Marks Takes the Market's Temperature

Stipp: Last question for you, Howard, is more of a personal one. You've been watching the markets for a long time. You've been studying the swings that occur and recur, but at the end of the day we're all human beings and we're subject to emotions. I am just wondering how you as an investor are able to walk away from those emotional urges. It's easy to say, "Buy low and sell high," but when the time comes it can be a tough thing to do.

Marks: I think that you're right. It's very important, and it's very tough. I think it helps to associate with likeminded people, and my partners and I buttress each other. We keep each other calm in heated times when the market booms and we keep each other more collected in tough times. In 2005, '06, '07, precrisis, we spent most of our time going into each other's office and saying, "Hey, look at this deal. This is crazy. How did this deal get done?" When you can see the deals that are unwise and shouldn't be done are getting done, and that's a way to take the temperature of the market, so we cool each other off.

Then when things collapse and there is a tendency to lose heart, we remind each other how good the values are. Now, of course, I've been doing this for 45 years, and my team and I have been through three crises in the debt world in 1990, '02, and '08. When you've been through a few crises, then you start to realize that things don't just collapse and stay there. They tend to come back, which means that the low prices are more of a signal to buy than a fear factor telling you to get out. I think that experience, understanding the issues and the health of, let’s say, a support network.