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thank you very much for your time to join top investors talk again Howard and in June 2022 you told word that it is time to turn aggressive again when the market is still selling off so what is the temperature of the market now in June of 22 there's no place one can go to look for the answer to these questions the you know these are all uh a matter of my own perception but it felt to me that in June of 22 what investors were saying is look there's inflation and that's bad to fight the inflation perhaps the FED will increase interest rates that will produce a recession and that's bad so in other words there's it's all bad there's no possibility of good news and when investors feel that way they sell things too cheaply that's when we want to participate our greatest goal is to buy things for less than they worth and to do that you have to have sellers who are willing to sell things for less than their worth and usually that comes from Panic on the other side so I like to point out and maybe it'll be uh helpful to your viewers that in the real world things tend to fluctuate between pretty good and not so hot the pendulum swings like this but in in Market psychology it swings from Flawless to hopeless and When Things become not so hot but psychology goes to hopeless that's a great time to buy and now I think things are roughly in Balance I think investors are not panicked anymore and so oaki is operating in its normal fashion not uh not highly aggressive not highly defensive to depart the crowd if you want to be superior but how how I can't tell you that's the key because there is no technique or algorithm or formula or method that will produce Superior performance the greatest investors in the world couldn't write out a prescription that will permit the average investor to be superior it's a matter of it's a matter of perception experience knowledge uh emotional control which not too many people have and and patience as I mentioned an accurate feel it's feel it's feel so the point is there's no methodology and that's why I can't give you suggestions which if implemented are sure to lead to success because those suggestions don't exist yes but sometimes the consensus are right right yes sometime sometimes the consensus is Right which means you can't improve upon that the The Importance of Being different is that sometimes the con ensus is wrong and if you can detect those times and move in the proper direction you can do better than the consensus that's this idea you mentioned Ivan of the importance of being different and what are the main mistakes that the consensus makes and they are emotional when everybody else is jumping out a window it's not easy to say no things aren't really that bad people are overdoing it they're panicking and selling I'm going to buy this is called contrarian this is very beneficial if you can do it but it's not easy I remember in 2020 or maybe 2021 you wrote a memo about the growth stocks and the value stocks it's a very impressive we saw some very big names very big Tech names have experienced a very brutal sell today so how do you see the value of this big names now Ivan first of all before I answer your question it's important to me to tell uh your audience that I don't believe in forecasts especially my own now having said that I'll answer your question as far as I know these leading tech stocks we talk about the fs Facebook Apple Amazon Microsoft Google but my perception is they did by far the best in the 2021 rally I believe that these stocks which did by far the best in the rally were punished the most in the correction many of them were down 50 to 70% uh tech stocks in general not necessarily those those five and now I think they're essentially fairly priced relative to everything else but let let's let's agree on one thing between the two of us what matters is not what's going to happen in the next few months and as as your viewers and the people of Shanghai increasingly become investors and I think it's important that I stress that what matters is the long- term nobody knows what's going to happen in the next three six 12 months but the question is can you find stocks and companies that will be great for the long term and can you can you invest in those companies and stay with those Investments for five 10 20 years that's how you make money I told to agree with you and we should pay more attention on the long term but what are things really matter now well look the market has changed over my 53 years in the sense that when I started you had the feeling that what mostly made stocks go up and down was how the companies did today investors are much more preoccupied by what we call the macro which means economics interest rates inflation currencies government policies International Affairs geopolitics so macroeconomics and policy that's one then number two things have been greatly moved this year by geopolitics and world affairs because uh geopolitics is not just standing still and is it is not just a benign uh influence or a stable influence it's volatile and it's changing up and down and of course there are negative events occurring in geopolitical Affairs so are we heading to recession within the bounds of my limitations on forecast Ivan I would say probably yes as I as I just finished saying the FED is trying to weaken the economy to reduce inflation to a a tolerable level without making it so weak that it falls into recession and historically speaking uh this has been very difficult it hasn't worked most times but again I want to caution you and your audience the important thing is not yes no it ansers to your question yes ref recession no ref the important question is if there's a recession how bad how long and my naive view tells me that it will not be too strong a recession and will not last too long because the especially because the Dynamics of of Labor demand are so strong you know Howard you said that in investing is a very interesting thing since it is easy to be averaged just by some ETF right but very hard to be above average so tell us do you think what are the three most important thing if you want to be superior in this industry well one way that that your audience can be different from most other investors and and uh hope to achieve superiority is by being long-term oriented and patient and most people have become very short-term oriented in the last well since I've been in this business and they hold the things they hold for very short periods of time number two have reasonable expectations everybody thinks about I'm going to buy this stock and double my money I'm going to buy that stock and triple my money if you can make 10% a year for 20 years one Ren minb will become eight through the process we call compounding that's a great accomplishment and then I think the last thing is you have to you know there are people who go on shows like yours and their approach seems to be to explain to people how easy it is to invest my Approach is to explain how hard it is you either have have to have reasonable moderate Investments like number two or if you want to be exceptional you probably have to hire managers and that's number three uh so I I would say you know I don't know when you say what are the three secrets you might expect me to say buy technology or buy uh a shares or invest in biotech but that's not what I say long-term reasonable expectations hire what you hope are superior managers if you want to be above average we are running out of time and let's talk something about China how are you made your name in the past 53 years by investing something people called uninvestable so what is your feeling when people say China is an uninvestable Place well as usual Ian your question is very appropriate and uh uh I always enjoy answering your questions and we always run out of time I might add but you're right in 1988 Bruce K and I moved into distress debt and people would say what are you crazy you're gon to you're going to invest in the Securities of companies that are bankrupt and so forth and the answer is that the bargains are found on the pile of things people don't know know about and we can sum that up with the word uninvestable and in formulating your question people have been saying that China is now uninvestable and uh as you know oak tree and I uh and my colleagues have been uh interested in investing in China for almost 25 years about seven years ago we began to invest in corporate loans real assets npls uh We've made uh investing joint ventures with many institutions in China had very good results we have tended to do more every year and uh now our investment total in China has reached uh 40 billion renman B and we're continue to invest even within the the recent year uh We've made some of our biggest Investments so we're hopeful that China will regain a path of growth uh under the central leadership that the uh that the economy will resume its path and we're hopeful that the international tensions that are causing some of these attitudes toward Chinese Securities we're hoping those tensions will be resolved Oak expertise is doing something people called uninvestable which means that you require an excellent environment of rule of law what is your experience in China we know that you have some deals with China's property developer which is in trouble now well you're right to highlight this as a creditor essentially that means we're promised money when you are a creditor they the borrower promises you interest and promises you your money back at some point in time and that if they don't pay you the interest and your money back then you have legal actions you can take to uh maximize your recovery it is essential that the rule of law operate so that the creditor's rights uh can be enforced and as long as I've been visiting China I've been meeting with the leaders uh and stressing the need for the rule of law and I have only received complete agreement from the leaders that I have spoken to and uh I don't talk extensively about our actual Investments that are underway Ian but uh you know so far I can I'm pleased to say that the right things are happening and as far as as we would say the rule of law is being uh respected and our position as creditor who has was promised money and has not been paid has been respected and we are optimistic that we are on the right track and will continue to be
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