Indianapolis
CFA
Society
Investment
Forum
Notes
Dustin
Hunter,
SunRift
Capital
Partners
(www.sunriftcp.com)
(These
notes
are
to
the
best
of
my
recollection
and
trusty
ink
pen.
Discrepancies
are
due
to
my
error
in
understanding
&
transcribing.)
Part
2
‐
Howard
Marks
‐
The
Most
Important
Things
in
the
Current
market
Environment
Environment:
(3)
things
influence
asset
prices:
Fundamentals,
Psychology,
Technicals
Since
2009:
o
Fundamentals
are
'Iffy'
o
Psychology
has
rebounded
o
Technicals
‐
centered
on
cash
inflows
vs.
forced
selling
Heavy
market
influence
due
to
interest
rates
near
zero
o
Fixed
income
‐
strong
o
Equities
‐
lackluster
o
Europe/Emerging
Markets
‐
corrected
Macro
Questions:
o
Developed
world
&
competition
o
Job
creation
o
Confidence
and
behavior
of
consumers
o
Austerity
impact
o
Delevering
vs.
previous
hyper
debt
o
Pace
of
recovery
o
Inflation
vs.
deflation
‐
He
had
a
comment
along
the
lines
of
"Not
both...
If
you’re
coming
to
me
for
the
answer,
that
says
something
about
how
desperate
you
are."
(my
note
‐
There's
irony
in
there
somewhere...)
o
Europe
outlook
‐
murky
&
scary
o
Political
involvement
in
economy
‐
questionable
leadership
o
Emerging
world
reliance
of
developed
world
o
Hard/soft
landing
in
China
Nobody
pays
their
debts,
they
continually
refinance.
Makes
that
point
even
for
'AAA'
ratings.
They
rely
on
the
capital
markets.
Sees
a
drawn
out,
weaker
recovery
‐
'Saucer'
vs.
V
shaped
Prepare
for
Tomorrow:
People
deal
with
the
future
by
assuming
that
it's
like
the
past
Be
careful
not
to
blindly
extrapolate
Consider
that
the
past
outcome
was
one
of
multiple
possibilities
(alternate
histories)
1982
‐
2007
ACTUAL1982
‐
2007
POSSIBLE
“Risk
means
more
things
can
happen
than
will
happen.”
‐
quoted
Elroy
Dimson
‘82’
‐
‘99’
was
about
as
good
as
it
gets…
Analogy
of
a
bucket
where
you
continue
to
draw
out
one
ball
at
a
time.
o
The
more
times
in
a
row
that
a
white
ball
is
pulled
out,
the
more
future
expectations
change
and
expect
that
trend
to
continue.
o
Might
be
prudent
to
consider
that
there
are
a
lot
of
black
balls
left
in
the
bucket
that
have
yet
to
be
pulled
out.
(This
was
a
powerful
point,
and
I’ve
since
added
it
to
my
mental
model)
Possible
futures
may
be
less
favorable
than
past
possibilities
…
Cyclical
outlook
positive,
but
worrisome
secular
trends
Analogy
of
a
pendulum
o
Investors
can
be
on
Offense,
Defense,
or
in
the
Middle
o
Posits
that
one
be
moderate,
and
venture
towards
offense
or
defense
in
a
fashion
contrarian
to
the
activity
of
others
Structuring
Portfolios
Should
one
prepare
for
prosperity?
–Not
if
prosperity
looks
like
the
90’s
Worry
more
–
Losing
money
or
missed
opportunity?
‐
References
pendulum
analogy
above
and
swing
counter
to
the
crowd
What
is
the
key?
o
Money
and
nerve
–
that’s
all
o
Discernment,
discipline,
risk
control,
selectivity
Marks’
Current
Stance
–
Move
forward
with
caution
Price
is
very
important
–
nearly
anything
can
be
good
at
the
right
price
Low
expectations
Too
Cautious?
Safety
in
Investing
comes
from
margin
for
error
Ensuring
a
margin
for
error
is
incompatible
with
maximization
Girding
for
the
bad
is
more
essential
than
preparing
for
the
good
Worry
more
–
Losing
money
or
missed
opportunity
2011
RANGE
OF
POSSIBILITIES
Long
left
tail
among
possibilities
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Inv Forum Notes - Part 2
Indianapolis CFA Society Investment Forum Notes
Part 2 - Howard Marks- The Most Important Things in the Current market Environment
Part 2 - Howard Marks- The Most Important Things in the Current market Environment
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