Image Credit: Howard Marks
By Jason Zweig | Sept. 14, 2018 7:00 a.m. ET
Next month, the respected investor Howard Marks is coming out with a new book, Mastering the Market Cycle, whose title might inspire many readers to scour it for evidence that short-term market timing can work.
They will look in vain. You should scale back or crank up the level of risk you take in the markets, says Mr. Marks—but only when signs of euphoria or despair become extreme. The more often you do change your stance, the less likely you are to be relying on valid indicators.
To be sure, Mr. Marks warned in early 2007 that the mortgage market was overheating. In October 2008, with the stock and bond markets in free-fall, he wrote: “When others conduct their affairs with excessive negativism, it’s worth being positive.” As a result, Oaktree Capital Management, the Los Angeles-based investment firm that Mr. Marks co-founded and co-chairs, largely avoided the buy-high-sell-low behavior that devastated so many other investors during the financial crisis a decade ago….
To read the rest of the column:
For further reading:
Benjamin Graham, The Intelligent Investor
Jason Zweig, The Devil’s Financial Dictionary
Jason Zweig, Your Money and Your Brain
Jason Zweig, The Little Book of Safe Money
Articles and other research:
Samuel Lee, “The Danger in Valuation-Based Market Timing,” SVRN Asset Management blog
“Capital Recycling at Elevated Valuations: A Historical Simulation,” Philosophical Economics blog
Howard Marks’ investment memos at Oaktree Capital Management’s website