Latest memo from Howard Marks: Something of Value

[¯|_(ツ)_/¯]

not related to Howard but just what my thinking process and had experienced.

Many years ago, I was hosting a dinner for my Japanese Colleagues that we talked about the zig-sawing stock market.  I says something like Pendulum aka what's go down must go up.

Well, I think I'm not experience enough (at that time). My friend show me the following picture - Japanese stock market chart:


From 1980 to 2015 - nope - didn't recover.

What about now? Does it recovered? 
For those who wanted to know, check today:
https://en.wikipedia.org/wiki/Nikkei_225

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What ever go up will go down?
What ever go down will go up?

I read a lot of financial blogs and a very common reflection is:
1) Sell to early
2) Sell to late

For 1), the stock was going up and then beyond the valuation metrics and so the valuebuddy will sell. Guess what, they always regret because the stock that they sold usually zoom to the moon.

For 2), exactly opposite, our valuebddy will hold on dearly to the stock until it zoom to the moon and still holding. Then, needless to say, the stock dropped back to the normal valuation price. What a waste! 

This is very common - for a simple reason - none of us could accurately predict the peak of a stock price - nobody could.

I like what Tan Chong Koay says:
Trying to buy a share at the lowest price and sell at the highest is unrealistic.

Very few, if not none, knows the lowest point. Buying near the lows is the best you can do.

Gratitude! 

Wish our valuebuddies a fruitful and fun investing journey ahead.

[weijian]

Some insights from Howard Marks. The last section talks about the US CRE (commercial real estate) and it seems like everyone is waiting for the US CRE "train wreck". Blackstone has even closed a 30.4billion global real estate PE fund last week, waiting to exploit the coming train wreck.

Since markets are reflexive, there will probably not be as much opportunities as everyone will like in the coming years. But banks are going to be cautious about refinancing (although they don't have much choices), bargaining power is with the tenants due to customer behavior changes, and interest rates will probably stay higher for some time - all these surely doesn't sound good for the locally listed US office REITs....

Lessons from Silicon Valley Bank

Combine developments like these with the reality that (a) interest rates are no longer declining or near zero; (b) the Fed can’t be as accommodative as it was in the last few crises, because of today’s elevated inflation; and © negative developments are popping up in portfolios, and I think the case made in my previous memo, Sea Change (December 2022), has been bolstered.

The easy-money environment of the last few years has been blamed for – among other things – the difficulties at SVB and its peers. Their failure is likely to bring stricter scrutiny to banking, meaning things are unlikely to be as easy in the period ahead. And to paraphrase Warren Buffett, now that the tide has gone out a bit, we’ve caught a glimpse of some who were swimming naked near shore. The remaining questions are, how many more are out there, and will the tide go out far enough to expose them?

https://www.oaktreecapital.com/docs/defa...om-svb.pdf

[specuvestor]

Chanced upon this old post. Actually ARKK as a basket would be a good example of how all these meme and “innovative” stocks (after collapsing so much does these stocks have value? ARKK down 81.2% from peak; some individual stocks fared worse) would look like 20 years down. It has not done as well as the tech rebound in 2023 but it’s just year 2 from the peak. Let’s see 🙂

As any good marketing person would tell you: just adjust the dates to get your desired results

If you bought Amazon at around peak 31 March 2000 you would have lost 90% 18 month later. Whether you have the conviction to hold on for the subsequent recovery is another matter. That's why even when I'm a believer of value investing, I don't believe in buy and forget ie I believe in cut loss when things change.

So are those bear markets will depend on when you define the bull market Then again I personally believe and of course hindside that Amazon is an Alpha stock. If you have bought a basket of dotcom stocks with equal weight and held for 20 years, what would your portfolio return be?

[weijian]

Inter Milan is 1 of the top 5 clubs in Serie A, and Serie A is 1 of the top 5 soccer leagues in the world. Since sports franchises will only get more valuable over time, this collateral looks legit.

Oaktree says it's now the owner of Inter Milan after soccer club failed to repay loan

Oaktree, the fund manager with $192 billion in assets co-founded by investing legend Howard Marks, is seizing the club from Chinese retailer Suning (CN:002024).

https://www.morningstar.com/news/marketw...repay-loan