Howard Marks & Joel Greenblatt: Is It Different This Time?

Published on
February 12th, 2021
62 minutes

Russell Napier: Growing Wealth in an Inflation Avalanche

Howard Marks & Joel Greenblatt: Is It Different This Time?

The Interview ·
Featuring Joel Greenblatt and Howard Marks

Published on: February 12th, 2021 • Duration: 62 minutes

Howard Marks, co-founder and co-chairman of Oaktree Capital Management, welcomes Joel Greenblatt, founder and co-CIO of Gotham Asset Management, for an exploration on whether market exuberance is rational or irrational. Marks contends that the current investor optimism is largely a man-made artifact of monetary policy in order to stave off an economic recession. Greenblatt argues that mega-cap tech stocks like Amazon, Alphabet, and Microsoft are reasonably valued despite their remarkable price appreciation. Marks and Greenblatt agree that the Fed’s promise to keep rates low for many years is a true gamechanger in the valuation of assets, and they discuss whether high inflation could change this. Lastly, Marks and Greenblatt compare different styles of investing and share timeless lessons they have learned over the course of their careers in finance. Marks and Greenblatt discuss ideas from Marks’ latest memo, “Something of Value.” To read this memo, click here: Filmed on February 5, 2021.

Key learnings:
Marks and Greenblatt contend that the prospect of sustained low-interest rates may indeed mean that “this time is different,” and that optimistic valuations may be justified by the lowering of the “discount rate” by which future cash flows are priced in the market. Nevertheless, market optimism is very high, so having a sufficient margin of safety when allocating capital is absolutely necessary.



