Crypto investors experience mind-boggling gains in very short periods of time. Here’re some of my favourite bits from Howard Marks’ latest memo, “Selling Out”, where he provides a simple framework on when to sell.
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https://twitter.com/zhusu/status/1481831051274162176
1. "When you find an investment with the potential to compound over a long period, one of the hardest things is to be patient … When you look at something that’s gone [Up Only] for 20 years, think about all the times a holder would have had to convince himself not to sell."
2. "Two main reasons for excessive short-term trading is [simply] because they’re up and because they’re down."
Price alone shouldn't dictate whether you sell or not.
Price alone shouldn't dictate whether you sell or not.
3. "On average, investors tend to sell assets with the worst recent performance (missing out on their potential recoveries) in order to chase the assets that have done the best (and thus likely participate in their return to earth)."
4. "Superior investing consists largely of taking advantage of mistakes made by others... selling things because they’re down is a mistake that can give buyers great opportunities."
looks like SLURRRRRP THE DIP is a solid strat if u think u r on the right side of info asymmetry
looks like SLURRRRRP THE DIP is a solid strat if u think u r on the right side of info asymmetry
On timing the market
Howard's thoughts on selling because you think a temporary dip lies ahead, idiosyncratic or market-wide:
Howard's thoughts on selling because you think a temporary dip lies ahead, idiosyncratic or market-wide:
1. "Why sell something you think has a positive long-term future to prepare for a dip you expect to be temporary? Doing so introduces one more way to be wrong (of which there are so many), since the decline might not occur."
2. selling for market-timing purposes actually gives an investor three ways to be wrong:
- whether the decline occurs
- when to get back in if it does
- if you sell you'll to decide what to do with the money while you wait until the dip occurs and the time comes to get back in
- whether the decline occurs
- when to get back in if it does
- if you sell you'll to decide what to do with the money while you wait until the dip occurs and the time comes to get back in
his thoughts on diversification and conviction
Most investors diversify; they “sub-optimize, potentially trading off some of their chance at a maximal return to increase the likelihood of a merely excellent one.”
Most investors diversify; they “sub-optimize, potentially trading off some of their chance at a maximal return to increase the likelihood of a merely excellent one.”
1. "it’s far better to own a small number of things about which I feel strongly. I’ll only have a few good insights over my lifetime, so I have to maximize the few I have."
agree with this very much
agree with this very much
2. "Most actively managed portfolios won’t outperform the market as a result of excessively shifting portfolio weightings or market timing... these actions are unlikely to work at best and can get in the way at worst.
https://twitter.com/zhusu/status/1481437258565959680
End.
It’s a pleasant read, here’s the link if you wanna check it out.
oaktreecapital.com/insights/memo/…
Like and RT the first tweet if you think this was helpful. Trying out new kinds of content to put out.
It’s a pleasant read, here’s the link if you wanna check it out.
oaktreecapital.com/insights/memo/…
Like and RT the first tweet if you think this was helpful. Trying out new kinds of content to put out.
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