LIZ: SOMEONE WHO HAS MADE
BILLIONS IN MARKET CYCLES AND
CALLING THEM HAS NOW OPENED ITS
ORDER BOOK SO TO SPEAK ON HOW HE
SPOTTED TRENDS THAT HELPED HIM
MAKE HIS BILLIONS.
HOWARD MARKS, COCHAIRMAN AND
CO-FOUNDER OF OAK CREEK CAPITAL
MANAGEMENT IS AUTHOR OF THE NEW
BOOK, MASTERING THE MARKET
CYCLE.
ONE OF HIS MAJOR CLAIMS TO FAME,
HIS NAILBITING CALLED TO SNAP UP
STOCKS AT THE VERY DEPTH OF THE
FINANCIAL CRISIS.
IN 2008 WHEN INVESTORS FLED,
OAKTREE INVESTED HALF A BILLION
DOLLARS OVER 15 WEEKS INTO
STOCKS AND BOY WAS THAT PAID
OFF.
NOW WE HAVE A NINE-POINT TYPE
YOUR WHOLE MARKET AND YOU CAN
SEE LAST WEEK'S SELLOFF ON THE
RIGHT.
MAKES YOU WONDER, IS IT TIME FOR
CYCLE CHECK?
THE GUY WHO DOES IT BETTER THAN
ANYBODY.
BUT I WARREN BUFFETT EVEN
FOLLOWS, HOWARD MARKS ARE GREAT
TO HAVE YOU HERE.
THANK YOU FOR JOINING US.
I WANT TO KNOW HOW YOU SAW
WEDNESDAY AND THURSDAY OF LAST
WEEK WHEN WE SAW 1400 POINTS
KNOCKED OFF THE MARKET LIKE
THAT.
>> I'VE BEEN THINKING THE MARKET
WAS HIGH IN THE CYCLE.
ANYTHING THAT BRINGS BACK IN THE
DIRECTION OF MODERATE I THINK IS
>> YOU HAVE THIS MARKET CYCLE
THEORY.
WHERE ARE WE IN THIS MARKET
CYCLE COME IN THE SECOND LONGEST
BULL MARKET RUN IN HISTORY.
>> LONGUS BY SOME MEASURES.
I THINK WE ARE IN AN ELEVATED
POSITION ABOVE THE MIDPOINT OF
WHAT YOU MIGHT THINK OF AS FAIR
VALUE.
THE STOCK MARKET NOT TERRIBLY
AND CREDIT WHICH IS WHAT WE
EMPHASIZE EVEN MORE.
THE BOOK, THE S&P HAS QUADRUPLED
FROM BELOW.
TEN-YEAR BULL MARKET AS YOU
DESCRIBED.
YOU CAN'T SAY WE ARE IN THE
EARLY INNINGS.
I BELIEVE THE EASY MONEY HAS
BEEN MADE AND WHEN YOU'RE
ELEVATED IN THE CYCLE AS I
BELIEVE WE ARE, THE ODDS ARE NOT
ON YOUR SIDE GEARED
>> I'M A HOCKEY FAN.
ARE WE IN OVERTIME AT THE
SHOOTOUT POINT?
>> NOT NECESSARILY.
IT'S EASY TO TALK ABOUT RACE
BALL.
WHAT WE SAY ABOUT RACE BALL IS
IN THE EIGHTH INNING WE DON'T
KNOW HOW LONG IT'S GOING TO GO.
IN HOCKEY, YOU KNOW, AND
NUMBERS.
TIMES NUMBER OF MINUTES.
THIS GAME IS UNLIKE BASEBALL.
IT COULD GO NINE INNINGS OR 11
OR 14.
THAT DOESN'T MEAN IT'S TIME TO
START PACKING UP OUR STUFF.
LIZ: ON OUR VIEWERS NOT ONLY TO
READ THE BOOK, BUT ALSO TO BE AT
LEAST CAUGHT BY YOUR ATTENTION
HERE AND TO AT LEAST GET A SENSE
OF HOW YOU SPOT MARKET CYCLES.
WHAT SIGNPOST YOU LOOK AT ON THE
ROAD TO INVESTING?
>> I THINK YOU LOOK AT P.E.
RATIOS, WHICH ARE A NUMERICAL
WAY TO SAY HOW ARE THINGS
VALUED.
YOU LOOK AT THE LEVEL OF
OPTIMISM.
WE'D RATHER BUY THINGS WHEN
THERE IS NO OPTIMISM AS YOU
DESCRIBE.
NOW WHEN OPTIMISM IS RIDING HIGH
THAN EXPECT PRICES WILL BE FULL.
IF THE MEDIA ARE SAYING THIS IS
YOUR LAST BEST CHANCE TO GET ON
THE MARKET BEFORE IT GOES TO THE
MOON, THAT'S WORRISOME.
I'D RATHER SAY IS RATHER SAY
IT'S RATHER SAY IS DOWN AND OUT,
NOBODY WILL EVER BUY AGAIN AND
FINALLY I LOOK FOR WHETHER IT'S
EASY OR HARD FOR COMPANIES TO
ISSUE DEALS THAT SHOULDN'T BE
DONE.
IF IT'S EASY TO DO IT, AND THAT
MEANS THE MARKET IS NOT
DISCIPLINED, NOT SKEPTICAL, NOT
AN INDIAN.
I DON'T WANT TO BE EXPOSED TO
RISK AND NOT MARKET.
LIZ: SOMEBODY CARED ABOUT,
CHILDREN OR PARENTS THAT WHAT
SHOULD I DO WITH THIS PILE OF
DRY POWDER RIGHT NOW I WANT TO
INVESTED.
RIGHT NOW AT THIS POINT IN TIME.
>> WE ARE NOT SMART ENOUGH TO
KNOW IF THE MARKET WILL DO
TOMORROW OR THIS YEAR OR NEXT
YEAR.
I WOULD SAY IT IS REASONABLE TO
INVEST SOME TODAY, BUT I WOULD
INVEST CAUTIOUSLY.
THAT IS THE KEY.
I WOULD BE AFRAID TO BE FULLY
COMMITTED TO THIS MARKET IN
RISKY ASSETS BUT I'D ALSO BE
AFRAID TO BE COMPLETELY OUT OF
IT.
OAK STREET HAS HAD A MANTRA FOR
A FEW YEARS NOW.
MOVE FORWARD BUT WITH CAUTION.
WE ARE MOVING FORWARD.
INVESTING, ENDEAVORING TO BE
FULLY INVESTED BUT EVEN MORE
CAUTIOUS THAN USUAL.
LIZ: HOWARD MARKS NOW HAS ABOUT
120 BILLION ANNOUNCEMENTS.
CONGRATULATIONS.
THE BOOK IS CALLED MASTERING THE
MARKET CYCLE.