Howard Marks: Memos From Our Chairman
Howard Marks’ latest memo, A Fresh Start (Hopefully), is now available on the Oaktree website.
Marks’ memos are a must read. If you have what Seth Klarman believes to be the ‘value investing gene’ – you are likely to find yourself nodding yes as you read along.
A compilation of Marks’ memos were recently published in a book called The Most Important Thing. You can also read the originals, which can be found here.
Over the coming days, I will post some older articles by Howard Marks to the SuperInvestor Resources page. In general, Marks’ clarity makes him a very ‘quotable’ investor. One of my all-time favorite quotes is:
Certain common threads run through the best investments I’ve witnessed. They’re usually contrarian, challenging and uncomfortable— although the experienced contrarian takes comfort from his or her position outside the herd. Whenever the debt market collapses, for example, most people say, “We’re not going to try to catch a falling knife; it’s too dangerous.” They usually add, “We’re going to wait until the dust settles and the uncertainty is resolved.” What they mean, of course, is that they’re frightened and unsure of what to do.
The one thing I’m sure of is that by the time the knife has stopped falling, the dust has settled and the uncertainty has been resolved, there’ll be no great bargains left . When buying something has become comfortable again, its price will no longer be so low that it’s a great bargain. Thus, a hugely profitable investment that doesn’t begin with discomfort is usually an oxymoron.
It’s our job as contrarians to catch falling knives, hopefully with care and skill. That’s why the concept of intrinsic value is so important. If we hold a view of value that enables us to buy when everyone else is selling—and if our view turns out to be right— that’s the route to the greatest rewards earned with the least risk.”
Have a wonderful Thanksgiving!
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