My favourite Howard Marks quotation is that certain investment managers earn their reputation from calling the market right once in a row. Marks is a renowned American investment professional who is best known for his client letters that outline his views on financial markets and the economy. One of his most devoted supporters is Warren Buffett who encouraged him to publish a book sharing his investment approach and market insights.Like so many prosperous money managers, Marks built his success on decades of patience, thorough and careful analysis and the avoidance of risky behaviour. He recognises that no one knows what lies ahead, and rather than banking on consensus forecasts about the economy, interest rates and market averages, he spends time gaining knowledge of the "knowable" - industries and companies. The more micro you focus, he insists, the greater you can learn things others don't. The biggest mistake most investors make is not from information and analysis but from succumbing to psychological and emotional forces that shape financial markets, such as fear of missing out, the influence of the crowd and a persistent search for a sure thing.Expanding on his theme that the future is "unknowable", Marks devoted a recent letter to the subject of risk. He argues that volatility is not risk, but simply an academic choice for defining and measuring risk. Academics, he points out, need something quantifiable for their calculations and modelling. Risk, he stipulates, is something investors worry about and demand compensation for, something that cannot be reduced to a hard number.Investors are not afraid of volatility but they do fear the possibility of permanent loss. Permanent loss can be estimated but certainly not determined accurately. If you invest in 2015, for example, you will only be able to quantify years later whether your venture was risky or not. Only in hindsight can you measure accurately the risk profile of the investment you made at the time.In the present market, fund managers are being confronted with countless unknowns, from Greece's future in the eurozone and the tumble in commodity prices to the timing of the Federal Reserve's interest rate hike. Should they position themselves for short-term volatility and prospective opportunities once the dust settles, or will the upshot of these events result in permanent loss to their holdings?Opinions about a possible Greece exit from the eurozone differ widely. The optimists believe that the crisis has discredited the region and, without Greece, it will emerge stronger and more disciplined. The naysayers worry that the costs of dealing with a politically and economically unstable nation on the doorstep will be ruinous.Equally concerning, especially for investors on the JSE, is the downward spiral in resource prices and the slump this has caused in mining stocks. Once mighty Anglo American is trading back at levels last reached near the depths of the 2008 recession.According to Marks, cycles prevail; nothing goes in one direction forever. Trees don't grow to the sky, and similarly few things go to zero. On the other hand it's impossible to know when an overheated market will turn down So, while we never know where we are going, we ought to distinguish where we are. One can still make sound investment decisions on the strength of present observations, knowing what we know, with no need to guess about the future...