Customer Quote by Howard Marks
““This paradox exists because most investors think quality, as opposed to price, is the determinant of whether something's risky. But high quality assets can be risky, and low quality assets can be safe. It's just a matter of the price paid for them...Elevated popular opinion, then, isn't just the source of low return potential, but also of high risk.””
About This Quote
Source Letter: 2023 Annual Investment Outlook, 2023
Investors often equate high quality with low risk, but risk is actually driven by price; cheap assets can be risky, expensive ones safe.
In simple terms: Risk depends on price, not just quality.
Key Takeaway
Assess risk by price paid.
Themes
investment
risk
valuation
Mood
analytical
cautious
Type
advisory
analytical
When to use this quote
- stock selection
- portfolio construction
- market timing
Key Concepts
price theory
behavioral finance
Questions to Reflect On
- Do you evaluate assets by price or intrinsic value?
A Different Perspective
Price signals can be misleading without context.
