Tag: Howard Marks
-
Howard Marks: Trends
“Many of the biggest mistakes made in the business and investment worlds have to do with cycles. People extrapolate uptrends and downtrends into eternity, whereas the truth is that trends usually correct: rather than go well or poorly forever, most things regress to the mean. The longer a trend has gone on – making it…
-
Howard Marks: Risk, return
“For the last 45 years, and I think for the rest of time, we don’t think of ‘Good idea, bad idea.’ We think ‘Risk, return. Risk, return.’ How risky is it? Is the promised return adequate to compensate for the risk?” —Howard Marks
-
Howard Marks: Coming years not similarly easy
“We’ve gone through an easy period for the last 14 years, and I believe that the coming period will be a harder period. Not a cataclysm. Not a depression. But I think people don’t recognize that the last 14 years have been unusually easy. And I believe that the coming years will not be similarly…
-
Howard Marks: Elevated popular opinion
“…most investors think quality, as opposed to price, is the determinant of whether something’s risky. But high quality assets can be risky, and low quality assets can be safe. It’s just a matter of the price paid for them. . . . Elevated popular opinion, then, isn’t just the source of low return potential, but…
-
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…
-
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…
-
Howard Marks: Inevitable
“Some things are inevitable. But you really shouldn’t think you know when.” –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,…
-
Howard Marks: Remedy for everything
“For every asset, there’s a price that’s low enough to make the risk palatable . . . Low price is the remedy for everything.” —Howard Marks.
-
Howard Marks: What you pay for it
“It’s not what you buy that determines your results, it’s what you pay for it.” –Howard Marks (Mastering the Market Cycle).
-
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…
-
Howard Marks: Thankful heart
“The philosopher Cicero said something beautiful. He said, ‘The thankful heart is not only the greatest of all the virtues, but it is the parent of all the other virtues.’ And I think what that means is that people who are lucky should thank their luck, acknowledge it and revel in it. I think it…
-
Howard Marks: Endemic to all markets
“We don’t consider ourselves good macro-forecasters (or even people who believe in forecasting). So we certainly are in no position to say when the recession or market pullback will start, how bad it will be…or even that there definitely will be one. But we think we’re unlikely to be proved wrong if we say cyclicality…
-
Howard Marks: Rarely same person twice
“In both economic forecasting and investment management, it’s worth noting that there’s usually someone who gets it exactly right… but it’s rarely the same person twice. ” —Howard Marks.
-
Howard Marks: Alternative outcomes
“Most forecasts don’t allow for alternative outcomes” —Howard Marks.
-
Howard Marks: Survive on the worst days
“Never forget about the man who was six-foot-tall, who drowned crossing the stream that was five feet deep on average. To be a successful investor, at minimum, you have to survive. Surviving on the good days is not the issue. You have to be able to survive on the bad days. The idea of surviving…
-
Howard Marks: Patterns
“This effort to explain life through the recognition of patterns—and thus to come up with winning formulas—is complicated, in large part, because we live in a world that is beset by randomness and in which people don’t behave the same from one instance to the next, even when they intend to. The realization that past…
-
Howard Marks: Very, almost depressing
“There are three words which are among the most important words in our business: I don’t know. And if you don’t know something…you should admit it—to yourself and to everybody around you. And I think personally that it’s very freeing to say ‘I don’t know.’ I think it’s very, almost depressing, to feel that you…
-
Howard Marks: Are you prepared?
“Controlling risk is the mark of a professional. Anybody can make money when the market goes up. And most of the time the market goes up. And anybody who takes above-average risk can do above average when the market rises. So achieving returns is not a point of distinction in good times. In my opinion,…
-
Howard Marks: Things not going the way we want
“…in my view, risk is primarily the likelihood of permanent capital loss. But there’s also such a thing as opportunity risk: the likelihood of missing out on potential gains. Put the two together and we see that risk is the possibility of things not going the way we want.” —Howard Marks.
-
Howard Marks: Judgment
“There can’t be a rule that always works…. These things cannot be reduced to a rule. The market operates so as to confound rule makers…. It all comes down to judgment. If we’re going to have superior investment performance we have to have superior judgment. You can work on your processes, both intellectually and emotionally,…
-
Howard Marks: Have some knowledge
“If you are investing based on a fact that everybody knows, it can’t possibly constitute an advantage and it can’t possibly have been omitted from the price. So, you must have some knowledge that is different from that of others.” —Howard Marks.
-
Howard Marks: Something no one anticipated
“What could cause a market decline? A drop in investor confidence — perhaps the commodity that’s most freely available today — would likely be the key, but the reason is hard to foresee. ‘We’re not expecting any surprises,’ people say, and that has become our new favorite oxymoron. Surprises are never expected — by definition…
-
Howard Marks: Favourite quote
“My favorite quote comes from a British author named Christopher Morley, ‘There’s only one success: to be able to live your life your way.’ I believe you shouldn’t let society determine what your way is, and you shouldn’t let money determine what your way is.” — Howard Marks.
-
Howard Marks: Overpermissive
“Overpermissive providers of capital frequently aid and abet financial bubbles. . . . In Field of Dreams, Kevin Costner was told, ‘if you build it, they will come.’ In the financial world, if you offer cheap money, they will borrow, buy and build – often without discipline, and with very negative consequences.” -Howard Marks (November…
-
Howard Marks: Large positions
“While it’s true that only large positions can get you into trouble, it’s equally true that only large positions can make a big contribution. (This is one of the great dilemmas in investing.)” —Howard Marks.
-
Howard Marks: Proceed carefully
“The workings of free capital markets require that in order to overcome investors’ innate aversion to risk, seemingly riskier investments must offer the possibility of higher returns providing ‘risk premiums.’ But when risk aversion is at cyclical lows, risk premiums needn’t be generous; people will invest anyway. Too many people trying to dine at the…