Howard Marks Revisited

2008 Memo - Not too bad for an anchor in 2008

Jan 2008:

• “Don’t try to catch a falling knife.” That bit of purported wisdom is being heard a lot nowadays. Like other adages, it can be entirely appropriate in some instances, while in others it’s nothing but an excuse for failing to think independently. Yes, it can be dangerous to jump in after the first price decline. But it’s unprofessional to hang back and refuse to buy when asset prices have fallen greatly, just because it’s less scary to “wait for the dust to settle.” It’s not easy to tell the difference, but that’s our job. We’ve made a lot of money catching falling knives in the last two decades. Certainly we’ll never let that old saw deter us from taking action when our analysis tells us there are bargains to be had. - This in Jan 2008?

Feb 2008:

• Nothing substantial

October 2008:

• We will invest on the assumption that it will go on, that companies will make money, that they’ll have value, and that buying claims on them at low prices will work in the long run. What alternative is there? - Leap of Faith!!!
• Then I went on to create the converse of the above, the three stages of a bear market: 

1.  the first, when just a few prudent investors recognize that, despite the prevailing bullishness, things won’t always be rosy, 
2. the second, when most investors recognize things are deteriorating, and 
3. the third, when everyone’s convinced things can only get worse. 

• In the final stage, you can buy assets at prices that reflect little or no optimism.There can be no doubt that we are in the third stage with regard to many financial institutions. Not necessarily at the bottom, but in a serious period of unremitting pessimism. No one seems able to imagine how the current vicious circle will be interrupted. But I think we must assume it will be. It must be noted that, just like two years ago, people are accepting as true something that has never held true before. Then, it was the proposition that massively levered balance sheets had been rendered safe by the miracle of financial engineering. Today, it’s the non-viability of the essential financial sector and its greatest institutions. Everyone was happy to buy 18-24-36 months ago, when the horizon was cloudless and asset prices were sky-high. Now, with heretofore unimaginable risks on the table and priced in, it’s appropriate to sniff around for bargains: the babies that are being thrown out with the bath water. We’re on the case.

2009 Memo - Procrastination

Jan 2009:

• Nothing substantial

March 2009:

• The only things we have to fall back on at this juncture are intrinsic value, company survival and our own staying power as investors. Of course, even these things mean we have to make judgments about what the future is likely to look like. That requirement, in turn, means nothing can be approached with complete safety or certainty. Nevertheless, we can take action if we think those three elements will be present under most circumstances. That’s the right mindset for today

July 2009:

• With price and value in reasonable balance, the course of security prices will largely be determined by future economic developments that defy prediction. Thus I find it hard to be highly opinionated at this juncture. Few things are compelling sells here, but I wouldn’t be a pedal-to-the-metal buyer either. On balance, I think better buying opportunities lie ahead. 

Nov 2009:

• Nothing substantial

2010 Memo - Decreased Investing

May 2010:

• The bottom line is this: the fact that we don’t know where trouble will come from shouldn’t allow us to feel comfortable in times when prices are full. The higher prices are relative to intrinsic value, the more we should allow for the unknown.Did not Invest or decreased investing

2011 Memo - Increased Investing


July 2011

• Nothing substantial - US debt ceiling

Sept 2011

• Nobody waves a banner when assets have gotten cheap enough, but its incumbent on investors to recognise things like these and react appropriately, rather than follow the herd. Thus right now, I would be a better buyer, albeit in moderation since fundamentals still pose threats

Nov 2011

• Nothing substantial

2012 Memo - 


March 2012

• No particular stance