It’s better to turn cautious too soon…

One of the greatest investors in the world is getting worried…
Howard Marks is the billionaire founder of Oaktree Capital, one of the largest and most successful investment firms in the world.
A few times each year Marks write up his thoughts about financial markets – he calls them ‘investment memos’.
And he just released his latest one with a very clear message: it’s time to be cautious.
From Marks’ memo…
I think it’s better to turn cautious too soon (and thus perhaps underperform for a while) rather than too late, after the downslide has begun, making it hard to trim risk, achieve exits and cut losses.
Marks admits this bull market could continue. But he’s happy taking chips off the table in today’s particularly dangerous market.
Asset prices are high across the board – the S&P 500 is trading at 25 times trailing 12-month earnings compared to a long-term median of 15 – and prospective returns are low.
Meanwhile, we’re also seeing record-low complacency amongst investors.

This post was published at Sovereign Man on July 31, 2017.

 

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