By
Borsgade
In his latest letter, Howard Marks of Oaktree discusses his view on the ability to beat the market – also known as alpha. There are several ways to deliver a good result and Marks discusses how that has changed for him over the years.
In their original approach, the approach was “If we avoid the losers, the winners will take care of themselves. ” Marks has had to adjust this a bit over the years, as there are returns beyond the market by finding the Right companies to invest in: “When you aspire to returns well above those available on bonds, it’s not enough to avoid losers; you actually have to find (or create) winners from time to time.“
If alpha is the ability to earn return without taking fully commensurate risk, investors possessing it can do so by either reducing risk while giving up less return or by increasing potential return with a less-than-commensurate increase in risk. In other words, skill can enable some investors to outperform by emphasizing aggressiveness and some by emphasizing defensiveness. […] Almost no investors possess both forms of alpha, and most possess neither. Investors who lack alpha shouldn’t expect to be able to produce either version of asymmetry – that is, to be able to generate superior risk-adjusted returns. However, most believe they do have it.
Share the news
The above has been prepared by Børsgade ApS for information purposes and cannot be regarded as a solicitation or recommendation to buy or sell any security. Nor can the information etc. be regarded as recommendations or advice of a legal, accounting or tax nature. Børsgade cannot be held liable for losses caused by customers’/users’ actions – or lack thereof – based on the information in the above. We have made every effort to ensure that the information in the above is complete and accurate, but cannot guarantee this and accept no liability for errors or omissions.
Readers are advised that investing may involve a risk of loss that cannot be determined in advance, and that past performance and price development cannot be used as a reliable indicator of future performance and price development. For further information please contact info@borsgade.dk
In a recent interview with Barron’s, value investor Christopher Davis delves into two critical investment considerations: identifying the right businesses to own and determining the appropriate price to pay for them.
In this interview, Francois Rochon, CIO of Giverny Capital, discusses how a handful of dominant companies—such as Amazon, Apple, Microsoft, and Nvidia—have significantly influenced the S&P 500’s performance in recent years. Their rapid growth has increased their weighting in the index, encouraging more investors to adopt indexing strategies, which further reinforces their dominance.
This is the first interview Li has accepted with domestic Chinese media after four years. In the interview, Li recalled his mentor Munger, summarized his spiritual legacy, and pointed out that it was Munger who made value investing possible in the global practice.
In this interview, Christopher Bloomstran, CIO of Semper Augustus, offers a wealth of insights into value investing, ethical business practices, and the critical role of patience and trust in achieving long-term success in both investing and life.
