Make a large number of good buys, not just a few perfect ones: Marks

Perfection is the enemy of the good, they say.

And billionaire investor Howard Marks believes investors waiting on the sidelines for the market to find a bottom may actually keep themselves away from making good purchases.

In his latest memo, Marks said an investor’s goal should be to make a large number of good buys, not just a few perfect ones.

The co-founder of Oaktree Capital Management said waiting for a market bottom is a folly. “If something’s cheap based on the relationship between price and intrinsic value, you should buy, and if it cheapens further, you should buy more.”

He believes terrible news makes it hard to buy and causes many people to say, they are not going to try to catch a falling knife. At the same time, it also pushes prices to absurdly low levels.

His views came as some equity markets globally tried to look up from a bloodbath amid fears and concerns over Coronavirus pandemic.

“It is not easy to buy when the news is terrible, prices are collapsing and it’s impossible to have an idea where the bottom lies. But doing so should be the investor’s greatest aspiration,” he said.

Referring to the Gavekal Research’s monthly strategy for April, Marks tried to answer a question on whether the bottom was passed in March, saying: “…Markets rarely clear after one massive decline. In 15 bear markets since 1950s, only one did not see the initial major low tested within three months… In all other cases, the bottom has been tested once or twice. Since news flow in this crisis will likely to worsen before it improves, a repeat seems likely.”