In a recent discussion, William Green highlighted how Howard Marks' initial academic diversion at the University of Pennsylvania led him to embrace the Buddhist idea of impermanence. This concept profoundly influenced Marks' approach to investing, reinforcing the belief that the future is unpredictable, but one can adapt to the ever-changing reality. By understanding that markets are in constant flux, Marks encourages investors to adjust their strategies based on current market sentiments – being cautious in exuberant times and more aggressive in periods of pessimism.
The lesson, in some ways, that I drew from Howard that's been life-changing for me is: you can't predict the future. But what you can do is accommodate yourself to reality as it is.
You recognize this fundamental Buddhist truth that everything is in a state of flux, and you say, 'If that's the case, let me accommodate myself to reality as it is.'
Companies that were once powerful will die, industries that were out of favor will rise again, countries that were in power will fall apart.
When there's too much pessimism priced into the market, then paradoxically, the market is possibly less risky, and you want to gun the engine.
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