Money and Finance
From The Most Important Thing:
- Leon Cooperman, Howard Marks On Investment Strategy
Link to video: Leon Cooperman, Howard Marks on Investment Strategy Sept. 22 (Bloomberg) -- Leon Cooperman, chairman and chief executive officer Omega Advisors Inc., and Howard Marks, chairman and co-founder of Oaktree Capital Management, talk about...
- Howard Marks: Investing Entails A Lot That Isn't Within One's Control...
From The Most Important Thing:The choice between offense and defense investing should be based on how much the investor believes is within his or her control. In my view, investing entails a lot that isn't. Professional tennis players can be...
- What’s Happening To Bonds And Why? – By Mohamed A. El-erian
Found via The View from the Blue Ridge. To say that bonds are under pressure would be an understatement. Over the last few months, sentiment about fixed income has flipped dramatically: from a favored investment destination that is deemed to benefit from...
- A Negative Art...
From Security Analysis: Sixth Edition:Our primary conception of the bond as a commitment with limited return leads us to another important viewpoint toward bond investment. Since the chief emphasis must be placed on avoidance of loss, bond selection is...
- How Worried Are You?
A friend asked me this week, given that you hold stocks how worried are you about a crash or major correction? Charlie Munger was asked a similar question during 2009, and his answer came to mind - "zero." There is good evidence why that's the case....
Money and Finance
Howard Marks on the balance between offense and defense
From The Most Important Thing:
A conscious balance must be struck between striving for return and limiting risk— between offense and defense. In fixed income, where I got my start as a portfolio manager, returns are limited and the manager’s greatest contribution comes through the avoidance of loss. Because the upside is truly “fixed,” the only variability is on the downside, and avoiding it holds the key. Thus, distinguishing yourself as a bond investor isn't a matter of which paying bonds you hold, but largely of whether you’re able to exclude bonds that don’t pay. According to Graham and Dodd, this emphasis on exclusion makes fixed income investing a negative art.
On the other hand, in equities and other more upside-oriented areas, avoiding losses isn't enough; potential for return must be present as well. While the fixed income investor can pretty much practice defense exclusively, the investor who moves beyond fixed income—typically in search of higher return—has to balance offense and defense.
The key is that word balance. The fact that investors need offense in addition to defense doesn't mean they should be indifferent to the mix between the two. If investors want to strive for more return, they generally have to take on more uncertainty—more risk. If investors aspire to higher returns than can be achieved in bonds, they can’t expect to get there through loss avoidance alone. Some offense is needed, and with offense comes increased uncertainty. A decision to go that way should be made consciously and intelligently.
- Leon Cooperman, Howard Marks On Investment Strategy
Link to video: Leon Cooperman, Howard Marks on Investment Strategy Sept. 22 (Bloomberg) -- Leon Cooperman, chairman and chief executive officer Omega Advisors Inc., and Howard Marks, chairman and co-founder of Oaktree Capital Management, talk about...
- Howard Marks: Investing Entails A Lot That Isn't Within One's Control...
From The Most Important Thing:The choice between offense and defense investing should be based on how much the investor believes is within his or her control. In my view, investing entails a lot that isn't. Professional tennis players can be...
- What’s Happening To Bonds And Why? – By Mohamed A. El-erian
Found via The View from the Blue Ridge. To say that bonds are under pressure would be an understatement. Over the last few months, sentiment about fixed income has flipped dramatically: from a favored investment destination that is deemed to benefit from...
- A Negative Art...
From Security Analysis: Sixth Edition:Our primary conception of the bond as a commitment with limited return leads us to another important viewpoint toward bond investment. Since the chief emphasis must be placed on avoidance of loss, bond selection is...
- How Worried Are You?
A friend asked me this week, given that you hold stocks how worried are you about a crash or major correction? Charlie Munger was asked a similar question during 2009, and his answer came to mind - "zero." There is good evidence why that's the case....