There are two ways to approach the market. You can guess which direction prices will go in next, or you can figure out what businesses and their securities are really worth.
Howard Marks, the subject of our latest "Value Spark" interview, veers toward the latter camp. And the success of Oaktree Capital Management, which he co-founded more than 20 years ago and today has roughly $100 billion in assets under management, is predicated on that.
"As Ben Graham pointed out, the day-to-day market isn't a fundamental analyst; it's a barometer of investor sentiment," Marks noted recently in one of his widely followed memos. "You just can't take it too seriously."
Except that many do. Entire populations of market strategists, fund managers and economists are employed to try and intuit for clients which securities to bet on for the best possible return each year, or quarter.