Howard Max's 9 Laws of Investment

Howard Max's 9 Laws of Investment

Howard Max is the founder of Oaktree Capital,
Its operating assets amount to $170 billion.

Let's take a look at his notes at nine key investment laws

1. Focus on intrinsic value

The price tells us what people are willing to pay,
It doesn't tell you the value of a company.

Smart investments should be able to anticipate the intrinsic value of a company.

The higher the intrinsic value for the price, the greater the opportunity.

2. Take advantage in the cycle

The economy and finance move within the cycle.
The cycle comes and goes at the end of pessimism and optimism.
You have to take advantage of these extreme points.

3. How dare you not be popular

Only unpopular assets can be said to be truly cheap.
When a company is facing short-term headwinds is the best time to buy.
This does not guarantee success, but it does reduce the chances of expensive spending.

4. Beat your luck

Be wary of lucky cases.
Even if the odds are on your side, it doesn't guarantee success.
The best way to protect your account is to think long term.

5. "I don't know anything"

There are people in the world who say "I know" and people who say "I don't know."
The former believes that they can predict it,
The latter is not the case.
Wise investors belong to the latter.

6. Be flexible (sometimes)

Distinguish between when to be flexible and when not!
Make your investment philosophy, goals, and strategies clear,
Be flexible with your investment assets and thinking about your company.

7. Ready

Keep a list of companies you understand and like
Wait for the headwinds, re-evaluate those companies, and buy them when you think it's appropriate.
Don't try to find new opportunities,
Make those opportunities come to you on their own.

8. Bad times make for good experiences

A good time can only be a bad experience.
You always learn from your mistakes,
Ideally, learn from others' mistakes.

But the longest lasting lesson is learning from experience.

9. Invest defensively

"Defensive investment" means to invest while worrying.
The element of defensive investment is
1) patience to wait until a certain price is reached
2) Variance instead of concentration
3) There is an avoidance of dependence on economic forecasts.