Billionaire investor Howard Marks touts value stocks, trumpets high-quality growth stocks, and says he’s open-minded about bitcoin in a new interview. Here are the 9 best quotes.

Howard Marks
Howard Marks.

  • Howard Marks trumpeted value stocks and high-quality growth stocks.
  • The Oaktree chief is bearish on bonds and bullish on US economic growth.
  • Marks is keeping an open mind on bitcoin’s value.
  • See more stories on Insider’s business page.

Billionaire investor Howard Marks touted pandemic-hit stocks as potential bargains, suggested growth stocks could serve as hedges against inflation, and said he was open-minded about bitcoin in a CNBC interview this week.

The Oaktree Capital Management co-chairman also dismissed bonds, argued the US economy has begun a new growth cycle, and underscored the difficulty of finding distressed assets with so much federal aid and liquidity in markets.

Here are Marks’ 9 best quotes from the interview, lightly edited and condensed for clarity:

1. “I’m never positive about anything.”

2. “The most opportunity is always found in the things other people are ignoring.”

3. “If you can find companies that have been penalized for their difficulties in the pandemic and the penalty was overdone and the difficulties are temporary, I think that’s a good sector right now.”

4. “Any company that has difficulties in this environment deserves to be distressed. The bailouts have been generous, the liquidity has been rife, and the default rate in 2020, which was predicted to get into middle teens, didn’t even reach half that.”

5. “Bonds may be fairly valued relative to stocks, but with yields of 1%, 2%, 3%, it’s hard to justify inclusion in portfolios. Nobody thinks they’re going to get the returns they need in the institutional realm just from stocks and bonds.” – arguing a portfolio split of 60% stocks and 40% bonds doesn’t do the job currently, and alternative assets are needed.

6. “We expect that there will be a recession once in a while. I believe last year’s recession was that recession for that cycle, and that we have commenced a new upcycle.”

7. “The fear is of an overheated economy that produces inflation and thus, calls for higher interest rates. I think that the great tech stocks, the great growth stocks, can offset inflation through their growth, but you have to pick the right ones.”

8. “I’m opening my mind on bitcoin. I was ‘knee-jerk’ skeptical.”

9. “While bitcoin doesn’t have an intrinsic value, the same can be said of the dollar and many, many other things that have value like paintings and diamonds. I’ve been more sensitized to the supply-demand case.”

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Howard Marks and Joel Greenblatt discussed market bubbles, tech stocks, and investing tips in a recent interview. Here are the value investors’ 9 best quotes.

Howard Marks
Howard Marks

  • Howard Marks and Joel Greenblatt discussed bubbles, tech stocks, and investing tips.
  • The value investors suggested some companies deserve their lofty valuations.
  • Here are Marks and Greenblatt’s nine best quotes from the interview.
  • Visit Business Insider’s homepage for more stories.

Value investors Howard Marks and Joel Greenblatt discussed market bubbles, tech stocks, and the key things they’ve learned during their careers in a recent RealVision interview.

The Oaktree Capital Management co-chairman and the co-chief of Gotham Asset Management agreed there were signs of irrational exuberance in markets.

However, they argued that some technology companies deserve aggressive valuations, and rock-bottom interest rates are limiting investors’ options. They also questioned the long-term consequences of the US government’s efforts to prop up asset prices.

Read more: GOLDMAN SACHS: These 40 heavily shorted stocks could be the next GameStop if retail traders target them – and the group has already nearly doubled over the past 3 months

Here are the nine best quotes from Marks and Greenblatt, lightly edited and condensed for clarity.

Marks: “We are definitely in a time of optimism that is largely man-made, stemming primarily from the actions of the Fed and the Treasury to counter the economic weakness of 2020. They produced a resurrection of risk-bearing. FOMO took over from fear of losing money. And it really led to very strong demand for securities. So that’s worrisome.”

Marks: “We see risky behavior ranging from the rapid acceptance of SPACs, to the ease of doing IPOs, phenomena like GameStop, and the heavy involvement of retail buying, margin buying, and option buying. A lot of these taken together could be signs of a bubble. But I think that most asset valuations are reasonable relative to the level of interest rates.”

Marks: “A ‘bubble’ connotes unreasonably optimistic psychology and a belief that there’s no price too high for the bubble asset. I don’t think that those are going on today. I just think that all prices are up because of all the demand, as well as returns being down.”

Read more: Tom Finke recounts how he went from running a $345 billion money manager to joining in the SPAC boom as a sponsor – and shares 3 characteristics investors should look for in an ideal blank-check company

Greenblatt: “I do not believe there will be hundreds of other Amazons, Googles, Microsofts out there. Many companies are priced as if they will be. I think that’s an element of froth.”

Marks: “The 40-year tailwind of declining interest rates that has lifted the price of all assets is at an end.”

