Howard Marks: Something of value

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Howard Marks: Something of value

Post by biaggio »

The last memo from Marks is a good read: ... -value.pdf

It feels to me like this forum is a better fit than "Recommended reading&watching" based on contents of the respective forums.

white belt
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Re: Howard Marks: Something of value

Post by white belt »

I find myself largely agreeing with his conclusions, however I do take issue with a couple of his points. But at least he acknowledged that value investing operates under the assumption of mean reversion.

I’ve talked about it in other threads, but I think passive forces are much too large to ignore (see Mike Green’s work). Marks barely mentions them other than talking about some indexes. Also maybe I missed it, but I don’t think he mentions volatility at all.

Additionally, Marks still seems stuck in the old school idea that being a fund manager is a lucrative job that everyone is striving for. Fund managers have been losing capital to the likes of Blackrock and Vanguard for years because an active manager can’t make any money from a 10 basis point fee. Blackrock/Vanguard can’t make money from it either, so they lend out their securities to make a profit. I forget what episode it was, but Mike Green was doing a Real Vision interview with someone about how it is almost impossible for young fund managers to get control of any sort of capital because the old guard fund managers are desperately holding on against the tide of passive.

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Re: Howard Marks: Something of value

Post by unemployable »

I don't think mean reversion has gone away. But I do believe the mean we're supposed to revert to can see changes in its inputs. The mean P/E in the 1950s-70s, when we had fought two World Wars and suffered a Great Depression within people's memories, doesn't have to have the same assumptions underlying it in an era when we can solve putative pandemics and financial-engineer our way out of crises.

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