Saturday, July 21, 2012

Howard Marks

I have read a wonderful book by this man called, The Most Important Thing.
Today, I saw a wonderful talk with him on Bloomberg.
A few key things:
1. The HF industry is too crowded. Demanding 20% of profits is a big number which should go to outstanding people. There can't be 8000 hedge funds with 8000+ outstanding people.
2. People blow up trends too much. At times, this causes sellers to make mistakes - on the other hand, a bubble is created when buyers make mistakes
3. Something Munger had said: It's not supposed to be easy, anyone who thinks it's easy, is stupid. The outstanding people in the investment world work really really hard to achieve what they have achieved.
4. An investor should stick to his spots and not dabble in a new asset class just because it looks promising
5. I loved the way he spoke of the importance of the micro-economic picture. If you look at all the most successful investors, "From Buffett, all the way down..." you will see that they don't focus too much on the macro-economic picture, but they always understand it. Distress in Europe is a macro event but the opportunities it creates is a micro-economic event.
6. There is nothing wrong with studying macro-economic events and people do make money, but the key thing is being consistent - and that is the important thing in all enterprising fields; it's important to be consistent with your performance. It's difficult to be consistent on the macro picture.
7. The New Normal is true. But we are going to see slow global growth.

One of the most striking things was his calculated way of talking. Very choosy with his words and with  his masked harsh comments.

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