Category: Howard Marks
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“The norm is not the average”
S&P 500 PE ratio above 23 historically resulted in 2-2% annualized returns over 10 years, with current PE ratio at 24, indicating low expected returns for the next decade.Oaktree Capital has consistently invested in high-yield bonds for 47 years, achieving 7-8% yields comparable to 10% S&P 500 returns, but taxes reduce after-tax returns to 4-7%.…
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High Averages
He highlights how optimism and psychological fluctuations can drive bubbles, with echoes of the late ’90s tech boom. While tech stocks are expensive, Howard doesn’t view them as the primary concern; it’s the high valuations of more average companies that are more alarming.
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“Italians make the pasta, and the Swiss make the watches…”
“Normally we think we know what’s gonna happen in the future. We normally assume the future will look mostly like the past…and usually it works because the world doesn’t change that much…the world has been shook up like a snowglobe by the events of the past few days…this is in flux…even if you know what…
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“I don’t think it’s time to get out…
…It’s a matter of relative choices.” “No. 1, what’s going to happen? Nobody knows. His appointments are not firm, they have yet to be confirmed. his policies are not known. What is he going to do? Nobody really knows what he’s going to do? No. 2, What else will be going on in the world.…
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Probability
Howard Marks explores the concept of risk through four key points. First, he highlights that the future is uncertain, and more outcomes are possible than will occur. Second, knowing probabilities does not eliminate uncertainty, as even the most probable outcomes are not guaranteed. Third, using the analogy of rolling dice, Marks illustrates that while we…
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Howard Marks on Clarity
Howard Marks is praised for his ability to make complex ideas simple and clear in his writing. Marks, who believes in the role of luck in his success as an investor, shares his approach to sharing his investing secrets through clear memos. He emphasizes the importance of clarity and simplicity in communication, using common language, connection with…
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7 to 108 Billion
Howard Marks discusses the upcoming sea change in financial markets and the potential implications for investors. He highlights the shift from declining or ultra-low interest rates to a higher interest rate environment, stating that credit instruments may provide equity-like returns and become more attractive. Marks reflects on his career at Oaktree and the growth of…