Stocktake: Howard Marks says don’t wait for stocks to bottom

Oaktree Capital founder and renowned value investor Howard Marks agrees markets "may well be considerably lower sometime in the coming months", but investors should nevertheless be buying now rather than waiting for the bottom. Marks's memos have become more frequent of late and they are required reading for serious investors seeking to navigate today's markets.

Saying you will “wait for the bottom” is “irrational”, he says, as bottoms can only be identified in retrospect. Waiting can keep investors from making good buys – an obvious example of how the perfect is the enemy of the good. His take is that if something is cheap, you should buy. And if it cheapens further? Buy more. The outlook isn’t positive now, says Marks, but investors always face two risks – the risk of losing money and the risk of missing opportunity. Rich valuations in recent years meant the former concern worried Marks; now, he’s more concerned about missing opportunity. “It’s not easy to buy when the news is terrible, prices are collapsing and it’s impossible to have an idea where the bottom lies,” says Marks, “but doing so should be the investor’s greatest aspiration.”