Howard Marks: "There Are Times For Aggressiveness; Now Is A Time For Caution"

Tyler Durden's picture

Oaktree Capital's Howard Marks begins his latest missive with a few hard truths. Anyone who has read his memos of the last 23 years will see he returns often to a few topics. This is due to the frequency with which themes tend to recur in the investment world. Humans, he notes, often fail to learn. They forget the lessons of history, repeat patterns of behavior and make the same mistakes. As a result, certain themes arise over and over. Mark Twain had it right: “History doesn’t repeat itself, but it does rhyme.” The details of the events may vary greatly from occurrence to occurrence, but the themes giving rise to the events tend not to change. Most or all of these themes have to do with behavior that’s observed in the markets over and over. The good news is that today’s investors are painfully aware of the many uncertainties. The bad news is that, regardless, they’re being forced by the low interest rates to bear substantial risk at returns that have been bid down. Their scramble for return has brought elements of pre-crisis behavior very much back to life.


In 2004, I stated the following conclusion: “There are times for aggressiveness. I think this is a time for caution.” Here as 2013 begins, I have only one word to add: ditto.

The greatest of all investment adages states that “what the wise man does in the beginning, the fool does in the end.” The wise man invested aggressively in late 2008 and early 2009. I believe only the fool is doing so now. Today, in place of aggressiveness, the challenging search for return should incorporate goodly doses of risk control, caution, discipline and selectivity.

Howard Marks by zerohedge

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Samsonov's picture

Be careful.  Got it.  Thanks.

HedgeAccordingly's picture

so you are saying... be careful with autopart suppliers? ? 

GetZeeGold's picture



Get some gold and hunker down......and hope the SS doesn't knock at the door.


Just note that the SS doesn't call themselves that don't be fooled.

ball-and-chain's picture

I'm too afraid to invest.

I keep my money under the mattress.

I still think we're going to see deflation.

Maybe I'm wrong.

What do I know?

dwayne elizando's picture

We have deflation. The price of most things deflated against gold.

fourchan's picture

algo is the new investor, all of him.

Cabreado's picture

When the "financial pundits" are out of ammo, er denial, they might then contribute more than punditry to a collective effort to weed out the lies.

Wouldn't, er, won't that be interesting.

tooriskytoinvest's picture

Economic Forecaster: The US Has Gone Over The 'Demographic Cliff'. Market Crash Will Start In Summer – That, Just Like The Last Crash, Lasts About A Year And A Half Or So, Goes Into Late 2014, Early 2015.

vote_libertarian_party's picture

I love how the happy talkers never answer the question about QE, forced record low interest rates and $1.3T in deficit spending is the ONLY thing keeping us out of a depression.


All 3 can delay, not prevent, the next depression.

disabledvet's picture

if those interest rates stay "at or near zero" for a multitude of years i'm not sure even a recession is possible given the level of spending. i had fellow employee tell me once "if the money is on the floor pick it up." words to live by in times like these. there will be a time when the Fed does not have your back fer sure. But now is not that time. Oaktree just started a distressed debt fund: certainly no problem raising capital...nor generating returns. does that mean an air pocket dead ahead? quite possibly. but i would view that as a buying opportunity given the fact that whether or not the USA is going to aggressively engage in Syria if something does happen over there "it will not be done like Iraq." namely..."with no concern for follow on activities." this is a very aggressive national security team...i also think once they are all confirmed (and they all will be) the fact that they are all on the same sheet of music will be readily it should be already. "but this war is being privately financed." no draft, no wage and price controls, no labor rules. the fact that such a conflict can still be financed...let alone considered given the fiasco of really a testament to some extraordinary Command and Staff operations. Is this good for the economy as a whole? Normally i would say "no way." All this Government stuff will regulate and choke off any incipient recovery no matter how promising. And yet...

Richard Head's picture

Oaktree started a distressed debt fund?  Wow. Who would have thought!

Half_A_Billion_Hollow_Points's picture

You seem to have you spell-checker with some problem.  Weird bug.  It has subtituted the word "garbage" for the word "money". 

secret_sam's picture

Wow.  This guy talks about how great his '04 suggestion to "be careful" was, and now he repeats it, but he doesn't provide a SINGLE example of how his advice in '04 worked out?  Or even WHAT IT FUCKING MEANT?!?

That's it.  I'ma start writing this shit and chargin' money....

If you want stock picks, gimme a +1 and if enough of ya do, I'll give you an email address to send CC#'s to so I can create a highly-exclusive newsletter only for the most doggedly contrarian investors.

TotalCarp's picture

If you went cautious in 04 you missed 3 yrs of drunken unappologetic ramp in risk assets. So this reads odd to say the least. Is like saying i called internet bubble in 1997... Well good for you, dead wrong tho

gjp's picture

Now might be the time to be "aggressively cautious". AKA guns and gold.

