Not much new in Howard Marks' latest missive which falls back on the Oaktree's boss' economy (and risk perception) as a "swinging pendulum" theory and focuses on what should be the "right approach to today" for the average investor. His advice: "money and nerve." Easier said than done of course when one doesn't have the benefit of tens of billions of "economies of scale" backing up one's conviction. Especially since as he points out, 'what if you had money and nerve in 2006 or early 2007? The results would have been disastrous. In those times you needed caution, conservatism, risk control, discipline and selectivity to stay out of trouble. In short, when the market is defaulting on its job of being a disciplinarian, discernment becomes our individual responsibility." Either way, Marks' always philosophical bottom line: "We can never be sure what will happen – and certainly not when – but it’s important to be prepared for what’s likely to lie ahead. And understanding the inevitable pendulum swing in the way investments are viewed – from weeds to flowers and back – is an essential ingredient in being able to do so."
Full letter (pdf)