Selling Out

In this episode of "The Memo by Howard Marks," Marks delves into the complexities of selling investments, challenging the simplistic "buy low, sell high" adage. He argues against selling solely based on price increases or decreases, highlighting the psychological factors that drive such decisions, like fear of losing gains or compounding losses. Drawing from his 2015 memo "Liquidity" and a conversation with his son Andrew, Marks emphasizes the importance of long-term investing, disciplined financial analysis, and relative selection—comparing potential investments—when deciding to sell. He cautions against market timing and the limitations of portfolio optimization models, concluding that sound investment decisions should be based on well-reasoned estimates of an asset's potential rather than emotional reactions or short-term market predictions, advocating for staying invested to benefit from long-term market trends and compounding.