Howard Marks Quotes



Best 29 Mastering The Market Cycle Quotes by Howard Marks

Mastering The Market Cycle Quotes

“A lack of emotionality is a gift (in investing, that is, but perhaps not in other areas, like marriage). It’s not my point that emotional people can’t be good investors, but it will require a great deal of self-awareness and self-restraint.”

Mastering The Market Cycle

“As Sir John Templeton put it: To buy when others are despondently selling and sell when others are greedily buying requires the greatest fortitude and pays the greatest reward.”

Mastering The Market Cycle

“I believe the aggressiveness/defensiveness balance should be adjusted over time in response to changes in the state of the investment environment and where a number of elements stand in their cycles.”

Mastering The Market Cycle

“I fear that people may look back at the decline of 2008 and the recovery that followed and conclude that declines can always be depended on to be recouped promptly and easily, and thus there’s nothing to worry about from down-cycles.

But I think those are the wrong lessons from the Crisis, since the outcome that actually occurred was so much better than some of the 'alternative histories' (as Nassim Nicholas Taleb calls them) that could have occurred instead.”

Mastering The Market Cycle

“I think it’s helpful to take an organized approach to what I call the 'twin risks'. What I’m talking about here is the fact that investors have to deal daily with two possible sources of error.

The first is obvious: the risk of losing money. The second is a bit more subtle: the risk of missing opportunity. Investors can eliminate either one, but doing so will expose them entirely to the other. So most people balance the two.”

Mastering The Market Cycle

“If the market were a disciplined calculator of value based exclusively on company fundamentals, the price of a security wouldn’t fluctuate much more than the issuer’s current earnings and the outlook for earnings in the future.

In fact, the price generally should fluctuate less than earnings, since quarter-to-quarter changes in earnings often even out in the long run and, besides, don’t necessarily reflect actual changes in the company’s long-term potential.”

Mastering The Market Cycle

“In investing, there is nothing that always works, since the environment is always changing, and investors’ efforts to respond to the environment cause it to change further.”

Mastering The Market Cycle

“In making investments, it has become my habit to worry less about the economic future — which I’m sure I can’t know much about — than I do about the supply/demand picture relating to capital.

Being positioned to make investments in an uncrowded arena conveys vast advantages. Participating in a field that everyone’s throwing money at is a formula for disaster.”

Mastering The Market Cycle

“In my view, the greatest way to optimize the positioning of a portfolio at a given point in time is through deciding what balance it should strike between aggressiveness and defensiveness.

And I believe the aggressiveness/defensiveness balance should be adjusted over time in response to changes in the state of the investment environment and where a number of elements stand in their cycles.”

Mastering The Market Cycle

“John Kenneth Galbraith said: We have two classes of forecasters: those who don’t know — and those who don’t know they don’t know.”

Mastering The Market Cycle

“Like so many other things in the investment world that might be tried on the basis of certitude and precision, waiting for the bottom to start buying is a great example of folly.

So if targeting the bottom is wrong, when should you buy? The answer’s simple: when price is below intrinsic value.”

Mastering The Market Cycle

“Milton Friedman put it: All these people see the same data, read the same material, and spend their time trying to guess what each other is going to say. Their forecasts will always be moderately right — and almost never of much use.”

Mastering The Market Cycle

“Most investors do capitulate eventually. They simply run out of the resolve needed to hold out.”

Mastering The Market Cycle

“Once the asset has doubled or tripled in price on the way up — or halved on the way down — many people feel so stupid and wrong, and are so envious of those who’ve profited from the fad or side-stepped the decline, that they lose the will to resist further.

Market participants are pained by the money that others have made and they’ve missed out on, and they’re afraid the trend (and the pain) will continue further. They conclude that joining the herd will stop the pain, so they surrender.

Eventually they buy the asset well into its rise or sell after it has fallen a great deal. In other words, after failing to do the right thing in stage one, they compound the error by taking that action in stage three, when it has become the wrong thing to do.

