This hard-core value hunter shares his insights on what makes him a good investor.

1. Howard Marks: What makes an investor smart
This hard-core value hunter shares his insights on what makes him a good investor
Author : iFast Content Team
The 10th Value Investor Conference held in Omaha, USA, this month, featured some of the best
minds in investing today. One of them was Howard Marks, money manager and chairman,
Oaktree Capital Management.
Marks is a hard-core value hunter. His book The Most Important Thing: Uncommon Sense for the
Thoughtful Investor received high praise with book jacket promos from the likes of Warren
Buffett.
Here are some excerpts from Guru Focus on what this contrarian investor had to say.
On buying when everyone is down and selling when up…
There is no correct rule. There cannot be a rule that always works. It is true that if I say buy
when people are selling, there will be times that cause you to lose money. Nothing reliable is to
be said about making money, because if there were, study would be intense and everybody with
a positive IQ would be rich.
This point was also touched in Marks’ latest memo to investors where he stated that there is
little he hates more than investment generalizations. He states: I like the way Mark Twain
summed up on the subject more than 100 years ago: All generalizations are false, including this
one. I consider most investment generalizations as useless as that great oxymoron: "common
sense".
On market timing …
It is difficult to get the timing right. “Should” isn’t the same as “will.” It is hard to do the right
thing in the investing world and impossible to do the right thing at the right time. No one should
work under the assumption that they are going to get the time right. If you have bet too much on
what should happen, happening right away, you could be in big trouble.
There are three stages of a bull market:
1. People believe things will get better
2. Most believe it has gotten better
3. Everyone thinks things will stay good forever
Buy at the first and sell at the third.
There aren’t any safe or risky things to buy and there aren’t any safe or risky investment
strategies. They are safe in Phase I and risky in Phase III. What the wise man does in the
beginning the fool does in the end. Every trend eventually becomes overdone. Why? In
beginning only wise men find it, and it works. Until the last stage when the fool buys it at a high
price and loses a lot of money. You have to be conscious of where we are in the cycle.
Other than buying securities one at a time, the most important question is whether to be on
offense or defense, or how much of each. That decision should be informed based on where we
on the stages of the bull market.

2. On smart investing….
Smart investing does not consist of buying good things, but rather of buying things well. Price is
what matters most for investment success.
He had addressed this issue earlier in one of his memos. You can invest in the best of companies
and have a bad experience, or you can invest in the worst and have a good experience. Because
it is not asset quality that determines investment risk. A too-high price can make something
risky. A too-low price can make it safe.
It is naive to assume that price is the only factor at play. Deterioration of an asset can cause a
loss, as can its failure to produce expected profits. But, all other things being equal, the price of
an asset is the principal determinant of its riskiness.
No asset is so good that it can’t be bid up to the point where it’s overpriced and dangerous. Few
assets are so bad that they can’t become underpriced and thus safe (not to mention potentially
lucrative).
People tend to warm to investments as they rise and shun them when they fall. This is one of the
biggest mistakes people make. We can take advantage of it.
On what he has learnt through time……
The best way to understand is by thinking of the pendulum. The pendulum always swings
between optimism and pessimism. Risk aversion and tolerance. Buying too much and selling too
much. And it will never stop as long as people are involved in the markets.
I observe what is going on around me in terms of investor behavior and the market and act
accordingly. To see the upward swing of the pendulum (which carries so much enthusiasm) as
worrisome and the downward swing as encouraging.
Buffett’s favourite quote is the less prudence with which people conduct their affairs, the
greater prudence with which we should conduct ours. I have learned to do that.
Howard Marks: Advice to Contrarians
Jim Rogers: Think Unconventionally
Sam Zell: The Grave Dancer
Warren Buffet: Profit from Panic
Contrarian investors: World's most famous contrarian investors
By investing via Fundsupermart, you have access to 41 AMCs in India. Here's why you
should invest via Fundsupermart.com.
At no cost to you, the Fundsupermart Mobile Application helps you take charge of your
portfolio with up-to-date information at your fingertips
To buy and sell mutual funds online, click here.

3. Disclaimer: iFAST and/or its content and research team’s licensed representatives may own or have positions in the mutual funds
of any of the Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be
materially interested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale
of any mutual fund. No investment decision should be taken without first viewing a mutual fund's scheme information document
including statement of additional information. Any advice herein is made on a general basis and does not take into account the
specific investment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, and
legal advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of
the future or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise.
Opinions expressed herein are subject to change without notice. Please read our disclaimer on the website. Please read our
disclaimer in the website. Risk Factors: Mutual funds, like securities investments, are subject to market risks and there is no
guarantee against loss in the Scheme or that the Scheme’s objectives will be achieved. As with any investment in securities, the NAV
of the Units issued under the Scheme can go up or down depending on various factors and forces affecting capital markets. Past
performance of the Sponsor/the AMC/the Mutual Fund does not indicate the future performance of the Scheme. The name of the
Scheme does not in any manner indicate the quality of the Scheme, its future prospects or returns. Please read the Statement of
Additional Information and Scheme Information Document carefully before investing.