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Deep Thoughts From Howard Marks

Tyler Durden's picture




 

Warning Flags, Past and Present

 

h/t Mike

 

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Fri, 05/14/2010 - 09:24 | 351438 Dicite justitiam
Dicite justitiam's picture

I usually like Marks' writing but this didn't do much for me.  It's overflowing with hindsight.

To paraphrase (grossly): Investing is simple.  Don't be a sucker.  Buy low, sell high.

C'mon Howard.  Sometimes you know it's a bubble but you shouldn't sell.  Sometimes you know it's cheap and you shouldn't buy.  But mostly you don't know.

Oversimplification is dangerous.  But I'll keep reading him.

Sun, 05/16/2010 - 02:57 | 354351 bluebare
bluebare's picture

Yes, twelve pages of nothing new or interesting.

Fri, 05/14/2010 - 09:23 | 351440 Whizbang
Whizbang's picture

Off topic, but last night I was watching the Celtics/Cavs game at a bar called MoMos. Thought a few of you might get a kick out of that.

Fri, 05/14/2010 - 09:27 | 351446 primefool
primefool's picture

The correct approach is " Buy low , Sell High. If it dont go up , I dont buy it in da foist place"

Fri, 05/14/2010 - 09:46 | 351488 Mako
Mako's picture

The Tron computer system is all over the place again.  No way a human can trade in this.  Fun to watch though.

When there are big moves the computer seem to run in a herd behavior.   Kind of interesting to watch.

Fri, 05/14/2010 - 10:53 | 351701 Invisible Hand
Invisible Hand's picture

This is a pretty good discussion of why most investors loose money--fear and greed.

And certainly, throughout history, the manias and the panics have always been carried to extremes.

However, today the old rules seemed to no longer hold, so making (semi) rational decisions about investments seems impossible--at least to me.

Even at the 2009 market nadir, the PE's never reached the old Graham rule of 7. 

HY fell through the old rule-of-thumb on spreads (but fortunately recovered to make the money back and more).

Neither the recovery of stocks or of HY made any sense.  I missed out on one and made a lot of money on the other.  Frankly, neither was an investment, as both were manipulated by government action, not market forces.

Now, nothing makes any sense.  The companies that have a book value of zero in the real world are the darlings of the market.  Fannie and Freddie still trade even though they are obviously just black holes for money.  The banks are all insolvent if they mark to market and are getting deeper underwater with every forclosure but they party on, not reporting their losses but touting how much money they made borrowing at 0% from us and loaning it back to us at 3.5%.  And the market bids them up.

Talking about how to invest in the markets is well and good but these aren't really markets because the governments are up to their elbows in them, picking winners and losers, making up the rules as they go.

What advice would you have given someone thinking of buying senior debt of GM at a steep discount two years ago.  How can you make rationale decisions when 200 years of bankrupcy law is overturned in a few weeks with nary a peep of dissent from the public or the legal system.

Don't talk to me about investments.  Let's discuss gambling and whether you get better odds in Las Vegas or Wall Street.  But remember, the house always wins in the long run. 

Fri, 05/14/2010 - 14:02 | 351765 DisparityFlux
DisparityFlux's picture

Market Maker to Trader:

I know what you're thinking. "Did he pump six stocks or only five?" Well, to tell you the truth, in all this excitement I kind of lost track myself. But being as this is a GS 2009 HFT algo, the most powerful quant in the world, and would blow your head clean off, you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?

 

Sun, 06/20/2010 - 01:33 | 423192 mbtshoe
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