet to move billions of dollars.
Looking ahead, the list of “unknowables” is just as long:
- What will Trump do next?
- Will China invade Taiwan?
- Will Powell cut rates too late?
- Who will win the AI race?
- Will the GNU last in South Africa?
- What next for the Middle East?
- What will Putin do next?
As Howard Marks (a billionaire American Investor) recently put it:
“…under these circumstances, it must be accepted that forecasts are even less likely to prove correct than usual. Why? Primarily because of the vast number of unprecedented unknowns involved, which has the potential to turn into the biggest economic development in our lifetimes.”
In short: predictions are fragile in a world of randomness.
That’s why Marriott’s key message resonates: instead of chasing “alpha” (trying to beat the market with bold forecasts), we should be looking for resilient earnings.
Resilience means “an ability to recover from or adjust to misfortune or change.”
In practice, that means seeking out companies, industries, and strategies that can adapt when the unexpected happens — not just those that shine in perfect conditions.
Key Thoughts
From a GDA perspective, we believe that one of our main roles is to help shape your financial journey into one of resilience over return. The key to wealth accumulation is taking action at appropriate times, staying steady through the noise, not making emotional decisions and having sound structures in place that can survive the turmoil of life.
It is a journey we take with you and navigate as your life circumstances change, and one that we thoroughly enjoy walking every step of the way.
We re-visited something Jonathan wrote 3 years ago in a newsletter:
“We know that making the best decision for you and your family’s financial wellbeing, for this generation and the next, is increasingly difficult in a world of infinite choices, changing rules and emotive news flow. We (GDA) come alongside you, to guide you in these choices, discern what is important and vitally, act on these choices to create a secure financial future.”
This is truer than ever today.
GDA Housekeeping
Dave and Jonathan will be away in Singapore and China from 11th September to 24th September on a once in a lifetime trip with Foord Asset Management, where they will be meeting with the management of some really exciting Chinese companies, such as Tencent, which is well known from a South African perspective through Naspers. They will be experiencing first hand how many of the companies within our portfolios are run and I am sure they will have many stories to share upon their return.
From Wes, Dave, Jono and the GDA Team