In this interview with Goldman Sachs, Howard Marks discusses the discrepancy between private and public asset valuations. He emphasizes the importance of making intelligent investment choices based on relative value. He also references Warren Buffett’s analogy about buying more when prices are low, likening market declines to a sale, and suggests that investors should consider buying assets when they become cheaper.
Here’s an excerpt from the interview:
Well, you know, there’s a saying in golf, every putt makes somebody happy. So, the fact that private asset valuations have not reflected the carnage, that’s great news for the people who are invested in those things. They feel a lot better. They look at the stock market. They see how much it’s down and they say, “My things aren’t down like that.”
But on the other hand, it tells the person who hasn’t invested or who might consider investing that they should probably hold off because maybe the prices are artificially high. Maybe the prices of public market assets have reflected some degree of psychological capitulation while the prices of private assets have not. And maybe that just means that public assets are cheaper than private assets. Or maybe it means that private assets will come down in the future as they catch up in terms of depreciation.
But one way or the other, investment is the discipline of relative selection. We have choices. We have to make intelligent choices. That’s the discipline. And if it’s true that public markets go down and private markets do not go down correspondingly, then you would say that suggests to me that public assets are cheaper and private assets are more expensive and you should wait till they catch up.
You know, Buffett says, “I like hamburgers. And when hamburgers go on sale, I eat more hamburgers.” Nobody likes to see their portfolio values go down. But it is the equivalent of things being put on sale. And you’re upset to see the losses. But hopefully, that won’t paralyze you, and you can swing into action and say, “You know what, they’re cheaper. I’m going to buy more.”
You can find a transcript of the interview here:
Howard Marks Interview – Goldman Sachs
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