Growth vs. Value: Investor Howard Marks: Why value investors do not necessarily have to do without Apple & Co. | message


Separation between value and growth is out of fashion

Buffett is no longer a 100 percent value investor either


 The  real value is not only measured by the inventory

Howard Marks was born in London on April 23, 1946 and currently lives in the United States. With a net worth of around 2.2 billion US dollars, the now 72-year-old is one of the 1,000 richest people in the world, according to Forbes. ©

 The  investor, writer, co-founder and co-chairman of Oaktree Capital Management, a Los Angeles-based asset management company that primarily operates in the private equity sector, is also known for his legendary memos, which he publishes several times a year on certain financial market topics.

Even Warren Buffett doesn’t miss a single memo

Howard Marks’ fans include multi-billion-dollar Warren Buffett. “When I see a memo from him in my mailbox, it is the first thing I open and read,” Buffett said of Marks’ transcript.

Howard Marks became famous not only for his popular memoranda but also for his two books, “Mastering the Market Cycle” and “©

 The  Most Important Thing”, which have become real must-reads in the financial scene. In keeping with this career path, few people on Wall Street enjoy more respect than Howard Marks. It also happens that his irregularly appearing memoranda is always given great attention.

Something of Value – Howard Mark’s latest memorandum


 The  latest memo by Howard Marks is entitled “Something of Value” which means something like “Something of Value” in German. ©

 The  author deals with the central differences between growth and value, although it was only through his son that he was made aware of the latest trends on Wall Street.

“As I reported earlier, is [mein Sohn] Andrew is a professional investor focused on long-term investments in so-called ‘growth companies’ and especially technology companies. He had a great 2020 and it’s hard to deny his success. Our coexistence [aufgrund der Pandemie] made me talk to him and think a lot about topics I hadn’t spent much time on, “said Marks in his introductory words to the memorandum.


 The se days, it’s often all about the prospect of ‘value’ investing. However, ‘growth’ stocks have outperformed their ‘worth’ by a significant margin over the past 13 years – so long that people have been asking me if it’s a permanent condition My extensive discussions with Andrew led me to the conclusion that the [Kampf zwischen Value und Growth] is not good for investors in the rapidly changing world in which we live, ”the author continued.

Howard Marks Grundprinzipien des Value-Investings

For Howard Marks, classic value investing is the key discipline in the investment world. This method “consists of quantifying what something is intrinsically worth, based mainly on its basic cash-flow generating capabilities, and buying it when its price is a significant discount from that value,” the expert said.

Marks does not see the key to success in a perfect mathematical calculation of the discounted cash flow or another valuation method, but rather in “making superior assessments with regard to the relevant inputs,” the investor continues. According to Marks, it is of key importance in this context that investors are always aware “that the securities they are buying are not just a piece of paper, but rather ownership interests in them [] actual company, “says Marks.

According to Marks, it is essential for good value investors to resist the emotional attraction of market cycles and only make decisions that can be fundamentally justified. ©

 The  basic principles of the billionaire can thus be easily summed up.

Investors should focus exclusively on the value and not on the price of a share, which also goes hand in hand with the fact that every value investor should have a strong emotional discipline. Also, according to the investment expert, value investors need to internalize that “attractive investments [erst dann] arise when there is a certain difference between the price at which something is offered on the market and the actual basic value.


 The  senseless struggle between value and growth

Howard Marks sees himself as a value investor, but in his memo he advises against making a strict distinction between value and growth investors. “At some point, camps of value and growth developed almost the same passion as rival political factions. ©

 The y have pledged allegiance to one or the other, and this is how they make their future investments. Believing their path is the only one, they looked to practitioners the other [Theorie] “says Marks, referring to the strict line between value and growth.


 The  expert pinpoints the differences between these two camps at a special point. While growth investors, according to Marks, have a strong belief in unproven business models that can suffer serious setbacks from time to time, value investors tend to focus more on today’s cash flows and assets.

Despite certain differences and differences between these two investment strategies, according to Marks, nothing speaks against merging the two strategies. “Either [Benjamin] Graham and Buffett achieved success with a variety of styles and viewed value investing primarily as adhering to fundamental business analysis separate from the study of market price movements, “said the expert.

Buffett’s inadvertent impact on the value scene

Marks also points out in this context that even Buffett, “the patron saint of value investors”, is no longer a 100 percent value investor, strictly speaking. ©

 The  expert mainly relates this to the recent investment in Apple, which is now one of the old master’s most successful investments.

“While Buffett has long understood that a company’s prospects are a huge part of its value, his career avoidance of technology stocks may have resulted in most value investors inadvertently boycotting these stocks,” said Buffett Marks.

Accordingly, Marks assumes that Buffett and Graham’s paradigms have led to the fact that the fronts between value and growth investors have hardened more and more. However, the expert considers a strict delimitation of these two theories to be nonsense.


 The re is a saying: ‘To the man with the hammer everything looks like a nail.’ ©

 The  much debated distinction between value and growth makes some people think they are just hammers, although they may have access to a whole toolbox. We now live in a complex world where a number of tools are required to be successful, “he said the financial market expert on the nonsensical distinction between value and growth.

Investors have to overcome old thought patterns

“Value investing doesn’t necessarily have to be about low-valued metrics. Value can be found in many forms. ©

 The  fact that a company is growing rapidly, relies on intangibles like technology for success, and / or has high P / E ratios , shouldn’t mean that “it’s not for value investors,” Marks said in the closing chapter of his memorandum.


 The  fact that one security has high valuations does not mean that it is overpriced, and the fact that another security has low valuations does not mean that it is a bargain,” continued Marks.

“When you find a company with a proverbial license to print money, don’t start selling their stock just because they’ve made some appreciation. You won’t find many such winners in your life, and you should get that out of those they find, “said Howard Marks in one of his closing remarks to the memorandum.

In conclusion, it can be stated that the quintessence of Howard Marks’ latest memo entitled “Something of Value” is that a strict separation between growth and value or between growth and value is no longer up-to-date. According to Marks, the fine art of investing is now rather to combine both investment strategies and not to separate them. Accordingly, both value and growth investors should now look beyond their perceptual horizon.

Pierre Bonnet / Redaktion

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