That’s capitulation. It’s a highly destructive aspect of investor behavior during cycles, and a great example of psychology-induced error at its worst.”

Mastering The Market Cycle

“Over the course of my career I’ve heard investment in real estate rationalized by easily digested statements like 'they’re not making any more' (in connection with land), 'you can always live in it' (in connection with houses), and 'it’s a hedge against inflation' (in connection with properties of all types).

What people eventually learn is that regardless of the merit behind these statements, they won’t protect an investment that was made at too high a price.”

Mastering The Market Cycle

“Risk is high when investors feel risk is low.”

Mastering The Market Cycle

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“Charts are great for predicting the past.”


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“Seen through the lens of human perception, cycles are often viewed as less symmetrical than they are. Negative price fluctuations are called 'volatility', while positive price fluctuations are called 'profit'.

Collapsing markets are called 'selling panics', while surges receive more benign descriptions (but I think they may best be seen as 'buying panics'; see tech stocks in 1999, for example).

Commentators talk about 'investor capitulation” at the bottom of market cycles, while I also see capitulation at the top, when previously prudent investors throw in the towel and buy.”

Mastering The Market Cycle

“Skepticism and pessimism aren’t synonymous. Skepticism calls for pessimism when optimism is excessive. But it also calls for optimism when pessimism is excessive.”

Mastering The Market Cycle

“The events in the life of a cycle shouldn’t be viewed merely as each being followed by the next, but — much more importantly — as each causing the next.”

Mastering The Market Cycle

“The first stage, when just a few thoughtful investors recognize that, despite the prevailing bullishness, things won’t always be rosy, the second stage, when most investors recognize that things are deteriorating, and the third stage, when everyone’s convinced things can only get worse.”

Mastering The Market Cycle

“The forecasts that are potentially valuable are those that correctly foresee deviation from long-term trends and recent levels.

If a forecaster makes a non-conforming, non-extrapolation prediction that turns out to be correct, the outcome is likely to come as a surprise to the other market participants.”

Mastering The Market Cycle

“The less prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs.”

Mastering The Market Cycle

“The riskiest thing in the world is the belief that there’s no risk. By the same token, the safest (and most rewarding) time to buy usually comes when everyone is convinced there’s no hope.”

Mastering The Market Cycle

“The superior investor is mature, rational, analytical, objective and unemotional.”

Mastering The Market Cycle

“The three stages of a bull market: the first stage, when only a few unusually perceptive people believe things will get better, the second stage, when most investors realize that improvement is actually taking place, and the third stage, when everyone concludes things will get better forever.”

Mastering The Market Cycle

“There are three ingredients for success — aggressiveness, timing and skill — and if you have enough aggressiveness at the right time, you don’t need that much skill.”

Mastering The Market Cycle

“There’s only one form of intelligent investing, and that’s figuring out what something’s worth and buying it for that price or less.

You can’t have intelligent investing in the absence of quantification of value and insistence on an attractive purchase price.

Any investment movement that’s built around a concept other than the relationship between price and value is irrational.”

Mastering The Market Cycle

“Try to travel into the future and look back. In 2023, do you think you’re more likely to say, “Back in 2018, I wish I’d been more aggressive” or “Back in 2018, I wish I’d been more defensive”?

And is there anything today about which you’d be likely to say, “In 2018, I missed the chance of a lifetime to buy xyz”? What you think you might say a few years down the road can help you figure out what you should do today.”

Mastering The Market Cycle

“Warren Buffett once told me about his two criteria for a desirable piece of information: it has to be important, and it has to be knowable.

Although 'everyone knows' that macro developments play a dominant role in determining the performance of markets these days, 'macro investors' as a whole have shown rather unimpressive results.”

Mastering The Market Cycle

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“Absent a lot of surprises, stocks are relatively predictable over twenty years. As to whether they're going to be higher or lower in two to three years, you might as well flip a coin to decide.”


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