market folly

Oaktree Capital's Chairman Howard Marks has put together a slideshow entitled The Truth About Investing which was posted by the CFA Society.  In it, he outlines the nuances of investing and also includes notable quotes from others.

Some highlights include:

"The price of a security  at a given point in time reflects  the consensus of investors  regarding its value.  The big gains arise when the consensus turns out to have  underestimated  reality.    To be able to take advantage of such divergences, you have  to think  in a way that departs from the consensus; you have to think  different and  better.   This goal can be described as “second - level thinking” or “variant perception.”

Also:

"Superior performance doesn’t come from being right, but from being more right  than the consensus.   You can be right about something and perform just average if  everyone else  is right, too.  Or you can be wrong and outperform if everyone else is  more wrong."

As well as:

"To be a successful investor, you have to have a philosophy  and process you believe  in and can stick  to, even under pressure.   Since no approach will allow you to profit  from all types of opportunities or in all environments, you have to be willing  to not  participate  in everything  that goes up, only the things that fit your approach. To be a  disciplined investor, you have to be able to stand by and watch as other people make  money in things you passed on."


Embedded below is Howard Marks' slideshow presentation: The Truth About Investing:



You can download a .pdf copy here.

For more from this investor, be sure to check out his book, The Most Important Thing, which is highly recommended if you found the above insightful.

We've also previously posted Howard Marks' latest memo: Expert Opinion.