Howard Marks says " it's OK to do some buying...things are cheaper", But not "All In" Yet


Just to share some interesting quotes /wisdom from Howard Marks latest memo as below:

 "Buy, sell or hold?  I think it’s okay to do some buying because things are cheaper.  But there’s no logical argument for spending all your cash, given that we have no idea how negative future events will be.  What I would do is figure out how much you’ll want to have invested by the time the bottom is reached – whenever that is – and spend part of it today.  Stocks may turn around and head north, and you’ll be glad you bought some.  Or they may continue down, in which case you’ll have money left (and hopefully the nerve) to buy more.  That’s life for people who accept that they don’t know what the future holds."




What to Do?
"These days, people have been asking me whether this is the time to buy.  My answer is more nuanced: it’s probably a time to buy.  There can be no unique time to buy that we can identify.  The only thing we can be sure of today is that stock prices, for example, are a lot lower in the absolute than they were two weeks ago.
 Will stocks decline in the coming days, weeks and months?  This is the wrong question to ask . . . primarily because it is entirely unanswerable.  Since we don’t have answers to the questions about the virus listed on page two, there’s no way to decide intelligently what the markets will do.  We know the market declined by 13% in seven trading days.  There can be absolutely no basis on which to conclude that they’ll lose another 13% in the weeks ahead – or that they’ll rise by a like amount – since the answer will be determined largely by changes in investor psychology.  (I say “largely” because it will also be influenced by developments regarding the virus . . . but likewise, we have no basis on which to judge how actual developments will compare against the expectations investors already have factored into asset prices.)
 Instead, intelligent investing has to be based – as always – on the relationship between price and value.  In other words, not “will the collapse go further?”  But rather “has the collapse to date caused securities to be priced right; or are they overpriced given the fundamentals; or have they become cheap?”  I have no doubt that assessing price relative to value remains the most reliable way to invest for the long term.  (It is the thrust of the whole discussion just above that there’s nothing that provides reliable help in the short term.) "
Time to Buy? Yes, but not "all in yet", buy-in phase as nobody knows what will be the direction of the market in coming weeks or months, it very much depends on how the Covid-19 crisis unfold....need to have a plan in using your war-chest, buy in stages.

You may find and read his memo using this < link  > 

“I’ve been buying American stocks,” Buffett wrote in an opinion piece for The New York Times on Oct. 16, 2008. Berkshire Hathaway also made big investments during the crisis, backing General Electric and Goldman Sachs.

Will Warren Buffett say the same thing in 2020? since he is sitting with a huge cash pile now...


Warren Buffett has a $128 billion cash pile. Wall Street can’t figure out why he isn’t spending it. <source: BusinessInsider.sg>



Happy " Hunting " !!

Cheers!

STE

Quote Of The Day :

“If there was a day of the week I could skip it would be Monday. Clients had too much time to think and worry over a long weekend and by Monday they were often riddled with fear and anxiety.”
― Stan Turner


Comments

  1. Short and to the point! In my opinion, more of an art than science
    The deployment of a war chest in stages is easier to plan but difficult to implement
    Ideally, once you are convinced of the merits of a stock, we need to be in a position to buy progressively more in stages, with each leg downwards
    But the limited war chest most of us possess, precludes the effective implementation of such a strategy.

    ReplyDelete
    Replies
    1. Hi garudadri,
      Thanks for the comments , yes ! Indeed, is difficult and easy said than done , when we see such huge market correction , emotion will hijack our rationality…we tend to panic and made wrong decision.
      Cheers !

      Delete

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