Howard Marks: The Cardinal Sin Of Investing

Johnny HopkinsHoward MarksLeave a Comment

In this interview with Nicola Wealth, Howard Marks discusses the cardinal sin of investing. Here’s an excerpt from the interview:

Marks: That’s a really good observation. First of all the worst single thing you can do as an investor, and there are many ways to make mistakes, and there are many things you can do wrong, but the worst of all in my opinion is having bought something and having seen it deteriorate in price, selling it just because it’s down.

Let’s look at the market overall. You buy in, it drops thirty percent. That’s really okay if you’re patient because chances are the next high is going to be higher than the last high, and the economy and the market benefit from an upward sloping secular trend line.

So buying high and having it fall is not the worst thing in the world because the next high is probably going to be higher.

The worst thing in the world is buying high and having it fall and selling it because then you don’t participate in the recovery. So I describe this as the cardinal sin of investing.

You can listen to the entire discussion here:

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