The World's Greatest Investors Are Sounding The Alarm... It's Time To Be Cautious

The World's Greatest Investors Are Sounding The Alarm... It's Time To Be Cautious
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Authored by Simon Black via SovereignMan.com,

Howard Marks is one of the greatest investors in history.

Marks is the founder of the credit investment firm Oaktree Capital Management. And he's been sharing his insights with the public in his Chairman memos since 1990 (which you can read for free on his website).

Even Warren Buffett stops what he's doing when Marks releases a new memo… Buffett says it's "the first thing I open and read."

Marks' latest memo, titled The Seven Worst Words in the World, came out last week. And those seven words are – "too much money chasing too few deals."

As you probably guessed, Marks is talking about how overheated the market is today and the end of the economic cycle.

He starts the memo by recounting the days leading up to the Gobal Financial Crisis, when Oaktree started turning cautious…

"The economy was doing quite well. Stocks weren't particularly overpriced. And I can assure you we had no idea that sub-prime mortgages and sub-prime mortgage backed securities would go bad in huge numbers, bringing on the Global Financial Crisis…

[A]lmost every day we saw deals being done that we felt wouldn't be doable in a market marked by appropriate levels of caution, discipline, skepticism and risk aversion. As Warren Buffett says, "the less prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs." Thus the imprudent deals that were getting done in 2005-06 were enough reason for us to increase our caution."

Sound familiar?

Today, like in the days leading up to the Global Financial Crisis we're seeing lots of inconsistencies in the market…

Two stocks, Apple and Amazon, are responsible for nearly 30% of the S&P 500's gain so far this year.

And investors are ....

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