Thinking of the big picture forces me to read Marks’ comments. In his last memo, he goes on generalization issues; extrapolation risks which we oftentimes incur but shouldn’t; the role of PRICE as a proxy of risk, despite the asset class – for example, bonds today seem way riskier than equities; the concept of ERP – the one he likes the most is “the margin by which equity returns will exceed the risk-free rate in the future” and that can’t be read anyplace; three psychology-descriptive stages of bull and bear markets and so on.
Bottom line he is constructive on equities, since “A move upward can be powered by a switch from the fear of losing money to the fear of missing opportunity. When attitudes are moderate & allocations are low, it doesn’t take much.”
Howard Marks makes his point about what puzzles him the most in investing saying “Many of the important things in investing are counter intuitive.” and as Einstein has said once: “Not everything that counts can be counted, and not everything that can be counted counts.”