Howard Marks Quotes

“Achieving gains usually has something to do with being right about events that are on the come, whereas losses can be minimized by ascertaining that tangible value is present, the herd’s expectations are moderate and prices are low. My experience tells me the latter can be done with greater consistency.”

“An accurate opinion on valuation, loosely held, will be of limited help. An incorrect opinion on valuation, strongly held, is far worse. This one statement shows how hard it is to get it all right.”

“Buying at a discount from intrinsic value and having the asset’s price move toward its value doesn’t require serendipity; it just requires that market participants wake up to reality. When the market’s functioning properly, value exerts a magnetic pull on price.”

“Buying something for less than its value. In my opinion, this is what it’s all about — the most dependable way to make money.”

“Charlie Munger gave me a great quotation on this subject, from Demosthenes: Nothing is easier than self-deceit. For what each man wishes, that he also believes to be true.

The belief that some fundamental limiter is no longer valid — and thus historic notions of fair value no longer matter — is invariably at the core of every bubble and consequent crash. In fiction, willing suspension of disbelief adds to our enjoyment.”

“Every once in a while, an up-or-down-leg goes on for a long time and/or to a great extreme and people start to say 'this time it's different'.

They cite the changes in geopolitics, institutions, technology or behaviour that have rendered the 'old rules' obsolete. They make investment decisions that extrapolate the recent trend.

And then it turns out that the old rules still apply and the cycle resumes. In the end, trees don't grow to the sky, and few things go to zero.”

“Everything you needed to know in the years leading up to the crash could be discerned through awareness of what was going on in the present.”

“I’m convinced that no idea can be any better than the action taken on it.”

“If everyone likes it, it's probably because it has been doing well. Most people seem to think that outstanding performance to dates presages outstanding future performance.

Actually, it's more likely that outstanding future performance to date has borrowed from the future and thus presages subpar performance from her on out.”

“If one is approached with a deal predicated on cycles having ceased to occur, remember that invariably that’s a losing bet.”

“If you've settled on the value approach to investing and come up with an intrinsic value for a security or asset, the next important thing is to hold it firmly.

That's because in the world of investing, being correct about something isn't at all synonymous with being proved correct right away.”

“If your behavior is conventional, you’re likely to get conventional results — either good or bad.

Only if your behavior is unconventional is your performance likely to be unconventional, and only if your judgments are superior is your performance likely to be above average.”

“In bubbles, infatuation with market momentum takes over from any notion of value and fair price, and greed (plus the pain of standing by as others make seemingly easy money) neutralises any prudence that might otherwise hold sway.”

“In good years, defensive investors have to be content with the knowledge that their gains, although perhaps less than maximal, were achieved with risk protection in place, even though it turned out not to be needed.”

“Investment success doesn’t come from ‘buying good things', but rather from ‘buying things well'.”

“It's worth noting that the assumption that something can't happen has the potential to make it happen, since people who believe it can't happen will engage in risky behaviour, and thus alter the environment.”

“It’s frightening to think that you might not know something, but more frightening to think that, by and large, the world is run by people who have faith that they know exactly what’s going on.”

“Most people strive to adjust their portfolios based on what they think lies ahead. At the same time, however, most people would admit forward visibility just isn't that great.

That's why I make the case for responding to the current realities and their implications, as opposed to expecting the future to be made clear.”

“No asset class or investment has the birthright of a high return. It’s only attractive if it’s priced right.”

“Patient opportunism, buttressed by a contrarian attitude and a strong balance sheet, can yield amazing profits during meltdowns.”

“Prices are too high is far from synonymous with 'the next move will be downward'.

Things can be overpriced and stay that way for a long time... or become far more so.”

“Prosperity brings expanded lending, which leads to unwise lending, which produces large losses, which makes lenders stop lending, which ends prosperity, and on and on...

Look around the next time there’s a crisis; you’ll probably find a lender.”

“Risk arises as investor behaviour alters the market. Investors bid up assets, accelerating into the present appreciation that otherwise would have occurred in the future, and thus lowering prospective returns.

The ultimate irony lies in the fact that the reward for taking incremental risk shrinks as more people move to take it.”

“Risk is incredibly important to investors. It’s also ephemeral and unmeasurable.

All of this makes it very hard to recognize, especially when emotions are running high. But recognize it we must.”

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

“The best foundation for a successful investment — or a successful investment career — is value.

You must have a good idea of what the thing you’re considering buying is worth. There are many components to this and many ways to look at it.

To oversimplify, there’s cash on the books and the value of the tangible assets; the ability of the company or asset to generate cash; and the potential for these things to increase.”

“The correctness of a decision can’t be judged from the outcome. Nevertheless, that's how people assess it.

A good decision is one that’s optimal at the time it’s made, when the future is by definition unknown. Thus, correct decisions are often unsuccessful, and vice versa.”

“The desire for more, the fear of missing out, the tendency to compare against others, the influence of the crowd and the dream of the sure thing — these factors are near universal.

Thus they have a profound collective impact on most investors and most markets. The result is mistakes, and those mistakes are frequent, widespread and recurring.”

“The key turning point in my investment career came when I concluded that because the notion of market efficiency has relevance, I should limit my efforts to relatively inefficient markets where hard work and skill would pay off best.”

“The most dangerous thing is to buy something at the peak of its popularity. At that point, all favourable facts and opinions are already factored into its price and no new buyers are left to emerge.”