A pattern of cycles

Great investment thinkers are hard to find. I’m talking about the really great ones, not the ones writing useless but catchily titled blogs.

I don’t any professional investors would argue with me here, but three of the best active investors these days are Howard Marks, Ray Dalio and Francisco Parames. They all come at investing from different angles, and none are household names, but their words have cult like status in investor circles.

Coincidentally, all three have written books on investing this year.

In no particular order of favouritism:

1. Howard Marks runs Oaktree Capital Management with $122 billion under management. He takes a value oriented approach, but his investments span high yield debt, distressed debt, special situations in addition to the usual value investing bread and butter of equities.

Two months ago he published: Mastering The Market Cycle: Getting the odds on your side US UK. The basic thesis is understanding economic cycles.

2. Ray Dalio founded Bridgewater Associates, with $124 billion under management. Starting with currency trading and then moving into bonds, over thirty years Ray has built his alpha seeking, quick moving firm into the world’s largest hedge fund. This year he published Big Debt Crises US UK. The book outlines how he thinks about the role of debt in creating predictable economic cycles.

3. Francisco García Paramés a bona fide, dyed in the wool, old school value investor, is one of the best known European investors, referred to as the Spanish Warren Buffett. I myself have done well out of studying his ideas. He was the cornerstone of one of the most respected value investing firms, Bestinver, but recently left to set up his own shop Cobas. Given that he is in mid-50’s and value investing is a game best played by those with experience, I’m sure we’ll be hearing about him for decades to come. This year he brought out the book, Investing for the Long Term US UK. It relies on the practical Austrian School of Economics and the obvious explanations for market cycles. Parames himself successfully survived both the (first) tech bubble and the 2008 crisis.

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Do you see the pattern yet? All three mega investors have different investment approaches but are thinking deeply about cycles - market cycles, the natural ebb and flow of our economy.

None of them is an economist by training, so I think it’s interesting 10 years after the 2008 financial crisis, all three great investors are spending time thinking about economic cycles.

Happy Reading! Don’t forget to order and READ all three books as a gift to your future economic well being.

Thanks,
Mallika