Howard Marks: Calibrating, Striking the Balance Between Offense and Defense

In this memo, Howard Marks examines how investors should adjust their strategies during the unprecedented uncertainty of the 2020 coronavirus pandemic. He argues that since market bottoms can only be identified in hindsight, attempting to time a perfect entry is a futile endeavor. Instead, Marks suggests that individuals should calibrate their portfolios by shifting from a defensive posture toward a more aggressive or neutral stance as asset prices become more attractive. By emphasizing the balance between the risk of losing money and the risk of missing opportunity, he highlights that buying during periods of extreme discomfort often leads to the best long-term outcomes. Ultimately, the text advocates for a disciplined, incremental approach to investing based on current value rather than trying to predict an unpredictable future.