Karlus's picture

See whats happening with guns and ammo? One year ago you could get anything. Now, not so much. Might loosen up a bit, might not.

Same thing is gonna happen with gold

sitenine's picture

I take issue with a few of these assumptions, like "In a while the times become less bad, and eventually even good." Like this is some forgone conclusion because, why? Cycles tend to break when stupid people do stupid things with our money system. Tail risk can disrupt cycles, and you'd have to be daft to think otherwise. Then this, "Over the years, I’ve become convinced that fluctuations in investor attitudes toward risk contribute more to major market movements than anything else. I don’t expect this to ever change." Really? Where the fuck has this guy been for the last 4 years? QE=market/casino as far as I've seen lately. But maybe I'm wrong..


sgorem's picture

How many times does it take for the sheeple to get burned at the stake for falling for the Wall Street, aka "investment community" bullshit with equities? The ONLY thing lifting the market for the last couple of years is the excess taxpayer monies GIVEN to the big banks through "stimulus" to float this false market higher. We are in a depression, have been for a long time. The only difference between now and the 30's is that the sheeple have CREDIT CARDS to rely on for day to day living, and sure as shit, that will come to a end soon.  Damn, just look around, do things look like they're getting any better? The Government doesn't even try to hide it's malfeasance and corrupt ways anymore. Stay away from paper promises and iou's or you'll feel the pain, again.

TotalCarp's picture

Well said, key in all this is staying in fiat money in the age of a govt debt implosion will be as bad or even worse then staying in cash assets - ie equities
Prec metals, select real estate (not miami beach condos!) select emerging markets assets.. Just dont read the article as in pile into fiat cash and u will be fine!!!

jonjon831983's picture

Awesome, forced myself to read through the release and it was worth it.


This section spoke to me:

"Sober attitudes on the part of investors should be a source of comfort, since in normal times we would expect them to bring down asset prices to the point where they’re attractive.

The problem, however, is that while few people are thinking bullish today, many are acting bullish. Their pro-risk behavior is having its normal dangerous impact on the markets, even in the absence of pro-risk thinking. I’ve become increasingly conscious of this inconsistency in recent months,and I think it is the most important issue that today’s investors have to confront.

 What’s the reason for this seeming inconsistency between thoughts and actions? The answer is simple. These people aren’t buying because they want to, but because they feel they have to. In the past I’ve referred to them as “handcuff volunteers.”"

StoleYourMoney's picture

Howard Marks must not watch CNBC

michiganmaven's picture

So you are saying he warned of a top in 2004? About 3 years too early... so it is safe until 2016 then? 

lmile61's picture

That can not said how and when its gonna possible to get caution!!! No one knows the future!!!!

magento development

Sudden Debt's picture

And the fucked up part is:

If we look to business cycles...

and the crisis was over in 2008...

and a cycle is 7 years...




Shizzmoney's picture

I agree that 2015 is the date of the next crash, especially since that is the next time the Fed actually discusses the "possibility" of raising interest rates (which they won't because unemployment will be over 6.5%).

The only savior for the poeple? The fact we ARE NOT saving:

When the financial "services" industry claims we are saving too little, it is expressing not merely crude vested interests, but perhaps bad economics too.

Saving is a good thing; but if we save in failed institutions who make money based off of fraud like MF Global and JPM, saving can actually expose us to going bust.  That's where the Baby Boomers get it wrong, and where they'll lose all their "safe" money on the Do Not Pass line when the Financial Market goes craps.

Gold. Silver. Cash in the Mattress. These are the way to go.

rufusbird's picture

This is good reading. The comments in the section of "The Sources of Risk", as are the others, is well articulated. Concepts I had tried to articulate to others throughout my career. We are fortunate to have access to this rich sharing of such insight. I am sure all of us who read this immediately call to mind people we know who need to know the wisdom shared here.

Gold Dog's picture

I am going to buy AND sell, that will teach them!

moneybots's picture

"They forget the lessons of history, repeat patterns of behavior and make the same mistakes."




Alan Greenspan wrote in the 1960's that FED policy lead into the Great Depression.

Alan knew not to make that mistake again.  So what did he do when he was in control?




Greenspan did not make a mistake.  What he did was deliberate.  Bernanke has followed with- I'll double down even more and drop money from helicopters.


Lessons have not been forgotten, they have been ignored by people who are very well aware of them.   Bernanke, after all, is a self proclaimed great student of the Great Depression.  He knows the lessons.

moneybots's picture


If we look to business cycles...

and the crisis was over in 2008...

and a cycle is 7 years...





The cycle averages some 7 years.  But manipulation by the FED has distorted the natural ebb and flow.  When the DOW dropped 20% in 1998, a recession should have followed, as we were at the 7 year mark.  Instead, the FED blew the top off the Nasdaq.