Wednesday, July 21, 2010


Oaktree's Howard Marks writes one of the must read quarterly letters (embedded below).  This one is a bit lengthy, including many extended quotes from mainstream sources, but there are a few tidbits that resonate soundly with me.

First of all, page 5, which describes the basic unsustainable characteristics common in many global economies.  More importantly, Marks's conclusion, on page 17, where he notes:

"bottom line: anyone who invests today in a pro-risk fashion out of belief in the recovery must be confident that he'll be agile enough to take profits before the long term realities set in."

I've used the term "reality" many times to answer the question "why are markets down today?"  And Marks's quote perfectly describes why I'm not going to be majorly long stocks any time in the near future:  1) I think reality is much lower, and 2) I don't think I am agile enough to pass the grenade once the pin is pulled.



Transor Z said...


But you've also got the meta level to global "competition," the Bretton Woods/G20 macro modeling of economic relationships in the age of the "welfare state." Elite conspiracy ("Bilderbergers!") or effective international cooperation, depending on your perspective. Somewhere in the middle you can probably call it a nice western fairy tale about progress, freedom and cooperation that got us through the dark nights.

I say lay off the Mediterranean people as "lazy and entitled." Because while democratic governments are no doubt guilty of unidirectional entitlements growth for political reasons, there are other things going on representing trillions in global GDP: sheltering increasing amounts of wealth offshore to evade taxation and corruption.

Dude, we just got fucking ripped off TRILLIONS by the FIRE sector. Add the waste and fraud in government contracts to that. That part of the problem is not about lazy and uncompetitive; it's regulatory capture and cronyism. The booty is buried in Caribbean islands, pirate style.

I wish these analysts would lay off the thinly veiled cultural stereotyping because taking a three hour lunch chillaxing on the piazza with an espresso shooting the shit is some of the only cultural authenticity left in this corporatized/disneyfied world we've helped create.

"Work harder, lazy entitled westerners!" Fuck that. We need the Simon Wiesenthal pitbull of tracking down global skimmed assets.

Kid Dynamite said...

TZ - i think that Marks's point was simply that a 3 hour cappuccino lunch on the piazza, with retirement at age 53, simply DOES NOT COMPUTE. so yeah, i guess you could translate that into "lazy and entitled." any way you cut it, it comes back to the old adage we learned at a very young age: there is no free lunch.

Transor Z said...

Economist analysts greatly overreach where theory bleeds into forming cultural judgments. Inefficiency is a cardinal sin of capitalist ideology. It's a barrier to achieving the cornucopia of Progress.

Except... I don't see any United Earth faster-than-light starships docked above us. So Progress toward what, exactly?

I think it's time for people to start to face the nihilism like a grown-up species. Because we're not going anywhere and we're making this planet unlivable, both literally and spiritually.

I want my three-hour lunch and espresso (or cappuccino) and neverending game of bocce so fuck off. And I'll retire at 53 to a 750 sq ft govt subsidized flat with no car, no computer, just a TV to watch football. And the best food in the world, baby.

Oh, and a roof garden.