Mastering The Market Cycle: Getting the Odds on Your Side

by Howard Marks

trying to know more than others about what I call “the knowable”: the fundamentals of industries, companies and securities, being disciplined as to the appropriate price to pay for a participation in those fundamentals, and

understanding the investment environment we’re in and deciding how to strategically position our portfolios for it.

What do value investors do? They strive to take advantage of discrepancies between “price” and “value.”

In my view, the greatest way to optimize the positioning of a portfolio at a given point in time is through deciding what balance it should strike between aggressiveness and defensiveness. And I believe the aggressiveness/defensiveness balance should be adjusted over time in response to changes in the state of the investment environment and where a number of elements stand in their cycles.

Valuable Insight.