Howard Marks, a renowned investor answers the important question, \u201cShould I wait for the bottom?\u201d In short, the answer is no. Since bottoms are only found out after the fact, buying on the downswing offers more opportunities than the alternative \u2014 waiting for some \u201call clear\u201d signal.<\/p>\n
Jon reminds us on his website that the old saying goes, \u201cThe perfect is the enemy of the good.\u201d Likewise, waiting for the bottom can keep investors from making good purchases.\u00a0The investor\u2019s goal should be to make a large number of good buys, not just a few perfect ones.<\/strong> Think about your normal behaviour. Before every purchase, do you insist on being sure the thing in question will never be available lower? That is, that you\u2019re buying at the bottom? I doubt it. You probably buy because you think you\u2019re getting a good asset at an attractive price. Isn\u2019t that enough? And I trust you sell because you think the selling price is adequate or more, not because you\u2019re convinced the price can never go higher.\u00a0To insist on buying only at bottoms and selling only at tops would be paralyzing\u2026<\/strong><\/p>\n The bottom line for Jon is that he is not at all troubled saying (a) markets may be considerably lower sometime in the coming months and (b) we\u2019re buying today when we find good value. He doesn\u2019t find these statements inconsistent.<\/strong><\/p>\n With as fast as the market\u2019 moved in the past two weeks, the question might be updated to: \u201cDid I miss the bottom?\u201d Arguments can be made for both yes and no. The correct answer is it\u2019s impossible to know today. Besides, not holding tight to opinions on this is more important than having one.<\/strong> Jan \u2013March quarter earnings, over the next few weeks, will offer some insight into the impact. But April \u2013June quarter numbers will tell the tale. The best-case scenario is we won\u2019t find out the real hit to companies \u2014 revenues, earnings, etc. \u2014 until sometime in July, at the earliest. Duration is still the biggest unanswered question right now.\u00a0How long will it last?\u00a0How will the market react to companies that report no revenues for a month? Two months? A quarter?<\/p>\n Investing is about understanding potential risks, placing bets based on those possibilities, but also being prepared for alternative outcomes. That\u2019s why investing is a tradeoff. Finding the perfect balance between attack and defend in your portfolio is never easy. But if you go all-in thinking the market bottomed in an attempt to not miss the recovery, and you\u2019re wrong, then you lose.\u00a0 But if you\u2019re all-out and wrong, you miss out on gains and also lose. Investment survival is a necessity. So<\/strong> finding a\u00a0good enough<\/em>\u00a0balance, that you\u2019re comfortable with, is key.<\/strong><\/p>\n Jon concludes that the only guarantee is that when all this blows over, everyone will wish they had more cash to invest, that they bought more stocks, and at a better time. That\u2019s the painful lesson with risk \u2014 not all risks are realized but we still need to prepare for it just in case.<\/p>\n","protected":false},"excerpt":{"rendered":" Howard Marks, a renowned investor answers the important question, \u201cShould I wait for the bottom?\u201d In short, the answer is no. Since bottoms are only found out after the fact, buying on the downswing offers more opportunities than the alternative \u2014 waiting for some \u201call clear\u201d signal. Jon reminds us on his website that the […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[74],"tags":[],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/912"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=912"}],"version-history":[{"count":1,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/912\/revisions"}],"predecessor-version":[{"id":913,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/912\/revisions\/913"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=912"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=912"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=912"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}