Howard Marks has been writing memos about investing for over thirty years. If you have not read them, you should. They are the most honest, rigorous, and practically useful body of work on the psychology of investing that exists. And if you read them carefully, you will notice something: Howard Marks is a Stoic.
Howard Marks has been writing memos about investing for over thirty years. If you have not read them, you should. They are the most honest, rigorous, and practically useful body of work on the psychology of investing that exists. And if you read them carefully, you will notice something: Howard Marks is a Stoic.
He does not use the word. He does not quote Marcus Aurelius or Epictetus. But the framework he has built for thinking about risk, uncertainty, and the psychology of markets is, at its core, a Stoic framework. And understanding why tells you something important about both investing and philosophy.
The Uncertainty Memo
In May 2020, as the world was trying to understand what COVID-19 meant for markets and economies, Marks published a memo called simply *Uncertainty*. It is one of the most important things I have read about investing — not because it told me what was going to happen, but because it was so clear about the limits of what anyone could know.
"We have to make decisions," Marks wrote, "even though we know we can't be right all the time, and even though we know we can't know when we're right and when we're wrong." This is not a counsel of despair. It is a counsel of intellectual humility — the recognition that the future is genuinely unknowable, and that the appropriate response to uncertainty is not to pretend you can eliminate it, but to build a practice that allows you to act wisely in spite of it.
This is Stoicism. Epictetus's entire philosophy rests on the distinction between what is in our control and what is not. The future is not in our control. The quality of our thinking and our decisions is. The Stoics did not waste energy trying to predict what would happen. They invested that energy in developing the judgment to respond well to whatever happened.
Premeditatio Malorum in Practice
The Stoic practice of *premeditatio malorum* — the premeditation of evils — is one of the most practically useful tools I know for thinking about risk. The practice is simple: before any significant decision, imagine the worst-case scenario in vivid, specific detail. Not to become paralyzed by it, but to remove its power. To make the decision with clear eyes about what you are actually risking.
Ray Dalio, who built Bridgewater Associates into the world's largest hedge fund, has described a remarkably similar practice in his book *Principles*. He calls it "stress-testing" — the systematic examination of what could go wrong and how bad it could get. "I learned that if you work hard and creatively, you can have just about anything you want," Dalio writes, "but not everything you want. Maturity is the ability to reject good alternatives in order to pursue even better ones."
The connection to Stoicism is not coincidental. Both Dalio's stress-testing and the Stoic *premeditatio malorum* are practices designed to do the same thing: to make the unconscious conscious, to bring the feared outcome into the light where it can be examined rationally rather than felt irrationally.
The Dichotomy of Control in Markets
One of the most common mistakes I see investors and founders make is spending enormous energy on things they cannot control. Market conditions. Competitor behavior. Macroeconomic trends. Regulatory changes. These are real forces that affect outcomes. But they are not in your control. And the energy spent worrying about them is energy not spent on the things that are.
The Stoic dichotomy of control — Epictetus's foundational distinction between what is "up to us" and what is "not up to us" — maps almost perfectly onto the best risk management frameworks in modern finance. Marks, in his memos, consistently distinguishes between the quality of a decision and the quality of an outcome. A good decision can produce a bad outcome. A bad decision can produce a good outcome. The market is noisy enough that short-term outcomes tell you very little about the quality of the thinking that produced them.
This is a Stoic insight. The Stoics were not outcome-focused. They were process-focused. They judged themselves — and others — not by what happened, but by whether the response to what happened was rational, virtuous, and in accordance with their values. The outcome was not in their control. The quality of their response was.
Nassim Taleb and the Black Swan
Nassim Nicholas Taleb, whose work on uncertainty and risk has been enormously influential in finance, is in many ways a modern Stoic — though he would probably resist the label. His central insight in *The Black Swan* is that the most important events in history — and in markets — are the ones that were not predicted and could not have been predicted. The fat tails of the distribution are where the real action is.
The practical implication is one that the Stoics would have recognized immediately: build for robustness, not optimization. The system that is optimized for the expected scenario is fragile. The system that is built to survive the unexpected scenario is antifragile — Taleb's term for systems that actually get stronger under stress.
This is how I think about portfolio construction. Not: what is the optimal allocation for the expected scenario? But: what is the allocation that survives the scenarios I have not imagined? The Stoic practice of *premeditatio malorum* is, in essence, a systematic attempt to imagine the scenarios you have not imagined — to stress-test your assumptions before the market does it for you.
The Equanimity Premium
There is a quality that the best investors share that I have come to think of as equanimity — a kind of settled, unshakeable calm in the face of uncertainty. It is not the absence of concern. It is the presence of perspective. The ability to hold the current moment — however difficult — within a larger frame that keeps it from becoming overwhelming.
This is the Stoic virtue of *ataraxia* — tranquility of mind. Not the tranquility of someone who has nothing at stake, but the tranquility of someone who has done the internal work to be at peace with uncertainty. Who has made their peace with the fact that outcomes are not in their control, and who has therefore freed themselves to focus entirely on what is.
Marcus Aurelius, writing to himself in the *Meditations*, put it this way: "You have power over your mind, not outside events. Realize this, and you will find strength." This is not a passive statement. It is a statement of radical agency — the recognition that the only thing you can truly control is your own mind, and that this is, in fact, enough.
In investing, as in life, the equanimity premium is real. The investor who can remain rational when markets are irrational, who can hold conviction when the crowd is panicking, who can make decisions from clarity rather than fear — that investor has an edge that no amount of information or analysis can replicate.
The Stoics knew this. The best investors know it too. The practice of connecting these two traditions is, I believe, one of the most valuable things a serious investor can do.
Richard Smullen is the co-founder of Keller Winston and the founder of Pypestream, Inc.
