In his latest interview on The Howard Marks Investor Series with Finance Professor Chris Geczy, Howard Marks discussed a number of topics including his five options for pursuing high returns in a low return world. Here’s an excerpt from that interview:
Marks: How do you pursue a high return in a low return world? What should you do in a low return world? I’ve come up with five possibilities and I can’t think of any more:
1. You can continue to invest as you always have and understand that the return you make will be lower than ever.
2. You can worry about the level of asset prices, reduce your risk to cushion the blow if a correction comes, but then your return will be lower still.
3. You can go all the way to cash, to the ultimate preparation for a correction, but then your return will be zero, and you better be right fast because if you’re in cash for two years and the market goes up you may be looking for another job, or new clients.
4. Rather than risk reduction you can go in the opposite direction. You can increase your risk in pursuit of a higher return. But is this the time to be increasing risk when there’s great uncertainty as to the fundamentals, geopolitical, political uncertainty in addition to economic.
5. Or number five. You can try to look for exceptions, what I call special niches, special people who hopefully can produce a good return with safety in a low return world. But those people are truly exceptional and not easy to find.
You can watch the entire interview here:
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