Howard Marks: There Is Value Here, But When Do You Pull The Trigger?

Here’s a great short interview with Howard Marks speaking on CNBC in which he discusses the dilemma that ever investor faces in a falling market. When do you pull the trigger when you see stocks that look cheap? Here’s an excerpt from the interview:

Q. What do you think is getting priced in here in terms of bad case scenarios?

Well I think that people are pricing in a bad scenario. Of course I can’t say worse than reality because nobody knows what the reality will be in terms of the disease, or the effect on the economy, or the ultimate effect on the stock market.

I do think that here we are down thirty from the high, and the high in my opinion was not a crazy high. I think we have value here and I’ve expressed the view that spending some money here is not irrational. I don’t think there’s an argument to be made for spending all your money and nobody can tell you it’s not going lower but I do think that you’re starting to have decent value here.

Now a really bad bust historically has probably been down let’s say fifty percent plus minus. So if we’re down thirty that means we’re sixty percent of the way there and you might spend some your money here and I do think that would be logical.

There’s no easy answers in this business. There’s no sure thing. There’s no magic secret sauce and… which is more important to you? To get some of the values that exist today or to have more dry powder ready to go in if it goes lower. You can’t accomplish both goals simultaneously.

So if you want to be sure that you have buying power and financial security if it goes lower then you don’t buy today but, there’s some chance, always some chance that these values are as good as they get now.

You’re sitting here today. The market’s down eleven twelve percent. It’s down thirty cumulatively from the high. It seems irrational to say it’s not going… it’s not going lower. But my only answer is, who knows!

You can watch the short interview here: