Market recovery – Howard Marks’ views

Howard Marks, a very thoughtful investor (which have made him a couple of billion dollars) has recently commented on the crisis and recovery. I have collected what I believe to be the most salient points.
Will the market dip again?
“Markets rarely rally in a straight line. Rather, their movements represent a continuous tug-of-war between the bulls and the bears, and the result rarely goes just in one direction. After the optimistic buyers of the initial dips have responded to the low prices and bought, the pessimists find the new, higher prices unsustainable and engage in another round of selling. And so it goes for a while…The bottom line for me is that I’m not at all troubled saying (a) markets may well be considerably lower sometime in the coming months and (b) we’re buying today when we find good value.  I don’t find these statements inconsistent.”
The future is unknowable, but is subject to informed extrapolation
“I’ve defined investing as the act of positioning capital so as to profit from future developments.  I’ve also mentioned the challenge presented by the fact that there’s no such thing as knowing what future developments will be.  This is the paradox we must deal with.

• there are few if any facts regarding the future,
• the vast majority of our theorizing about the future consists of extrapolating from past patterns, and
• a lot of that extrapolation – and just about all the rest of our conclusions – consists of what Lipsitch calls opinion or speculation and what I call guesswork. (George Bernard Shaw said, “All professions are conspiracies against the laity.” Thus the rules of the investment profession seem to require that its members describe their views about the future using high-sounding terms like “analysis,” “assessment,” “projection,” “prediction” and “forecast.” Rarely do we see the word “guess.”)

There has to be good reason to believe the past can be extrapolated to the future; as Lipsitch says, it has to be informed extrapolation.  And that brings me to the current episode.  What does the U.S. see today?

• one of the greatest pandemics to reach us since the Spanish Flu of 102 years ago,
• the greatest economic contraction since the Great Depression, which ended 80 years ago,
• the greatest oil-price decline in the OPEC era (and, probably, ever), and
• the greatest central bank/government intervention of all time.

The future for all these things is clearly unknowable.  We have no reason to think we know how they’ll operate in the period ahead, how they’ll interact with each other, and what the consequences will be for everything else.  In short, it’s my view that if you’re experiencing something that has never been seen before, you simply can’t say you know how it’ll turn out.”
Will there be a quick recovery?
“One of the greatest uncertainties we face toda………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1