Alpha Ideas

I’m lucky to have received many gifts of investment insight early in my career.  Perhaps foremost among them is one I picked up in New York about 40 years ago, at a lunch meeting of what we called the Third Thursday Group.  It concerned the three stages of a bull market:

• the first, when only a few especially insightful people suspect improvement might occur,
• the second, when most people accept that improvement is actually taking place, and
• the third, when everyone concludes that things are sure to improve forever.

Between the first stage and the last, nothing has to have changed in terms of fundamentals.  The difference lies in the perspective investors are bringing to their decisions.  But clearly, it’s great to be a buyer in the first stage and essential not to be in the last.

–Howard Marks