Came across a couple of interesting points from a memo sent out by Howard Marks to investors with Oaktree, on the WSJ.com blog page. The memo provides a nice analysis of the current problems the stock & credit markets are having.
The memo outlined the three stages of a bull and bear market:
Bull Market
- the first, when a few forward-looking people begin to believe things will get better,
- the second, when most investors realize improvement is actually underway, and
- the third, when everyone’s sure things will get better forever.
Bear Market
- the first, when just a few prudent investors recognize that, despite the prevailing bullishness, things won’t always be rosy,
- the second, when most investors recognize things are deteriorating, and
- the third, when everyone’s convinced things can only get worse.
The memo also notes:
Certainly we’re well into the second of these three stages. There’s been lots of bad news and writeoffs. More and more people recognize the dangers inherent in things like innovation, leverage, derivatives, counterparty risk and mark-to-market accounting. And increasingly the problems seem insolvable.
One of these days, though, we’ll reach the third stage, and the herd will give up on there being a solution. And unless the financial world really does end, we’re likely to encounter the investment opportunities of a lifetime. Major bottoms occur when everyone forgets that the tide also comes in. Those are the times we live for.
The last two sentences are a great reminder that the market will get better, it just will take time.
Source:
"Bull and Bear Markets, According to Oaktree's Howard Marks", Posted by Peter Lattman
No comments:
Post a Comment