Sunday, November 15, 2015

Howard Marks quote

Superior investors know—and buy—when the price of something is lower than it should be. And the price of an investment can be lower than it should be only when most people don’t see its merit. Yogi Berra is famous for having said, “Nobody goes to that restaurant anymore; it’s too crowded.” It’s just as nonsensical to say, “Everyone realizes that investment’s a bargain.” If everyone realizes it, they’ll buy, in which case the price will no longer be low. . . .  Large amounts of money aren’t made by buying what everybody likes. They’re made by buying what everybody underestimates. . . . 
In short, there are two primary elements in superior investing: 
• seeing some quality that others don’t see or appreciate (and that isn’t reflected in the price), and 
• having it turn out to be true (or at least accepted by the market). 
It should be clear from the first element that the process has to begin with investors who are unusually perceptive, unconventional, iconoclastic or early. That’s why successful investors are said to spend a lot of their time being lonely.