Hi everyone as markets are down from previous few day and theirs pessimism everywhere .
Let’s go down to the history and study what Howard Marks (Legenday Investor) did when their way extreme pessimism around markets
Most of times end of the world doesn’t happen - Howard Marks
Let’s dive straight In…
Storytime
This was the year 2008 . From the years of 2003 to 2007 he had witnessed foolish lending that means institutions were lending money where they shouldn't have .
Hence on this Howard Marks commented that -
Prosperity leads to expanded lending which leads to unwanted lending which leads to huge losses which leads to lenders not lending money
Which basically meant that as country progress its lending power increase which leads to it lending money where it shouldn't have and that leads to them making losses and not lending any money further
Then dominos effect happened In 2008 -
1. First the house prices tumbled
2. Then commercial property prices tanked 📉
3. After few weeks financial system began to disintegrate
4. After that Lehman largest bank 🏦 declared bankruptcy
5. And many more things
This was the time of extreme pessimism which comes in every stock Markey cycle 🚲. According to Howard Marks everything is cyclical in nature
So there are times of extreme optimism and pessimism. When their are times of extreme pessimism its hard to maintain your conviction over companies .
So Howard Marks did which no one expected to do cause everyone was thinking that this was the end of the world 🤔. On Sept 15 when Lehman died over next 15 weeks he deployed $500 to $600 Million per week buying stocks
As Sir John Templeton says
Buy at the peak of extreme pessimism
After that Howard marks says that over the years that investment made him around $9 Billion 🤯 🤯
We have bet and we have won
This is story I read from the book Richer Wiser Happier. Which also suits the current times pretty nicely. I am also averaging down my winners in this times of market falls .
I hope you would have enjoyed this newsletter post . If yes then do let me know your feedback on the same