Investor Howard Marks shares investing advice for stocks that aren’t in a bubble. Add me on Instagram: michellemarki
Howard Marks is a co-founder of Oaktree Capital Management and he talked about the investing mindset and temperament you need to have in order to be successful in stocks.
He sat down with Katie Koch, the Chief Investment Officer of Public Equity at Goldman Sachs in June 2022.
Howard Marks’ line of thinking is closer to Ray Dalio’s in not having called stocks in a bubble rather than Jeremy Grantham or Michael Burry who have been sounding the alarm that stocks were or still might be in a bubble.
Even though Howard believes that stocks have been reasonably priced relative to interest rates, he also said that stocks that are overpriced often keep going up for a while. He explains the market cycles of what typically happens when many people buy high and end up selling low in a stock market panic.
Citing economist John Maynard Keynes, Howard Marks repeated: “Markets can stay irrational longer than you can stay solvent.”
In order to outperform in stock market investing, “you have to depart from the crowd. You have to hold a different position, and you have to have resolve to do it. It can’t be easy.”
“A battlefield hero is not somebody who’s unafraid. It’s somebody who’s afraid but he does it anyway,” in referring to how when markets look bleakest you have to find a way forward and not get frozen in a panicked state when everyone else is selling like crazy.
“Successful investing requires the adoption of uncomfortably idiosyncratic positions,” where tomorrow’s winners come from today’s losers, Howard said. “It’s a rare person who can do that and not feel some discomfort.”
To be idiosyncratic means when a big market catalyst happens like Lehman Brothers going under, you have to be willing to buy stocks in general when everyone is doing the opposite. “You have to do it” to succeed, according to Howard Marks.
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