Landmark Links April 18th – Buy Low


Lead Story….. Quick programming note: I won’t be posting on Friday as I’m heading out of town for a wedding.  In fact, I’m going to be the wedding officiant when my sister-in-law and future brother-in-law tie the knot.  It’s the first time I’ve ever officiated wedding and, needless to say, I’ve been busy getting ready.  I wasn’t going to post this week (there will not be a post on Friday) but then I came across this Business Insider article by Frank Chaparro summarizing an interview where Wall Street legend Howard Marks of Oaktree described the phone conversation with Michael Milken that changed his life.  It’s one of the best things I’ve read and I wanted to post it in it’s entirety (highlights are mine):

Howard Marks isn’t afraid of risky assets, so long as the price is right.

Marks’ investment firm, Oaktree, is considered one of the leading investors in distressed debt, essentially riskier debt.

He founded the firm in 1995, and since then the firm’s assets under management have increased from $5 billion to about $101 billion. And Marks is estimated to have a personal net worth of close to $1.97 billion, according to Forbes.

He counts Warren Buffett as a friend and a fan. “When I see memos from Howard Marks in my mail, they’re the first thing I open and read,” Buffett once said.

And in an interview with Julie Segel at Institutional Investor , Marks explained the phone call that changed his life.

He was asked by his boss to meet up with an investor out in California named Mike Milken. Milken, whom many consider the father of high-yield bonds, explained that investing in safe assets isn’t as smart as it appears, because they can only go down.

“If you buy AAA or AA bonds they only have direction. If you buy single B bonds, and they survive, all the surprise will be on the upside,” he said.

“[You] could issue high yield bonds, they called them junk in those days, if the promised yield was high enough. And that makes perfect sense,” he added.

It’s all about price, according to Marks, not what you invest in:

There’s not such thing as a good investment idea, until you’ve discussed price.

Investing well is not a matter of buying good things, it’s about buying things well. And people have to understand the difference. And if you don’t understand the difference you are in big trouble.

This interview hit home for me.  In recent months I’ve had several discussions with prospective clients where I’ve been asked about the viability of a new business plan.  My answer has always been the same: it depends on what price you are paying.  Howard Marks is a billionaire and one of the most successful investors in the world because he understands the difference between buying good things and buying things well.  We’d all do well to heed his advice in the last four sentences of the interview.


Black Box: Financial insiders are becoming increasingly worried about the spread of securities-based loans which allow wealthy investors to borrow against their securities portfolios at variable rates without selling positions.  The loans loans don’t show up on bank balance sheets and there is almost no regulatory oversight.

Worst of Both Worlds: Believe it or not, economic concentration is flat even as inequality rises, primarily because lower income people are fleeing high cost cities.  Like so many things these days, it all comes back to a lack of affordable housing.

Over It: CalPERS is sick and tired of paying high private equity fees.


Dead Space: American built way too many malls and it’s a major drag on the economy. See Also: Is American retail at a historic tipping point?  And: If you think online shopping is disruptive to retail, just wait until driver-less vehicles become mainstream.


Check Up: JBREC’s highly entertaining Housing Bubble Check-In finds only a small handful of potential bubble signs.

Same Direction: Young Americans aren’t moving like they used to.  See Also: Why current housing trends will help to keep interest rates suppressed.

Hitting the Road: Leaving coastal California is a no-brainier for some as housing costs continue to rise.  See Also: LA’s housing costs mark it harder for companies to keep workers here.


Underdog: The unlikely story of how Mark Davis outfoxed the most powerful man in Nevada, Sheldon Adelson, and brought the Raiders to Las Vegas.

How the Other Half Lives: Residents in the inland regions of California increasingly have less in common with their coastal brethren….and little say in governing at the state level.

Iceberg!  What happened after the Titanic sunk in pictures.

Surge Pricing: Japan has a major potato chip shortage thanks to a bad crop and bags are now going for as much as $12 a pop.

Stuck Up:  Why American Express is losing the credit card snob war to Chase.

Chart of the Day

I think that I spot a trend here….



Fake it ‘Till You Make It: A man was arrested for impersonating a police officer when he pulled over a real cop because, Florida.

Headline of the Year:  It’s only April but the headline of the year title has already been claimed.  Nothing is beating this: Amid Allegations of Unpaid Taxes, Neo-Nazism, and Sex Offender, Denver Furry Convention Canceled.

Stamina: The world’s oldest porn star is 82 years old and credits his longevity to eating raw eggs every day.

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