Howard Marks: Negatives accumulate

One of the most notable behavioral traits among investors is their tendency to overlook negatives or understate their significance for a while, and then eventually to capitulate and overreact to them on the downside.  I attribute a lot of this to psychological failings and the rest to the inability to appreciate the true significance of events. As negatives accumulate – whether they surface for the first time or just are finally recognized as significant – eventually a time comes when they can no longer be ignored, and instead they come to be treated as being of overwhelming importance.”

—-Howard Marks.

Howard Marks: Cyclicality

“The basic reason for the cyclicality in our world is the involvement of humans. Mechanical things can go in a straight line. Time moves ahead continuously. So can a machine when it’s adequately powered. But processes in fields like history and economics involve people, and when people are involved, the results are variable and cyclical.”
—Howard Marks.

Howard Marks: None of them ‘know’

“The vast majority of today’s negative-yield bonds are in Europe and Japan. One of the biggest questions surrounds whether negative rates will reach the U.S. This question takes me back to my immediate response to Ian’s suggestion that I write this memo: nobody knows, and certainly not me. When something hasn’t happened in the past, it’s impossible to be sure you know how it’ll end up. Different people will express opinions on this subject with differing degrees of confidence. Yet I remain certain that none of them ‘know.'” –Howard Marks.

Howard Marks: Uncertainty

“I’m firmly convinced that markets will continue to rise and fall, and I think I know (a) why and (b) what makes these movements more or less imminent. But I’m sure I’ll never know when they’re going to turn up or down, how far they’ll go after they do, how fast they’ll move, when they’ll turn back toward the midpoint, or how far they’ll continue on the opposite side. So there’s a great deal to admit uncertainty about.” —Howard Marks.