When Howard Marks speaks, it pays to listen. The chairman of Oaktree Capital recently sat for a lengthy interview with Shane Parrish of Farnam Street in which he covered many key issues, including risk management, the role of luck and the difficulty of controlling emotions when investing. “Our emotions conspire at every turn to make us do the wrong thing,” he said.
On Wall Street, he noted that people tend to buy when prices are rising, whereas in every other aspect of their lives they tend to buy when prices are discounted and there is a sale. “Emotion gets them to sell art the bottom,” he said, “just as they bought at the top.”
As markets are dancing around record highs, and the Standard & Poor’s 500 Index is having trouble trading above 2800, the Marks interview provides some powerful fodder for advisors and their clients who are likely watching the tape and wondering what comes next.
Hear the full interview here.