Greenblatt: “If you take a business like Microsoft, Amazon, or Google and actually put a reasonable growth rate on them for five years, and then look at where you are in five years, it’s 30 or 40 times earnings. Your results show that they’re not astronomically priced. They’re, in many cases, reasonably priced.”

Marks: “I always say that if you stand at a bus stop long enough, you’ll get a bus. But if you run from bus stop to bus stop, you may never get a bus. And I think that’s an important thing for people to accept –  nothing will work all the time.” – advising investors not to switch from one strategy to another.

Read more: Short-seller Carson Block says the day-trading revolution that hit GameStop and other stocks is changing the playing field for investors like him. Here’s how his firm is reinventing itself – and what he’s betting against today

Greenblatt: “The people who are really successful at investing do it for love, do it for the fascination, do it for the challenge. And those are the people who are most successful. They, as Warren Buffett would say, tap dance to work every day. And that’s really the secret.”

Marks: “It’s not what you buy, it’s what you pay for it. Investing is a matter of buying things well, not buying good things.”

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Billionaire investor Howard Marks discussed Tesla’s valuation, growth vs value investing, and the Fed juicing markets in a recent interview. Here are the 8 best quotes.

Howard Marks

  • Howard Marks advised casual investors who have won big on Tesla to withdraw some of their gains in a recent Bloomberg TV interview.
  • The billionaire cofounder of Oaktree Capital Management also argued that value investors can own growth stocks, without undermining their investing principles.
  • Marks highlighted the Federal Reserve and Treasury’s stimulus efforts as key drivers of the current stock-market boom as well.
  • Here are Marks’ 8 best quotes from the interview.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Billionaire investor Howard Marks recommended amateur Tesla investors cash out some of their profits during a Bloomberg TV interview this week. His comments suggest he’s not especially bullish on Elon Musk’s electric-vehicle company following its 700% stock rally over the past year.

The cofounder and cochairman of Oaktree Capital Management also argued value investors can buy growth stocks trading at high price-to-earnings ratios without betraying their principles. Moreover, he attributed a large part of the recent stock-market boom on the US government’s efforts to stimulate the economy.

Here are Marks’ 8 best quotes from the interview, lightly edited and condensed for clarity:

1. “Tesla is an extreme case. There’s an argument to be made that it’s too high. The people who are buying it, you can’t say that they’re all nuts. There may be people who have a view that it’s attractive. By the way, people said that it was too high two years ago. Have all the appreciations in the last two years been fallacious? Who are we to say?”

2. “An individual not of great means – he should take some profits. If he bought Tesla two years ago, he probably has a huge gain. It’s probably a very disproportionate amount of his financial net worth and his portfolio. He should absolutely cut back. Unless he really wants to try to hit the long ball. To do that, he should have a high pain threshold.”

Read more: A leading Wall Street firm asked 7 famous investors about their favorite stocks and the global trades they’re using to stay ahead of the competition. Here’s what they’re betting on now.

3. “There’s no reason that you can’t do so-called value investing in growth companies.” – arguing that the key tenets of value investing – treating shares as pieces of a business, focusing on companies’ true worth instead of their price, relying on fundamentals to calculate their intrinsic value, identifying investments as attractive when their price diverges from their value, and having the emotional discipline to act only when that gap opens up and not otherwise – don’t preclude growth bets.

4. “The investor’s mentality should be eclectic and you shouldn’t decline to invest in companies just because they’re fast-growing and carry high P/E ratios. Just because something has a high P/E ratio doesn’t mean it’s overvalued, and just because something has a low P/E ratio doesn’t mean it’s cheap.”

5. “There was a very famous value investor who made good money in some of the tech leaders. I said, ‘Well how could a value guy invest in high-growth tech companies?’ He says, ‘Well, they looked like value to me.’ The point is that he was open-minded.”

Read more: GOLDMAN SACHS: Buy these 50 under-owned stocks that will roar higher as growth and inflation lift off in 2021

6. “There’s no disputing the fact that growth stocks have outperformed value stocks. On the other hand, I think there’s no disputing the fact that growth stocks have a better future than value stocks.” – arguing that high P/E ratios and strong stock-price performance may fairly reflect the improving prospects of tech companies as they grow larger and more dominant.

7. “It’s not something everybody can do, but I don’t think it’s something nobody can do.” – on assessing which companies will survive and which will fail during a bubble.

8. “The Fed and Treasury’s actions, and specifically the reduction of the federal funds rate to zero, has had a very coercive effect on the market. It has required people to invest because they don’t want to sit around with cash, money market funds, bank deposits, all earning zero. They don’t want Treasuries at less than 1%, or high-grade bonds at 2% and so they’ve had to push out into risk assets.” – explaining why the stock market continues to boom, despite immense political division and the pandemic’s continued fallout.

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