Howard Marks

[Bullitt]

The Memo to Oaktree clients from Marks. Bold emphasis his.

Conditions have changed such that caution is no longer as imperative. With part of the crisis-related losses having already taken place, I’m somewhat less worried about losing money and somewhat more interested in making sure our clients participate in gains. My 2018 book, Mastering the Market Cycle,carries the subtitle Getting the Odds on Your Side. In that vein, I now feel the odds are more in investors’ favor or, at a minimum, somewhat less against them. Portfolios should be calibrated accordingly.

Some of the most interesting questions in investing are especially appropriate today: “Since you expect more bad news and feel the markets may fall further, isn’t it premature to do any buying? Shouldn’t you wait for the bottom?”

To me, the answer clearly is “no.” As mentioned earlier, we never know when we’re at the bottom. A bottom can only be recognized in retrospect: it was the day before the market started to go up. By definition,we can’t know today whether it’s been reached, since that’s a function of what will happen tomorrow. Thus, “I’m going to wait for the bottom” is an irrational statement.

 

[rangerray]

If you're still 10 to 15 years out from retiring and tend to buy and hold, only moving between the funds during major occurences, then I'd say you could probably go all in right now and call this a bottom.

 

[flalaw97]

My question when deciding when to get back in is do I want to miss some of the time going down or the time going up and is it easier to spot the bottom on the way down or on the way up? Using the fact that we "never know when we're at the bottom" are we better able to predict that we are approaching the bottom (and get in so we don't miss any of the upswing) or that we just left the bottom (and get in knowing we missed some of the upswing)?

 

[rangerray]

My question when deciding when to get back in is do I want to miss some of the time going down or the time going up and is it easier to spot the bottom on the way down or on the way up? Using the fact that we "never know when we're at the bottom" are we better able to predict that we are approaching the bottom (and get in so we don't miss any of the upswing) or that we just left the bottom (and get in knowing we missed some of the upswing)?

I think it still depends on the time horizon. For me, I'd rather miss out on a few gains and preserve the money I have currently rather than suffer losses on the way down and have to work to get back to where I started. I don't have that much time left.