Oaktree Capital Management chairman Howard Marks recently had an interview with Christoph Gisiger of Finanz und Wirtschaft, (h/t Zero Hedge), telling Gisiger that the market is on the high side of fair, but doesn’t look like a bubble, and that there should be enough new investors falling in love with the market to fuel this bull run for a while longer.

Howard Marks Oaktree Capital - Risk

“Let’s think about a pendulum: It swings from too rich to too cheap, but it never swings halfway and stops. And it never swings halfway and goes back to where it came from,” said Howard Marks.

He explains that people pile into the stock market when it’s on the upswing, and then jump ship when prices start falling, fueling the trend they are reacting to in both cases. Between 1960 and the 1990s equities went up and up as more segments of the US population got involved in the market, and then fell dramatically afterward first with the dot com crash and then with the financial crisis. The stock market’s reputation is only now recovering, and Marks think the trend has a ways to run (though his analogy demands that it will eventually crash again).

He also points out that the current S&P 500 (INDEXSP:.INX) PE is above recent averages, obviously, but the historical average is 16x, so while stocks might not be cheap he doesn’t think there is reason to be worried about a bubble.

Great investors are unemotional: Howard Marks

In the long term, he recommends that investors avoid just being part of the crowd, and that being unemotional can help.

“Almost all the great investors I know are unemotional. If you’re emotional then you’ll buy at the top when everybody is euphoric and prices are high. Also, you’ll sell at the bottom when everybody is depressed and prices are low. You’ll be like everybody else and you will always do the wrong thing at the extremes,” said Howard Marks. “If you can’t be unemotional you should not invest your own money, period.”

Gold can’t be valued rationally

One of Howard Marks most interesting comments is that he doesn’t think it’s possible to make a rational investment in gold. Fundamental analysis of a company looks at revenues, real assets, and other concrete items. There may be speculation involved, but the speculation is fairly explicit and at least everyone knows where the facts end and the estimates begin. Gold might be a good store of value, and it might be a good hedge against inflation, but those arguments can be made no matter what the current gold spot price is.

“If you take the word «gold» and you take away the letter «l» then you have god,” said Howard Marks. “And it’s the same analysis: Either you believe in it or you don’t.”