Here are some presentations on study of investment gurus
- Buffett – Buffett_Oracle_of_Omaha
- David Tepper – Study_of_Tepper_gurufocus
one recent example of investment in distressed bonds
Puerto Rico Bonds Soar, Pointing to Hope for Restructuring
A deal would clear one of the largest obstacles to emergence from the bankruptcy court protection. Puerto Rico bond prices soared Monday after the federal oversight board that runs the U.S. territory’s finances released a revised fiscal plan that raises expectations for disaster funding and economic growth. Bond price rises from 20 cents on the dollar in Jan to 60 cents on the dollar today.
3. Howard Marks
Howard Marks on Surviving Market Storms
Barron’s: There’s been a lot of market turmoil since we spoke on Oct. 1, with the S&P 500 down about 9%. At that time, you said we were still in an optimistic phase of the market. Does that still hold?
Marks: No. The interesting thing is really how quickly things have changed. It illustrates something I mentioned in the book. I refer to a cartoon whose caption is: “Everything that was good for the market yesterday is no good for it today.” I wrote that “in the real world, things generally fluctuate between ‘pretty good’ and ‘not so hot.’ But in the world of investing, perception often swings from ‘flawless’ to ‘hopeless.’” Nobody can say why this happens or why the tipping point was reached. But the psychology of the market is so irrational and excessive in its swings.
In the beginning of 2016, the market was crashing because, among other things, people thought rates were going up and oil was going down. First of all, is it bad if oil goes down? It is bad for the oil companies, but it is good for a lot of others. The increases in interest rates should have been foreseeable, and the situation is kind of similar this time.
In your book, you write about how it’s crucial to calibrate between being aggressive and defensive. What should investors do now?
To me, the main question is: Is it time for offense or defense? And I still think it is time for defense, predominantly. It’s not 100%, but at this point, I would worry more about losing money than I would about missing opportunities, and it is time for caution. [Although he didn’t cite specific examples, he made it clear that besides holding cash and shunning leverage, one way to play it safe is to find mutual funds that have outperformed in down markets.]
What are the key themes in your most recent book?
Managing risk and understanding where you are in the cycle are really the two most important things for an investor, and they are interrelated. That’s because where we stand in the cycle is a main determinant of risk.
Do a lot of people overlook that?
They probably get it intuitively, but they don’t think about it rigorously. In the book, there are graphs that relate the cycle to the probability of return distributions.
