저자: RodolfoCortes · 외국인
요약 보기
Howard Marks의 'Pendulum' 메모를 낭독·해설한 오디오북 영상. 투자자 심리는 탐욕과 공포 사이를 진자처럼 오가며 과열과 저평가를 반복하고, 시장 붕괴 직후가 최고의 투자 기회라고 설명. 2008년 위기 사례를 들어 공포가 극에 달할 때 기회가 온다고 주장. 특정 자산에 대한 1~3개월 방향 예측은 없음.
다듬은 글
Nine, the most important thing is to be aware of the pendulum. When everything is going well and prices are high, investors rush to buy, abandoning all prudence. Then, when chaos reigns and assets are exposed on the bargain counter, they lose all willingness to take risks and rush to sell. And it will always be like that.
The second memo I wrote in 1991 was almost entirely dedicated to a subject I have thought about more and more over the years: the pendulum swing of investors' attitudes and behaviors. The mood swings of the securities markets resemble the movement of a pendulum. Although the midpoint of the arc is what best describes the location of the pendulum, on average it actually spends very little time at that point.
Instead, it is almost always oscillating between the extremes of its arc. However, whenever the pendulum is near one of the extremes, sooner or later it inevitably returns to the midpoint. In fact, it is the movement towards one extreme itself that provides the energy for it to swing to the other extreme.
Investment markets oscillate in a similar way. A pendulum swings between euphoria and depression, between celebrating positive events and obsessing over negative ones, and thus between overvaluation and undervaluation. This oscillation is one of the most reliable characteristics of the investment world, and investors' psychological factors seem to lead them to spend much more time at the extremes than in a good middle ground.
Thirteen years later, in another memo, I revisited the subject of the pendulum at length. In it, I observed that, in addition to the elements mentioned earlier, the pendulum also oscillates between greed and fear, between the willingness to see facts through an optimistic or pessimistic filter, towards faith in future events, between credulity and skepticism, and between tolerance and aversion to risk.
This last oscillation, related to risk attitudes, is a common characteristic of many market fluctuations. Risk aversion is the main ingredient of a rational market, as I said before, and the pendulum's position in relation to it is particularly important. An inadequate version of risk is one of the main factors in market excesses and subsequent bubbles.
To say that low risk aversion is the inevitable characteristic of bubbles during crises is an oversimplification, but not a serious one. On the other hand, investors are excessively fearful; this excessive risk aversion prevents them from buying even when prices don't reflect optimism, only pessimism, and when valuations are absurdly low.
In my opinion, the greed-fear cycle is caused by a change in attitude towards risk when greed predominates. This means that investors feel extremely comfortable with risk and the idea of taking it to obtain higher profits. On the other hand, widespread fear indicates a high degree of risk aversion.
Academics see investors' attitudes towards risky situations as a constant, but it certainly has great variability. Finance theory strongly depends on the assumption that investors are risk-averse, that is, they do not prefer risk and must be induced or coerced into taking it by the promise of higher desired returns.
Obtaining very high returns from risky investments is an oxymoron. But there are times when this caveat is... Ignored when people are too comfortable with risk, and therefore when asset prices incorporate an inadequate premium to compensate for the risk investors are taking. When investors in general are very risk-tolerant, asset prices may incorporate more risk than returns.
When investors are very risk-averse, prices may offer more returns than risk. The pendulum swing in relation to risk attitudes is one of the most powerful, which is why I recently limited the main risks of investing to two: the risk of losing money and the risk of missing opportunities. It is possible to eliminate either of them almost entirely, but not both.
In an ideal world, investors reconcile these two concerns, but from time to time, at the extreme points of the pendulum's swing, one of them ends up predominating. For example, in 2005, 2006, and the beginning of 2007, with things going so well and the capital market quite open, few people imagined that there would be losses just ahead.
Many believed that there was no more risk; their only concern was missing an opportunity if Wall Street invented some new financial miracle and other investors bought it, and even if the miracle worked, they would end up... While they seemed very conservative and would lose ground, as they weren't concerned about losing money, they didn't insist on low prices, adequate risk premiums, or investor protection.
In short, they behaved extremely aggressively. Then, at the end of 2007 and into 2008, amidst the credit crisis, people began to fear a complete collapse of the global financial system. Nobody worried about missing opportunities anymore; the pendulum had swung to a point where people could only worry about loss.
Therefore, they started to flee from anything with the slightest glimmer of risk, regardless of potential return, and sought the safety of government bonds with near-zero yields. At that point, investors became extremely fearful, selling quickly and creating very defensive portfolios. Thus, the last few years have offered us an extraordinarily clear opportunity to witness the pendulum swing and see how most people consistently do the wrong thing at the wrong time.
When everything is going well and prices are high, investors rush to buy, abandoning all prudence. Then, when chaos reigns, assets are exposed on the over-the-counter market. Bargain hunters lose all willingness to take risks and rush to sell, and it will always be like that. Early in my career, a veteran investor told me about the three stages of an autistic market; now I will share them: first, when some people with a forward-looking vision begin to believe that things will get better; second, when most investors realize that improvement is actually happening; and third, when everyone concludes that things will always get better.
Why waste time looking for a better description? The following text explains it, and it's important that we understand its meaning: the market has a mind of its own, and changes in asset valuation parameters, mainly caused by the psychological changes of investors—not changes in fundamentals—account for most short-term changes in asset prices.
