Invisible Forces

There is perhaps nothing more human (or American) than giving ourselves outsized credit for our personal successes when the forces that conspired to produce a particular outcome had very little to do with us. This is one of my takeaways from Howard Marks’s recent letter, "Sea Change." Marks, a renowned investor, describes the massive impact of transitioning from a multi-decade period of low interest rates to one defined by high interest rates.

What we thought was our knack for picking winning stocks was actually a product of a low-interest rate environment that pushed asset prices up. The successes we attributed to venture capitalists or entrepreneurs was—at least partially—made possible by favorable economic conditions with low costs of capital. They say real estate is all about "location, location, location." But for those who were able to become homeowners in the last two decades (and then watch their home’s value go up), it was also about interest rates.

Interest rates are but one invisible force in our midst. Though it’s tempting to believe that I am solely responsible for the outcomes in my life, when I reflect on the multitude of contributing factors, it feels like putting on my glasses: suddenly I see the world in all the accurate, humbling detail that my own ego was obstructing. When we pierce through the fiction of our own self-importance, new ways of understanding the world open up to us that are grounded in the truth of our small but mighty role.