Howard Marks at UVA three clips

Investing
Photo by stux (Pixabay)

Published on Aug 12, 2016
Howard Marks on concentrated investment styles and capital structure considerations.

Published on Aug 12, 2016
Howard Marks on outperforming and risk as it relates to doing things differently in investing.

0:20the old saying that if you live by the sword die by the sword
0:23the people make heavily concentrated pets and what I would consider high
0:28rates equities make a lot of money when they work and and the you know at people
0:35like Ackman are famous for their winners but the only thing is that they don’t
0:42always work in vegas have an old saying the more you bet the more you win when
0:49you win and you can’t argue with that
0:51you know it’s absolutely true that the more you bet on your winners the more
0:58you want but what they don’t say in vegas is that
1:02and the more you use when you lose and that’s the that’s what happens with
1:07concentrated physicians & and you know this this year and last year in vallians
1:16mother’s son medicine so forth
1:18we’ve had a chance to see what happens
1:21and so I think that you know when I was a kid
1:27one of the first things I learned in this business was the saying that there
1:31are old investors and there are bold investors but there aren’t that many old
1:36golden vessels and people who invest all that you often get carried out and that
1:43Ackman hasn’t been carried out but certainly you know he’s in the news
1:48fish last year in this year in a way he doesn’t want and you know the
1:56interesting thing about investing is that there are many different ways to
1:59succeed and what seems attractive to Bill Ackman the Ray Dalio doesn’t
2:07understand how he does it or white
2:11but but there are different ways to skin the cat and you know that we all have
2:18different risk towels
2:21it’s different psychological makeup and I think one of the most important
2:29lessons in general and investing is that we have to in
2:33best in a way that is in line with our risk tolerance
2:39if we try to do what somebody else will
2:42that’s a good way to get into trouble if I I couldn’t you know obviously ray
2:47saying he couldn’t live the way they will invest
2:51I couldn’t live that way either but to build seems like the right thing and and
2:55certainly his reputation suggests that it had all things being equal the more
3:02senior you are the more you can concentrate
3:06you know if it’s it’s one thing to have twenty percent of your fund in a high
3:12volatility equity
3:13it’s something very different have twenty percent of your fun in in a in
3:19the senior credit instrument of a percent rich company so I think that no
3:26matter what your risk tolerance is as you rise in the capital structure and
3:31see there i am saying that that the equities at the bottom as you rise and
3:36then then it’s reasonable concentrate more but you know we we’ve read about
3:44people who had thirty percent of their funded valley
3:50thirty percent them other names recently and I don’t think we’ve ever had
3:55thirty percent position or world and by the way but part of it is that I you
4:00know our clients are institutions and they come to us for us for steady cans
4:04in performance and nobody invest thirty percent in an individual stock and and
4:13and ensure to deliver steady consistent performance