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Howard Marks: The Difference Between Good Companies And Good Investments

In a recent interview with Barron’s, Howard Marks reflects on his early career in finance, recalling how banks in the 1970s invested heavily in the “Nifty Fifty” — a group of America’s fastest-growing companies, considered unbeatable regardless of their valuation.

However, despite the strength of these companies, investors who held onto their stocks for five years saw losses exceeding 90% due to overpaying. Howard underscores that while the quality of an asset becomes more important over time, price remains a crucial factor.

He cautions that owning a great asset doesn’t guarantee a great investment; success hinges on paying the right price. According to Marks, the key is not just buying good companies but buying them at the right price.

It’s not what you buy; it’s what you pay that determines a good investment. Now, the longer your time horizon, the quality of the thing you buy matters more and the price you paid matters a bit less.

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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

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