Among the many generous donations and contributions, that Howard Marks, Beta Pi ’64, has given to the University of Pennsylvania these many years since his graduation, is the Howard Marks Investor Series Lecture. This year, he was the centerpiece of his own creation.
For many years, Howard has issued memos that are considered “required” reading for his admirers and many of the leaders in the investment community. When Howard was introduced, it was said that he has the ability to put “complex market dynamics into ideas”. This year’s lecture focused on certain of his memos: “Fewer Losses or More Winners”, “What Really Matters”, “Taking the Temperature”, “The Distinction Between Process and Outcome”, and “How investors Should Respond to Changing Market Environments”.
Answering questions for approximately forty minutes, Howard touched on many points on how to become a successful investor. Gleaned from his lecture, this writer took home the following profound ideas.
Is it better to avoid losers or look for winners? The answer is not the same for everyone. It depends on the investor’s personal circumstances regarding his financial condition and sensitivity to risk.
Those who wait to buy at the bottom of the market do not realize that you can not predict when the market is at its lowest. When Howard asked the assemblage of future MBA’s and others in attendance as to when the market is at bottom, none could come up with Howard’s rational answer: The bottom of the market is the day before the market starts going up.
When the market rises on good news, the euphoria of success often causes investors to ignore the bad news. For example, if the AI technology sector is advancing, do you ask yourself what will happen when AI is capable of programming codes. If AI can program codes, there will be no need for software coders.
Perhaps the “gem” of all his advice is “Good investing doesn’t come from buying good things, it comes from buying it well”. Even the best companies may be over-priced and the worst companies may be under-valued. You have to be able to determine the value of a company.
Take the opportunity to watch the entire interview. You can do so on youtube.com. Search “Howard Marks Investor Series”.