In his recent interview with Talks At GS, Howard Marks explains why successful investors have to take on uncomfortably idiosyncratic positions. Here’s an excerpt from the interview:
Marks: David Swensen, who for 35 years ran the endowment at Yale, and did a bang-up job. And he wrote a book called pioneering portfolio management, I think was in ’98 or ’99 and he said that successful investing requires the adoption of uncomfortably idiosyncratic positions.
Everybody has the same influences. Everybody thinks pretty much the same. Everybody anoints the same winners and the same… and criticizes the same losers. And obviously tomorrow’s winners are usually found on the pile of today’s losers, not on today’s pile of today’s winners.
But to prospect in today’s pile of losers, the things that everybody else are junk, you have to be idiosyncratic, you have to take on idiosyncratic positions. And it’s a rare person who can do that and not feel some discomfort.
So I think that those two words, uncomfortably idiosyncratic, tell a huge part of the story, but you have to do it and you have to when, you know, when Lehman goes under, you have to buy, you can’t sell.
You can watch the entire discussion here:
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