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Illustration: Aïda Amer/Axios

What kind of investor would ignore economics? A successful one, says legendary hedge fund manager Howard Marks in the memo we wrote about on Monday.

Why it matters: Nearly all investors — Marks included — have views on the economy, how it works, and where it's headed. Many of them go to great lengths to disseminate and popularize those views. (Looking at you, Ray Dalio.) But that's all marketing, not investing.

The big picture: One of Marks' investing tenets holds that economic forecasting is "not critical to investing."

  • "I can count on one hand the investors I know who successfully base their decisions on macro forecasts," he writes.

Marks asks the only question that matters: "If you invest on the basis of your macro views, how often have they helped?"

  • There are two common answers to that question. The first, which is typical among individual investors, is "very rarely." Investors tend to overestimate future inflation in developed markets and underestimate the likelihood of a major negative shock in emerging markets.
  • Institutional investors, on the other hand, if they're honest, will tend to say that they don't invest on the basis of their macro views.

Between the lines: A huge part of being an institutional investor is sales and marketing — persuading individuals that you're a smart and safe place for them to put their money.

  • Because stocks do well when the economy does well, and do badly when the economy does badly, those individuals will invariably ask about your economic outlook. So investors need an answer to that question.
  • Once they become adept at answering those questions, they end up being asked those questions even more frequently. While the answers don't help in terms of investment returns, they do often help convey an aura of general expertise that in turn helps to retain and increase their total funds under management.

The bottom line: There's no utility to listening to investors when they're in economic-pundit mode. And there's also no utility in trying to use economic forecasts to make money. Almost no one can do that.

Go deeper

Desperate times for distressed investors

Illustration: Sarah Grillo/Axios

China’s Evergrande is giving hedge fund managers who invest in distressed situations what they’ve craved all year: a huge company with billions in debt trading at deeply discounted levels.

Yes, but: It’s a sign of the times that in order to access one of the only large distressed opportunities, they have to stretch into one of investing’s riskiest regions.

Updated 2 hours ago - Politics & Policy

Congressman criminally charged with lying to feds

Rep. Jeff Fortenberry. Photo: Al Drago/Bloomberg via Getty Images

Rep. Jeff Fortenberry (R-Neb.) has been indicted on charges he falsified records and lied to federal investigators probing an illegal foreign donation scheme, the Justice Department announced on Tuesday.

Driving the news: DOJ says a Fortenberry associate, who later cooperated with investigators, informed him he'd likely received illegal donations from an intermediary for a foreign national, but that Fortenberry denied any knowledge of such a scheme when contacted by the FBI.

"Assassin's Creed," but for schools

"Viking Age: Discovery Tour." Image via Ubisoft

For the third time since 2018, Ubisoft is releasing a nonviolent version of its latest “Assassin’s Creed” game as part of a unique effort to turn one of the medium’s most popular series into an educational tool.

Driving the news:Viking Age: Discovery Tour” transforms last year’s “Assassin’s Creed Valhalla” from a bloody 150-hour game about Viking conquest in 9th century England into a peaceful four-hour game about merchants and monks.