Howard Marks at NYSSA

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Frank Voisin
Apr 10, 2012
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Howard Marks is the Chairman of Oaktree Capital Management and author of the book The Most Important Thing: Uncommon Sense for the Thoughtful Investor (My review here), which is a collection of his popular and well circulated regular Investment Memos. Last week, Marks gave a presentation to the New York Society of Security Analysts. Hunter from Distressed Debt Investing was there, diligently taking notes which he has kindly put online:

One has to be very careful about the value and price relationship. If you buy without discernment to the price, the returns would be all over the place sometimes good, and sometimes bad. In theory, people want more of something at lower prices and less of something at higher prices. However, in practice, people tend to warm to investments as they rise and shun them when they fall. In markets, the demand curve looks the opposite of how it looks in microeconomics theory based on supply and demand.

The normal investor behaves like a pendulum with constant swings between optimism and pessimism, between risk tolerance and risk aversion. Although, the statistical mean location for the pendulum swing is in the middle, that happy medium is rarely seen in the markets, just as the pendulum spends almost no time at its mean during the swing.

Read all of Hunters notes here.

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