Investors are playing the waiting game for Tuesday, a day ahead of what could be a pivotal consumer prices report. <\/p>\n
\u201cOver time, it takes just a few winners to work wonders.\u201d That\u2019s what one of the world\u2019s most widely followed investors, Berkshire Hathaway\u2019s Warren Buffett, told investors earlier this year. Some of his big victors have included Apple, which he bought in 2016, or Coca-Cola in 1988 \u2014 clearly those early investments have paid off.<\/p>\n
Our call of the day<\/strong> comes from another legend, Oaktree Capital Management\u2019s co-founder and co-chairman Howard Marks, who offers insight about how he made his best ever calls \u2014 five in 50 years \u2014 along with a key mistake for investors to avoid. <\/p>\n First, the latter. In a new note to investors, Marks addresses whether it\u2019s worse for investors to buy at the top or sell at the bottom. \u201cIf you buy at what later turns out to have been a market top, you\u2019ll suffer a downward fluctuation,\u201d he says. If the long-term thesis on that stock is intact, the next top will usually beat the last so investors will usually come out ahead, he adds.<\/p>\n \u201cBut if you sell at a market bottom, you render that downward fluctuation permanent, and even more important, you get off the escalator of a rising economy and rising markets that has made so many long-term investors rich. This is why I describe selling at the bottom as the cardinal sin of investing,\u201d he says.<\/p>\n As for his five good calls, Marks says the first was in January 2000, when he warned of a tech bubble that was about to burst because, simply, \u201cstock prices had become unsustainably high.\u201d The bursting came later that year. <\/p>\n In July 2007, he warned clients that \u201cskepticism, fear and risk aversion\u201d were in short supply as many were stuck believing the housing market would only go up. Oaktree made big defensive moves in its investment portfolio ahead of the crash that would arrive eight months later. <\/p>\n Another call came in late 2008, when Oakmark decided to invest aggressively, ignoring the aversion to put money to work as fallout from Lehman\u2019s bankruptcy swept across the markets. \u201cThere was too much fear and too little greed, too much pessimism and too little optimism, and too much risk aversion and too little risk tolerance,\u201d he says.<\/p>\n He also warned clients of excessive negativity around stocks in 2012, which worked in favor of those willing to take a contrarian stance. \u201cOnce again excessively negative sentiment had resulted in major gains. It\u2019s as simple as that,\u201d he said. The S&P 500 returned 16.5% a year from 2012 to 2021.<\/p>\n His last big call came in March 2020, when Marks cautioned about emotional stock selling fueled by panic over the COVID-19 pandemic. Indeed, equities eventually bounced. \u201cWhen the knee-jerk reaction of most investors is to stand pat or sell, a contrarian decision to buy might be well called for,\u201d he said. <\/p>\n Marks says a pattern emerges for investors, the main one being that they shouldn\u2019t try to make too many big calls too often.<\/p>\n \u201cYou have to pick your spots \u2014 as Warren Buffett puts it \u2014 wait for a fat pitch,\u201d said the investor. \u201cMost of the time, you have nothing to lose by abstaining from trying to adroitly get in and out of the markets: you merely participate in their long-term trends, and those have been very favorable.\u201d<\/p>\n Investors need to remember that in extreme times, \u201cthe secret to making money lies in contrarianism and conformity,\u201d said Marks. But to be a successful contrarianist, one needs to \u201cunderstand (a) what the herd is doing, (b) why it\u2019s doing it, (c) what\u2019s wrong with it, and (d) what should be done instead and why.\u201d<\/p>\n More advice? Realize that much of what happens in markets and economies is not part of a mechanical process but really down to the back and forth of investor emotions. \u201cTake note of the swings and capitalize whenever possible,\u201d he said. With that, resist one\u2019s own emotionality and finally look out for \u201cillogical propositions.\u201d For example, a view that stocks are down so much no one wants to buy. <\/p>\n Stocks opened higher, with Treasury yields TMUBMUSD02Y, For more market updates plus actionable trade ideas for stocks, options and crypto,\u00a0subscribe to\u00a0MarketDiem by Investor\u2019s Business Daily.<\/strong><\/p>\n After announcing 10,000 jobs will go earlier this year, Microsoft A leading U.K. fund manager dumped his Amazon Read: <\/strong>20 of the absolute best deals you can get now on Amazon Prime Day that starts Tuesday<\/p>\n Shares of Better Therapeutics Viridian Therapeutics stock The National Federation of Independent Business June optimism index topped forecasts.<\/p>\n Sweden is set to join NATO after Turkey removed its objections.<\/p>\n What exactly are flash floods, like those hitting New York this week?<\/p>\n Supreme Court Justice Sotomayor\u2019s staff prodded colleges and libraries to buy her books<\/p>\n When a freight train blocks your town and the government won\u2019t do anything<\/p>\n These were the top-searched tickers on MarketWatch as of 6 a.m.: <\/p>\n South African city sees snow for the first time in 11 years.<\/p>\n Passenger reportedly enraged over meal choice on Houston flight to Amsterdam forces diversion to Chicago.<\/p>\nThe markets<\/h2>\n
\n TMUBMUSD10Y,
\n
\n
\n tilting lower and the dollar
\n DXY,
\n
\n weak \u2014 the pound
\n GBPUSD,
\n
\n hit a 15-month high above $1.29 on surging wage growth. Oil prices
\n CL.1,
\n
\n aremodestly up. <\/p>\nThe buzz<\/h2>\n
\n MSFT,
\n
\n is making more cuts.<\/p>\n
\n AMZN,
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\n stake because of one key investment by the e-commerce giant. <\/p>\n
\n BTTX,
\n
\n are up 46% ahead of a conference call Tuesday morning after the company got Food and Drug Administration approval for a smartphone-based diabetes treatment. <\/p>\n
\n VRDN,
\n
\n is down 14% after the biotech drugmaker announced changes to its study design for a chronic thyroid eye disease therapy.\u00a0<\/p>\nBest of the web<\/h2>\n
The chart<\/h2>\n
Top tickers<\/h2>\n
\n
\n \n Ticker<\/p>\n<\/td>\n \n Security name<\/p>\n<\/td>\n<\/tr>\n \n \n TSLA,
\n \n Tesla<\/p>\n<\/td>\n<\/tr>\n \n \n NIO,
\n \n Nio<\/p>\n<\/td>\n<\/tr>\n \n \n MULN,
\n \n Mullen Automotive<\/p>\n<\/td>\n<\/tr>\n \n \n GME,
\n \n GameStop<\/p>\n<\/td>\n<\/tr>\n \n \n AMC,
\n \n AMC Entertainment<\/p>\n<\/td>\n<\/tr>\n \n \n NVDA,
\n \n Nvidia<\/p>\n<\/td>\n<\/tr>\n \n \n AAPL,
\n \n Apple<\/p>\n<\/td>\n<\/tr>\n \n \n PLTR,
\n \n Palantir Technologies<\/p>\n<\/td>\n<\/tr>\n \n \n RIVN,
\n \n Rivian Automotive<\/p>\n<\/td>\n<\/tr>\n \n \n AMZN,
\n \n Amazon.com<\/p>\n<\/td>\n<\/tr>\n<\/table>\n Random reads<\/h2>\n