Value and growth investing are not diametric opposites but rather two sides of the same investing coin.
Visualizing a company's future prospects and analyzing qualitative factors are crucial in gaining an advantage in today's rapidly changing markets.
Transitioning from value investing to early-stage venture investing allows for leveraging high expected value investments and a probabilistic approach.
Shared values and complementary skills are essential in building a successful investment firm, while alignment within the team is crucial.
Deep dives
The Evolution of Investing and the Role of Value and Growth
In this podcast episode, legendary value investor Howard Marks and his son Andrew Marks discuss the evolution of investing and the interplay between value and growth investing. They emphasize the importance of avoiding rigid investment strategies and recognizing that companies can possess both value and growth attributes. The conversation highlights the need for open-mindedness and the ability to make qualitative judgments about the future prospects of a company. They also explore how readily available quantitative information about the present can affect investment decisions. Overall, the episode delves into the challenges and opportunities presented by today's rapidly changing markets.
The Impact of Technological Advancements
The discussion touches on the impact of technological advancements on investing. They note that with the abundance of information and increased competition, it is harder to find hidden value in stocks. However, they emphasize the importance of visualizing a company's future prospects and analyzing qualitative factors to gain an advantage. They also highlight the shifting dynamics of market inefficiencies and the need for investors to stay adaptable and forward-looking. The conversation references examples like Amazon and the changing landscape of newspapers to illustrate how business models can evolve and disrupt established industries.
The Appeal of Venture Investing
Andrew shares his transition from value investing to early-stage venture investing and why it aligns better with his skill set. He discusses the importance of visualizing a company's future potential and leveraging high expected value investments in venture capital. Andrew emphasizes the probabilistic nature of venture investing, where many bets may result in losses, but a few successful investments can yield significant returns. He also explains how venture investing suits his optimistic outlook and his passion for working with founders and helping them build successful businesses.
Building a Successful Investment Firm
Howard and Andrew touch on the challenges of building an investment firm. They highlight the importance of shared values and complementary skills among partners. Howard explains his role in fundraising and representing the firm to the external community, while Bruce and others focus on managing money. Andrew shares how he and his partner handle the investment program and decision-making processes, driven by their passion for investing and the pursuit of world-class returns. The conversation emphasizes the different approaches to firm-building and the need for alignment within the team.
The Importance of Doing What You Love
The podcast episode emphasizes the importance of doing what you love and being motivated by it. The hosts discuss how their firm's approach is centered around doing what they love and maximizing their time in that pursuit.
The Value of Founders and Judgment in Investing
The podcast explores the significance of understanding founders and making qualitative judgments in investing. It emphasizes that backing the right people is crucial and that judgment plays a key role in investment decisions.
The Decision to Sell: Understanding Fundamentals and Opportunity Costs
The podcast delves into the topic of selling investments and highlights the need to consider fundamentals, opportunity costs, and the reasons for initially making the investment. It emphasizes the importance of looking beyond price action and making the selling decision based on a deep understanding of the investment.
We sit down with legendary investor Howard Marks of Oaktree Capital and his son Andrew who, while less-well-known, is also an incredibly accomplished investor in a very different arena: early-stage VC. The purpose of the conversation was to discuss their joint work together on Howard’s all-time most popular memo, “Something of Value”, which made the then-shocking argument that Value and Growth investing are not diametric opposites but rather two sides of the same investing coin. We of course dive deep into that, and also cover plenty of fun Oaktree and investing history, as well as Andrew’s favorite topic: selling (or not selling, as the case may be). This is not one to miss!
Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.
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