Interesting take from two different experts..

…on Superstocks and current state of markets.

Howard Marks -
https://www.oaktreecapital.com/insights/howard-marks-memos?c…

Aswath Damodaran -
https://www.youtube.com/watch?v=0_flH3URTY8&feature=yout…

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Vinvest, thanks so much for finding those!

  1. Man, that Marks piece is a slog. I won’t say I read every word, but I did make it to the bottom, and his conclusions section seems as scattered as the rest of it. But basically he comes down to: stay invested, but be defensive, not aggressive, buying things that are less risky: But for every asset class, there are high-risk and low-risk approaches. Not exactly sure what he’s referring to…higher quality bonds and stocks with lower betas? But I would agree with this:

Environments like today’s call to mind the applicability of something I was told more than 40 years ago by Sid Cottle, editor of the later editions of Graham and Dodd’s Security Analysis: “Investment is the discipline of relative selection.”

But I think the choice we should focus on is not between high-risk and low-risk, but between companies. Good investing looks at the long run AND the short run. Example:

Shopify I think in the long run it grows and grows, and where it stops nobody knows…and will someday be a 50B, 100B, maybe even bigger enterprise. Short run, yeah, it’s expensive, and volatile – if there’s a correction, it will get hit hard. But as long as the performance continues long term like I think it will, it will be quick to recover.

Chevron Short run, it’s simply not going to have bad days as bad as SHOP’s. But 30 years from now I have no idea if it will even be around, and if it is it will look very different than it does today, and who knows how big or small it will be.

So to classify Chevron as less risky than Shopify is very short term thinking.

  1. The video was awesome and I very much agree with his view of networks. FB’s and Amazon’s are better than Neflix’s, because while NFLX gets predictable recurring revenue from increasing numbers of users, FB and Amazon get increasing revenue from their increasing user bases. Kind of like Shopify. :slight_smile:

I join you in recommending the video to all: https://youtu.be/0_flH3URTY8

Bear

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<<<Environments like today’s call to mind the applicability of something I was told more than 40 years ago by Sid Cottle, editor of the later editions of Graham and Dodd’s Security Analysis: “Investment is the discipline of relative selection.”>>>

Gobbly gook to sell financial services to people who don’t know any better.

The last 40 years?

https://www.reddit.com/r/dataisbeautiful/comments/4q9iwa/40_…

If you are 25, and just put money away every month in an index fund that tracks the S&P 500 (that has grown slower than other index funds you can invest in), at age 65 your money will have returned more than 16x.

Wonder what his “discipline of relative selection” will have returned? Far less I think.

He could have just said I pick more consistent stocks that have been in business a lot longer that are more conventionally valued. Doesn’t sell as well though…discipline of relative selection…and toss in Graham or Dodge to make it sound all academian.

For most people, if your are worried about undue risk just buy an index fund and let it go for a few decades.

For those who can actually understand the tripe of this sort of sloganality (I can make up words, someone has to), we can try to do better.

Tinker

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