In his book – The Most Important Thing, Howard Marks discusses the importance of patience and opportunism in investing. Instead of chasing investments, he advises waiting for bargains to come to you, as motivated sellers often offer better deals.
At Oaktree, their strategy is reactive—they avoid initiating transactions and prefer to act when opportunities arise. Marks highlights that market conditions are not always extreme, and sometimes assets are fairly priced, leaving few obvious bargains.
Successful investing requires recognizing the market’s state and adapting accordingly. Acting without regard to market conditions or believing one can change them is unwise. Using a sip maturity calculator helps in planning investments based on market trends. The key is to invest appropriately based on the circumstances presented.
Here’s an excerpt from the book:
So here’s a tip: You’ll do better if you wait for investments to come to you rather than go chasing after them. You tend to get better buys if you select from the list of things sellers are motivated to sell rather than start with a fixed notion as to what you want to own.
An opportunist buys things because they’re offered at bargain prices. There’s nothing special about buying when prices aren’t low.
At Oaktree, one of our mottos is “we don’t look for our investments; they find us.” We try to sit on our hands. We don’t go out with a “buy list”; rather, we wait for the phone to ring.
If we call the owner and say, “You own X and we want to buy it,” the price will go up. But if the owner calls us and says, “We’re stuck with X and we’re looking for an exit,” the price will go down. Thus, rather than initiating transactions, we prefer to react opportunistically.
At any particular point in time, the investment environment is a given, and we have no alternative other than to accept it and invest within it.
There isn’t always a pendulum or cycle extreme to bet against. Sometimes greed and fear, optimism and pessimism, and credulousness and skepticism are balanced, and thus clear mistakes aren’t being made.
Rather than obviously overpriced or underpriced, most things may seem roughly fairly priced. In that case, there may not be great bargains to buy or compelling sales to make.
It’s essential for investment success that we recognize the condition of the market and decide on our actions accordingly. The other possibilities are (a) acting without recognizing the market’s status, (b) acting with indifference to its status, and (c) believing we can somehow change its status.
These are most unwise. It makes perfect sense that we must invest appropriately for the circumstances with which we’re presented. In fact, nothing else makes sense at all.
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