Howard Marks talked to the CFA Society Chicago last week and streamed it live via Youtube. The video is embedded below (with links).
The entire talk is worth watching but the Q&A portion is what stood out most (his answer to why the market collapsed in the fourth quarter is brilliant @ 55:22). The Q&A starts around 31:35.
Three things stood out in the Q&A, which I transcribed below. The first question was on finding the line between market efficiency and inefficiency. The short version is markets are efficient but some inefficiency exists but it’s hard. Much of it is psychological and tends to be more pronounced at certain points in the market cycle. Marks explains what it takes to take advantage of those periods.
Later, Marks was asked about the right structure for capturing inefficiencies, which is where contrarianism comes in and he circled back around to the contrarian mindset at the end of the talk. He offers a great example on second-level thinking. And finally, he points out that it’s not about always being a contrarian but being an intelligent contrarian only when an opportunity exists that be taken advantage of.
Here’s Marks: Continue Reading…