Howard Marks: Should Investors Buy The Dip?

Johnny HopkinsHoward MarksLeave a Comment

In his recent interview with S&P Global Ratings, Howard Marks answers the question on whether investors should buy the dip. Here’s an excerpt from the interview:

Marks: So the answer is we are reducing our defensiveness, increasing our aggressiveness. Does that mean we’re at the bottom? Absolutely not. I don’t believe in the ability to know when we’re at the bottom. I don’t believe in the ability to buy at the bottom.

The bottom is a momentary thing and it changes very fast. And by the way, nobody rings a bell when you hit the bottom. But as prices come down, one should buy more and one should switch from defensive to aggressive. And and one should be willing to accept somewhat more risk in pursuit of today’s higher returns.

What’s the probability that the market goes down? Whatever market we’re talking about, any given market for the next month, pretty good, but maybe not. Who knows?

I mean, I guess what I would sum up Joe for you and for the people who wanted you to ask me that question is there are two kinds of times in the market, there are times when we think we don’t know what’s going to happen.

And there are times when we think we do know what’s going to happen and we don’t know… we never know what’s going to happen. But when Buffett… you asked about Buffett before, he says, I like hamburgers when hamburgers go on sale I eat my hamburgers.

Well, everything is on sale relative to six or 12 months ago. Could there be further markdowns yes. You’re talking not about economics, not a lot about company performance, you’re talking about psychology. And there’s absolutely no basis for predicting psychology.

You can listen to the full discussion here:

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