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Howard Marks on Investing: Wisdom for a Chaotic World

Howard Marks on Investing: Wisdom for a Chaotic World

November 27, 2024

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Markets are uncertain. The future is unknowable. Yet, everyone acts like they have a crystal ball. Howard Marks, one of the greatest investors of our time, doesn’t buy it. Instead, he offers a refreshing take: don’t predict—prepare.

Here’s the essence of his wisdom, distilled.

1. The Chaos is Constant

Every era feels chaotic. Wars, politics, economic upheavals—they never end. Today, it’s Trump, inflation, and geopolitical risks. Tomorrow, it’ll be something else. If you wait for clarity, you’ll never invest.

“The future is never clear. The best you can do is invest with discipline and adjust as you go.”

What does this mean for you? Stop trying to outguess the market. Focus on what you can control: the businesses you own and the price you pay for them.

2. High Valuations Aren’t the Same as Overpriced

The U.S. market is expensive. But does that mean it’s time to sell everything? No. High prices don’t guarantee a crash—they just lower future returns.

“Being defensive doesn’t mean getting out. It means being thoughtful.”

Markets don’t move in straight lines. Timing them is impossible. Instead of going all-in or all-out, adjust your balance between risk and safety. Think in shades of gray, not black and white.

3. Beware the Herd

When retail investors flood in, professionals get nervous. Herd mentality leads to bubbles. But reacting too quickly can hurt you just as much.

“The market can stay irrational longer than you can stay solvent.”

It’s tempting to follow trends, but real money is made by standing apart. Look for opportunities where others see fear, not hype.

4. Trump, Musk, and the Noise

With Trump back in power, markets are buzzing about everything from EV policies to international relations. But Marks reminds us: most of this is noise.

“Everyone wants to connect dots that aren’t there. Focus on what’s real.”

Will Trump’s policies boost Tesla? Maybe. Maybe not. But speculating on political moves is a game for gamblers, not investors. The smarter play: stick to fundamentals.

5. China: The Bargain Nobody Wants

While U.S. markets are priced high, China looks cheap. Growth is slower, yes, but at 5% GDP, it’s still moving faster than most of the world. Negative headlines scare investors away, but that’s exactly where Marks sees opportunity.

“I’ve made my career buying assets no one else wanted.”

China’s property sector is shaky, and geopolitical risks are real. But great returns often come from embracing discomfort—if you do it carefully.

6. The Only Winning Strategy

Marks doesn’t deal in predictions. He deals in principles. And his advice is timeless:

Start Early, Stay Invested: Compounding is magic, but only if you give it time.
Avoid Emotional Decisions: Greed and fear are the enemies of wealth.
Focus on Value: High-quality assets bought at fair prices will beat flashy bets every time.
Moderate Your Expectations: You’re not going to double your money every year. Aim for steady, sustainable growth.

“Do it early. Do it a lot. Build a nest egg, and don’t screw it up.”

The Big Picture

The world is messy. It always has been. Investing isn’t about predicting what will happen—it’s about positioning yourself to thrive no matter what happens.

Howard Marks puts it best: “Success in investing isn’t about being right all the time. It’s about being prepared for when you’re wrong.”

Take that to heart. Then take action.