By Carlos Santos
The chair at Oaktree gave
investors attending the sixth annual University
of Virginia Investing Conference yesterday a
powerful but simple lesson in investing.
“We should be moderate. We should
not be volatile. We should be reasonable,” said Howard Marks, chair of Oaktree
Capital Management, who is the author of The
Most Important Thing: Uncommon Sense for the Thoughtful Investor. “No asset
is so high in quality it can’t be overpriced and no asset is so low in quality
it can’t be underpriced.” That leaves smart investors with potential, he
In fact, he says, the stock market
swings like a pendulum, “always in the direction of one extreme. It’s fear
versus greed and optimism versus pessimism. It’s celebrating the positive or
complaining about the negative. … All we really need to know about this
business is that extremes are normal.”
Marks advises investors to “buy
when there is little confidence and sell when there is too much confidence.
Risk is when there’s too much confidence in the price of an asset,” he added.
The conference — which began
Thursday, 14 November, at the University of Virginia Darden
School of Business and concluded Friday, 15
November — brings in industry authorities from around the world who help
investors find the best strategies to deliver positive returns while tempering
risk. Investors and Darden students heard from a string of experts on
emerging markets, energy, the U.S. economy and technology. The Darden Center
for Asset Management hosted the event.
Technology stocks are riding high,
but is the sector dancing on a bubble? Shelby Bonnie, moderator of the tech
panel; Henry Ellenbogen, portfolio manager for T. Rowe Price; Scott Ferber, CEO
of Videology; and Ned Hooper, a partner in Centerview Capital, don’t think so.
Hooper said, “It’s fundamentally
hard to find growth in the marketplace right now. Investors are seeing growth
in tech, and the market is paying high multiples for that growth.”
But in the wild world of tech, change
can happen in months instead of years: “The consumer is one click away from going
with another startup,” said Ellenbogen. “The only thing to know about
technology is that changes happen fast.”
Good tech stocks to buy?
Google, even at this entry point,
and Netflix, the three experts said.
Kyle Bass, moderator of the energy
panel; Jody LaNasa, managing partner with Serengeti Asset Management; Wil
Vanloh, president and CEO of Quantum Energy Partners; and Michael Watzky,
managing partner of BP Capital Energy Advisors, touted the new developments in
oil and natural gas in the United States and the resulting investment
opportunities. New drilling technologies such as horizontal drilling and
fracking are opening up large new sources of oil and natural gas in the U.S.,
which has increased its oil production by an astounding 50 percent in the past
five years. Some analysts believe the country can be oil self-sufficient by
2020. The country is also shifting slowly to natural gas as a substitute for
diesel and coal.
LaNasa urged investors to explore
companies involved in building the infrastructure that will be necessary to
transport all that oil and natural gas for both use and export.
Two good ones?
He touts Williams Co., which is
building a gas pipeline in the northeast U.S. where huge pockets of gas have
been found, and Kinder Morgan, one of the largest energy infrastructure
companies in the world.
The conference also looked outside
the U.S. Joyce Chang, head of emerging markets for JP Morgan Securities, says
emerging markets “is no longer a dirty word.” In fact, emerging markets
“account for 50 percent of the contribution to global growth.”
About the Darden School of Business
The University of Virginia Darden
School of Business is one of the world's leading business schools, offering
MBA, Ph.D. and Executive Education programs. The unique Darden experience
combines the case study method, top-ranked faculty whose research advances
global managerial practice and business education, and a tight-knit learning
environment to develop responsible and complete leaders who are ready to make
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