The main mistake people make, be they individuals or professionals, is they allow themselves to be affected by emotion. Emotion is the enemy.
Who said it: Howard Marks, Chairman and Co-founder, Oaktree Capital Management
In Context: If we took today’s quote out of context, it would make psychologists and marketing executives wince, and bartenders cheer. Afterall, they are both are in the business of emotion, either by encouraging the expression of it, or by assuaging it. But Howard Marks, Chairman of the world’s biggest distressed-debt PE player and a much quoted industry insider, is not talking about personal well-being; he’s talking about what it takes to be successful in investment, particularly individual investors who may be managing their own retirement fund. The risk, and this goes for professionals too, he says, is that people will buy when they’re “excited” and sell when they’re “depressed”, paying too high a price for an asset on the one hand, and getting too low a price on the other hand when they making sell decisions. Trading is not the same as investing. The only reason to buy is either you’ve fund a “very cheap asset”, or found one that is “managed by somebody with exceptional skill”. There is a world of difference between trading and investing, he says. Marks was interviewed by Bloomberg upon the launch of retail-investor-targeted emerging markets mutual fund managed by Oaktree. (Image source: Oaktree).
Where we found it: Bloomberg