32 Quotes by Howard Marks

Here’s the key to understanding risk: it’s largely a matter of opinion.

Selling for more than your asset’s worth. Everyone hopes a buyer will come along who’s willing to overpay for what they have for sale. But certainly the hoped-for arrival of this sucker can’t be counted on. Unlike having an underpriced asset move to its fair value, expecting appreciation on the part of a fairly priced or overpriced asset requires irrationality on the part of buyers that absolutely cannot be considered dependable.

If one is approached with a deal predicated on cycles having ceased to occur, remember that invariably that’s a losing bet.

It’s worth noting that the assumption that something can’t happen has the potential to make it happen, since people who believe it can’t happen will engage in risky behaviour, and thus alter the environment.

We conclude that most of the time, the future will look a lot like the past, with both up cycles and down cycles. There is a right time to argue that things will be better, and that’s when the market is on its backside and everyone is selling things at giveaway prices. It’s dangerous when the market’s at record levels to reach for a positive rationalisation that has never held true in the past.