Tuesday, January 8, 2013


Howard Marks' new memo just hit the internet.

Human behaviour is full of dogma: "High risk - high return and low risk - low return"
They miss out on the power of price...
"It's not asset quality that determines investment risk."

He also touches upon how cycles are all-pervasive and can be found in investor behaviour too

He speaks of contrarianism and lists out a few key points with the most important being:
"You have to be willing to look wrong for a while."
This, for me, is one big failure of investors... they are unable to sit on the sidelines and go for a vacation; they are unable to get a good understanding of intrinsic value and unable to forego potential profits. A contrarian has to be willing to withstand criticism.

Ends with: There is a time for aggressiveness, this is a time for caution."

Marks is one the smartest folks out there... follow him. 

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