Howard Marks Advice To Stock Market Investors : Control Risk

In times like these when markets are volatile & we are seeing some wild swings on both NIFTY & SENSEX, most stock investors are jittery. Lot of bears have come out of the closet & forecasting the next big stock market crash, carnage in midcaps etc. However, if you are invested in the right company & paid a fair price for your stocks, you are safe. To achieve consistent outperformance, you have got to focus on risk control. Avoid mad rush to buy stocks at any price. In bull markets all kinds of terminologies pop up ! High quality is rare, its never too late to buy a great stock, forget valuations & just look at the size of opportunity this company has & what not !

In this video, Howard Marks points out the importance of paying the right price. He advices stock market investors to follow the basics & just focus on the value of stocks before buying them. Here are key takeaways from the video;

  • People who forecast continuation of current are usually right. But they don’t make any money in stock markets ! You have got to forecast radical change in order to make money out of it.
  • If everything is perfect,it can’t get better. And if it can’t get better,it can only get worse if there’s a change. Beware of perfect stocks.
  • Most important thing in investing is controlling risks. If you put less emphasis on this factor, you will have better results in good times but worst performance in bad times. And you have got to survive on bad days ! Anyone can make money on average days. You must survive long enough in order to achieve superior long term performance.
  • If you want to be in top 5% of the money managers, you have to be at the bottom !
  • Lots of things that should happen, fail to happen. And even if they happen, they fail to happen on schedule.