Few takeaways from Howard Marks (for those who missed it)
Investment Philosophy
1. No one can consistently forecast. Our industry is full of people who became famous by getting it right once. Investors would be wise to accept that they can't see the future and restrict themselves to doing things that are within their control. While we can't see where we are going, we ought to have a good sense of where we are.
2. Superior results don't come from buying the right asset , but from buying assets at less than their worth. Investing is not about what you buy, but what you pay.
3.Sometimes there are plentiful opportunities for unusual returns, wait patiently for such opportunities. Big gains come when consensus underestimates reality. Be aggressive at bottoms, defensive at highs. Key to outperformance is to think different, and to think better. Superior returns come not from being right, but being right more than others.
4.Over the last few years, investor timeframes have shrunk, obsessed with quarterly returns. Advantage is to be right in the long run.
5. It is essential to invest counter-cyclically. Cyclical up's and down's don't go on forever, but at extremes most act as if they will. Markets are riskiest when there is widespread belief there is no risk, this was the case in 2007.
6. Markets are not always 100% efficient, the concept of market efficiency must not be ignored. It cannot be assumed that bargains in the past, will be repeated in the future.
7. To be a successful investor, you have to have a philosophy and stick to it even under pressure. No one can profit from all opportunities. To be a disciplined investor, you have to be willing to stand by and watch others make money.
8. Risk is inescapable in investment, but you should not expect more money, just by taking on more risk. Risk needs to be controlled but not through quantification, experienced qualitative judgement is better. Investment cannot be reduced to an algorithm or mechanical process.
9. Good performance will result in inflows, but if inflows are not checked it may lead to bad performance.
10. Slope of trend is important, but investments should not be based on forecasts or timing the market.
