Motley Fool Money - “When” is a Dangerous Word

Episode Date: December 15, 2020

With the market on track to finish up for 2020, some investors are already asking when the next downturn will come. Howard Marks, co-founder of Oaktree Capital, explains why “when” is a word investors should avoid.   Learn more about your ad choices. Visit megaphone.fm/adchoices

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And you can get unlimited expert help at no extra cost, even on nights and weekends during tax season. Visit turbotax.com to get matched with an expert today, only available with TurboTax full service experts. With the Motley Full Money Extra, I'm Chris Hill. With just a couple weeks left in 2020, it's fair to say this has been an unusual year for investors. When you think back to how much stocks fell in March and April, it's almost hard to believe that the S&P 500 is on track to finish the year up around 10%. Of course, now the question a lot of people are asking is, when's the next downturn?

And that is a question Howard Marks does not want to hear. is the co-founder of Oak Tree Capital, one of the biggest money management firms in the world. In the fall of 2018, he spent a little time talking with my colleague Bill Mann and shared why the word when can be a dangerous one for investors. It should be clear by now to everyone that the swings in popularity are unpredictable. And if they are, then most forecasts are not going to work. So the next concept is that people say to me, okay, when will the market turn down? And I never answer a question that starts with the word when.

In the investment business, sometimes we know what's going to happen. We never know when. And so I would dispense with that immediately. You must accept the ambiguity in the situation and accept the need to live with uncertainty. And that's why in the book, I say there are certain words that every good investor should drive out of his vocabulary. Things like never, always, must, can't, has to. You know, these words are out. Yeah.

You know, we can talk about likely events. We can talk about probabilities more and less likely, but we can never say has to or won't. I'm Chris Hill. Thanks for listening. We'll see you next time.