Howard Marks: It’s Time To Play Offense. ‘Waiting For The Bottom Is Folly.’
Howard Marks set a personal record for most memos penned in a single month in March, and as of Tuesday, he's already got one under his belt for April.
Writing last week, Marks expressed more than a little caution about the outlook going forward.
He cited, among other things, elevated leverage for the US corporate sector headed into the crisis, a series of potentially dire repercussions from plunging oil prices and a list of worries about the dollar and America's finances under a version of MMT
Read the articles here for the talent and the perspective, and well because where else can you find H writing style? When the price of the stocks you like become overvalued sell em. When the market is reaching overvalued reduce your risk with a simple scheme. Do not feel uncomfortable with a pouch full of dry powder. Deploy because you want to, not because you need to. Someone said sell the rips in this post bull. If you have a few companies that you like sell the rips so what if you are stuck with them for a couple of years. If you picked them because you think they are good long term companies, well just be a long. Is the bear dead; no sir. However in this endeavor you still have to fire for effect, to determine range.
Damn, I just sprayed some good vodka over my keyboard. Go for it Howie! This septuagenarian got out and will, with alacrity, wait considerably past the ‘bottom’ to wet the toes, thank you.
Well, I gotta say, one of the few positives of all this self isolating is that there are a lot more comments on HR. And there have been a lot of great comments. I think you have built a commendable following, H.
here’s what I’m doing.
1. screening the hardest hit sectors and stocks. looking for stocks down 50%-70% with valuations similar to 2008/09 lows.
2. modeling cash flows, balance sheets, liquidity, debt covenants to see if the company can survive 2-3 quarters of the worst conceivable sales then 2-3 quarters of a weak recovery.
3. buying those selected names on down days
4. gradually building to around 30-50% invested
5. hedging the entire position to beta near zero
6. waiting for things to get close to bottom, then lift the hedge and go all in. don’t think we are near the bottom.
not interested in defensive names here. because nothing is more defensive than cash. only interested in stocks that have (I think) suffered the great majority of their losses already.
My oldest and best friend (of more than 60years), who managed a large pension fund for 15 years before retiring, knows the esteemed Mr. Marks personally and recently told me that in his last conversation with Marks he was told that the man’s “whole portfolio” is now in TIPS. Just sayin’