These psychological factors also oscillate like a pendulum. Stocks are cheaper when everything seems bleak, the scenario depressing; they are cheap, and only a few shrewd and courageous bargain hunters are willing to take new positions, perhaps because they attract some attention when bought, or perhaps because the scenario has become a little less depressing for one reason or another.
It starts to rise, then after a while the scenario begins to look a little less pessimistic, people start to notice improvements and no longer need many excuses to buy. Of course, as soon as the economy and the market emerge from the crisis, they start paying prices that better reflect the fair values of the shares, and in due time Tonti returns to the market, encouraged by the improvement in economic and corporate results.
People are willing to extrapolate this; the masses become excited and envious of the profits obtained by investors who arrived earlier in the market and want more. Furthermore, they ignore the cyclical nature of things and conclude that profits will continue to exist forever. That's why I love the old saying: "Whatever the wise man does at the beginning, the fool does at the end." There is something more important in the final stages of large autistic markets: people are willing to pay high prices for stocks, assuming that this good period will last forever.
35 years after I learned about the stages of an autistic market, after the weaknesses of subprime mortgages and their holders were exposed, and while people were... Concerned about a global crisis due to contagion, I decided to describe the other side of the coin. This is the three stages of a bearish market: first, when only a few sensible investors recognize that despite the prevailing rise, things won't stay good forever; second, when most investors recognize that things are deteriorating; and third, when everyone is convinced that things can only get worse.
We are certainly in the second stage of these three. There has been much more news and downturns. People are increasingly recognizing the dangers inherent in things like innovation, leverage, derivatives, counterparty risk, and mark-to-market accounting. Furthermore, the problems seem increasingly insurmountable.
One of these days, however, we will reach the third stage. And people will give up looking for a solution, and unless the financial world truly ends, it's likely we will find the best investment opportunities of our lives. The biggest downturns occur when everyone forgets that the tide also rises again.
We live for these moments only. Months after I wrote this text, events had already led us to the third stage. At that moment, a total collapse of the world financial system was considered possible; in fact, the first... The steps had already occurred: the bankruptcy of Lemman Brothers and the absorption or rescue of Berkshire Hathaway, Mario Lint, Aig, Fanny May, Fred McChovah, and Vamu.
As this had been the biggest crisis of all time, investors, more than ever, adhered to the third stage, during which everyone is convinced that things can only get worse. Thus, in many asset classes, the events determined by the pendulum swing, namely the decline in prices in 2008, the investment opportunities at the lowest point, and the profits in 2009 were the greatest I have ever seen.
The key to all this lies in the opportunity it offers to those who understand the events and see their implications. An example of the pendulum: the darkest period requires anticipatory skill, objectivity, and even imagination. Things can be unusual and low, and prices can reach impossible levels. Eternal improvements are established; the scenario of painful losses is established.
Everything happens together; none of this is an isolated event or a casual occurrence; all are, in fact, elements of a recurring pattern that can be understood and exploited. The pendulum swing of... Investor behavior is very similar to the fluctuating highs and lows of economic and market cycles described in Chapter 8.
For some reason, I find myself making a distinction between the two and speaking of them in different terms, but both are important, and the main lessons from both are the same, with the advantage of almost 20 years of experience since I wrote the first memo on the pendulum in 1991. I have reformulated its main observations into theory.
Regarding polarities such as fear and greed, the pendulum should remain longer at a midpoint between the extremes, but it doesn't stay there for very long, mainly because of how investors' psychological factors work. Generally, the pendulum is swinging towards one of its extremes or away from them. The pendulum cannot continue to move towards a single extreme, or it will remain there forever.
Although people often describe the pendulum's maximum point as a permanent condition, similar to a pendulum, the emotional oscillation of investors towards one of the extremes leads to an accumulation of energy that will ultimately contribute to the... Sometimes the energy accumulated in the pendulum swings to the other extreme.
Sometimes the energy that causes the change in direction, that is, the oscillation of the pendulum towards one extreme, is corrected by its own weight. The return movement is generally faster and therefore takes much less time than the oscillations that take the pendulum to the extreme. Or, as my partner Sheldon Stone often says, the air leaves the balloon much faster than it entered.
The occurrence of this pendulum-like pattern is extremely reliable in most market phenomena. However, just as with the oscillation of cycles, we never know what the maximum point of the pendulum's oscillation arc will be. This can cause the movement towards one extreme to change direction, at what point the reversal will occur, or what its maximum point will be in the opposite direction.
For a trend phase to occur, the environment must be characterized by greed, optimism, exuberance, confidence, credulity, boldness, risk tolerance, and aggressiveness. But these characteristics will not govern a market forever; the time will come. which will be replaced by fear, pessimism, prudence, uncertainty, skepticism, caution, risk aversion, and reticence.
Crises are a product of booms. I am convinced that it is generally more correct to attribute a crisis to the excesses of the bundu, which is the specific event that triggers the course correction. We can be certain of few things; this is one of them: the extreme behavior of the market will be reversed.
Those who believe that the pendulum will forever remain in the same direction or will stay at one extreme indefinitely will lose large sums at one time or another. Those who understand pendulum behavior may reap enormous benefits.
Comments 0