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Although I'm an absolute investor, I do like to compare my performance to indices for fun. Rather than try to "beat the market" on the upside, I'm more focused on saving myself from the downside. The market is up 1% and I'm only up 0.50% or 0.75%? No problem. The market is down 1% and I'm only down 0.5% or 0.75%? Ahh, excellent! That's the goal. No bad days, right? 😉
I kind of disagree with Howard Marks here. There's plenty that I don't get into, regardless of price. Pharmaceuticals is a great example for me. I don't know what it takes to make a successful drug from the scientific perspective and I certainly don't understand all the regulations. If something like Bayer, Moderna, etc crashes like a vase then I'm just going to stand out of the way to make sure the shards from the vase and the goop inside of it don't hit me. In this case, I would fall into the "I don't do that" camp. That doesn't mean "I only do this" regardless of price. It's OK to do nothing and let cash pile up. Currently, short term T-Bills give over 5% yield. Money market funds and CDs are a smidge behind right at 5%. Plenty of preferred stock to choose from as well as beaten down REITs. So, there's always something we can do ... the big question is should we? Should we tinker here? I understand I'm probably going out further and farther than what Howard Marks meant but it's an interesting thought experiment. 🙂
Blotting out bad memories - oof! I must be an outlier. My bad memories are seared into my memory and act as guardrails. No way do I want to "go back there" so I make sure my decisions don't take me "back there". Getting whacked once was plenty enough! 😳 😉
I love the opening line, "It's a mindset, not an algorithm." !! I always appreciate Howard Marks' wisdom. He is like a hyper-rational machine that can operate in all terrains under all conditions.
So, to paraphrase Napoleon a bit, keep your head while everyone else is losing theirs and you should be OK. Lose your head along with everyone else, and you'll find yourself in trouble.
I also noticed the cycling shoes! That is true mark of living life on your own terms. Love it! I wish we could have seen Mohnish's bike! 🚲 A pleasant conversation on investing philosophy for sure! I appreciate his thoughtfulness and for finding a credo that works for him. We all should develop a credo that lines up with our own values and meshes with our personality. Mohnish has created a space that works for him. It's a little too busy looking for me. I need a lot of empty and open space. Give me a big desk, with a massive computer monitor, a handful of wooden pencils, and a stack of scratch paper. Give me a bookshelf filled with thoughtful authors and two typewriters - my IBM Selectric and my Olympia SM-8.
Perhaps a more interesting paper could be :The Whiffs of Warren Buffett" detailing stock buys & businesses that didn't work out. Rational reasons, then why as best could be reconstructed why they didn't work out.
The Chipotle thesis is I think fundamentally wrong. It was clearly impossible to see the global trajectory of a restaurant(!) starting on 3 US states. Could have been any other mexican restaurant chain. You just cannot with certainty pick that kind of a no-moat franchise ex ante at an early stage. Different to smaller niche markets where you are actually leading. Silicon Valley Bank is the better example.
Buy the dips if the company can recover, not if it’s going to fail. Why not buy the index instead? It’s less effort, less time consuming and less stressful.
