Saturday, May 18, 2013

The wisdom of Howard Marks

So, another video.

Key takeaways for me:

Risk - People still equate risk with a low quality asset. But if the low quality asset is bought at a really low price, it is not as risky.
Similarly, if a very high quality asset is bought at a very unfavourable price, it is very risky.

Singer - the sewing machine company. Howard Marks supposedly predicted that the emancipation of women in the 1960s would result in far fewer women being at home and sewing during the day.
A high quality asset which seemed to have a durable business was ruined by a change in society's way of functioning.

Understand Risk - If you know what you don't know, you are much better off than when you don't acknowledge what you don't know.
In the former, you can price the asset right and then buy.

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