  • WH
    William H.
    25 February 2021 @ 10:57
    37:40 - re 30 year bonds. Why give away convexity?
  • MP
    Mark P.
    23 February 2021 @ 01:48
    Sorry that I'm coming on to this a bit late but I'd humbly suggest reading Mr. Marks memo, "Something of Value." He is a very lucid thinker with lots of experience and, as bonus, a pretty good writer.
  • DD
    Daniel D.
    20 February 2021 @ 21:55
    Two extraordinarily successful and humble investors and true gentlemen of the old school sharing their respective wisdom. Thank you and I hope you young(ins) appreciate the shared knowledge.
  • AA
    Alexander A.
    18 February 2021 @ 22:39
    Two of the greatest of all time. I couldn't help but wonder how this conversation would have been different if the Fed hadn't stepped in on a massive scale last March.
  • TE
    Tom E.
    17 February 2021 @ 11:02
    Class. Both leave such a rich library of valuable writings. This interview is a small snippet.
  • NT
    Nestor T.
    15 February 2021 @ 23:15
    Honestly, I was expecting a much more insightful discussion from such accomplished investors. They say nothing new.
    • JS
      Jordan S.
      16 February 2021 @ 02:18
      sometimes its helpful to hear the same thing.
    • CD
      Christopher D.
      16 February 2021 @ 22:04
      sometimes its helpful to read the same thing.
  • PM
    Pascal M.
    16 February 2021 @ 17:37
    Flee! Sell! Now the fundamental Makro value investors even wanna buy FAANG stocks!!!
  • JT
    Joseph T.
    15 February 2021 @ 17:49
    What a privilidge to be a fly on the wall.
  • CM
    Chris M.
    14 February 2021 @ 20:01
    They cannot fathom the system which worked for them will inevitably cease to exist. Fundamentals matter but not in a system without transparency and integrity. Tell me one corrupt system throughout history that is still surviving today?
    • PP
      Peter P.
      15 February 2021 @ 13:52
      Respectfully disagree - Marks/Greenblatt understand the system which worked for them will cease to exist, what they are leaving here is the way to look at things once what comes next gets up & running (as that will not change - IMHO it is not their views that are broken but the markets -> to your point that all systems get corrupted and then fail.) Mr. Marks once wrote a letter on Gold - I paraphrase poorly - but pointing out that at the level of his wealth, if he converted it to Gold, he certainly could not carry it, nor even move it, and would rely on society to maintain order so he could keep it. It was not knocking Gold as a store of value at all, just pointing that order & our laws that protect our property are what allow us to grow & enjoy the fruits of our investment.
  • PP
    Peter P.
    15 February 2021 @ 13:44
    Howard Marks & Joel Greenblatt leave a wonderful legacy for the future by time stamping the global financial markets - as they are & how we got here - while on the cusp of a new paradigm. Each man with proven track records across up & down markets, they offer their thoughts & their valuable time to remind us how to look at markets when this system is normalized. Thank you both for making & sharing this conversation with Real Vision subscribers. @ 37:00 I gave copies of Adam Smith's (i.e. George Goodman) the Money Game to the interns & young people I worked with. One of the best books ever written about the financial markets & how they work - As I remember the chapter on the "Great" Winthrop discussing his three young star money making portfolio managers in the current bull market -> In the next bust two will be ruined, and one will be seen as an investing "genius", and then the cycle begins anew (1966 ; 1982 ; 1999 ; 2009 ; 2021-22 ?)
  • BM
    Brendon M.
    13 February 2021 @ 11:21
    Starting from 21:20 an interesting thought came out - EVERYBODY has access to all present (legal) information due to computers and technology speed. So finding imbalances in price and "actual current value based on present information" is an almost impossible task. "Actual current value.." is the expected mean point where price is expected to revert to, and a profit margin is within that gap. But... Theoretically, with current data known to all, price no longer relates to "Actual current value.." . In truth, current price relates to participants' perception of future expected value based on projections of expected performance. So investing requires insight on that perception accuracy. However, when that future time comes, price won't reflect "Actual current value.." at that time either, but again, perception of more distant future expected performance. That may have been part of the equation in the past, but it's the only equation now. Price may never reflect a rational "Actual current value.." standard ever again. Investing is no longer about judgement of present value. It is about judgement of perceptions of future potential value, that will never be realized because when that future time arrives there will be perceptions of value at a more distant future infinitum.
    • JS
      John S.
      13 February 2021 @ 11:23
      This is a good response. Congrats!
    • FL
      Fabrizio L.
      13 February 2021 @ 13:41
      Really good description, could not agree more. You now need to try, with same linguistics ability, to describe the delusion element that inevitably will arrive when the output of the loop becomes negative - it is a cycle after all
    • BM
      Brendon M.
      15 February 2021 @ 00:11
      @ Fabrizio L.. Thanks for commenting. My description didn't assume positive (or negative) perception/potential. You're right, the next story is what happens when the delusion element comes into play in the negative perception phases, and on the other side, what happens when the euphoria element (or 'hopium element'?) comes into play in the positive perception phases. What is a trader or investor to do?
  • MH
    Michael H.
    14 February 2021 @ 23:12
    Thank you for the discussion from two top investment thinkers. Howard mentions early in the discussion that the FED had to save us from a Depression. That was the most humane and eithical choice. I question that. We will never know what would have been if the FED had not intervened. But ok ...they did what they had to do and I get that. I do not get the next 12 yrs of QE2 QE3 twist...and then QE to infinity making a mockery of the modern financial system. The world central banks helped destroy the price of money ( interest rates). We kick the can down the road and leave the next generation a pile of excrement. The chickens will come home to roost. I ask: Can we have capitalism without the central bank system?? Can we have capitalism without the crony??? Can we have capitalism and markets that are fair and without massive leverage ( derrivatives are weapons of mass destruction)??? There should be more outrage from the grey beards . Sadly we have lost our way.
  • JH
    John H.
    14 February 2021 @ 16:39
    Great discussion. Thanks to Howard and Joel, and the Realvision team.
  • PP
    Patrick P.
    14 February 2021 @ 16:06
    Really Funny! ... Howard brought up Argentina and 100 year the same sentence with America.... does he realize we are one in the same?...... It's just a matter of time.
  • AB
    AJ B.
    14 February 2021 @ 14:54
    Out of touch. Clueless. Disappointing.
  • DA
    David A.
    14 February 2021 @ 14:33
    I think too much deference is paid in the comments below to these two grandees, presumably on account of the reputations and their learned air. Did they actually say anything other than some vague truisms?
  • CM
    Craig M.
    14 February 2021 @ 13:52
    I'm a fan of Howard Marks but turned this off at the 35 minute mark. Joel Greenblatt made the comment that this virus is a one time event. I believe we are now witnessing another huge government bureaucracy in the making that has and will reach into many aspects of our lives. COVID will be used to continue to print and pump money perpetually. This only accelerates the demise of the currency and the economy.
  • jc
    james c.
    14 February 2021 @ 06:26
    Such humility / open-mindedness !!!
  • bf
    bill f.
    14 February 2021 @ 01:03
    i think the money system has pushed a lot of people to high time preference thinking (the bitcoin standard) and in combination with the democratization of investing via computing technology it has led to this "pinnacle in investing psychosis", which wont end until its blasted out of the water. i think the return to hard money will reverse this trend and investing will mean building low time preference industries.
  • MV
    Matt V.
    12 February 2021 @ 17:54
    These guys are legends and obviously great at what they do, but as far as an interview/discussion, nothing of substance was really said. Howard is amazing at talking and saying nothing, it's a gift he has. Maybe I missed it, and everyone else sees it and I don't. If that's the case, please comment.....want to put a positive spin, but I can't.
    • DC
      David C.
      12 February 2021 @ 19:43
      Couldn't agree more. Felt the same way.
    • BV
      Bas V.
      12 February 2021 @ 19:50
      Not taking a hard stance can be easily mistaken for 'saying nothing'. I feel this is a discussion to keep you/everyone intellectually honest towards yourself and (maybe) reflect a little on your views. I loved it. Not that I 'learned anything new', I didn't. But because it was sensible, nuanced and down to earth for an entire hour. Hard to find these days.
    • AP
      Antonio P.
      12 February 2021 @ 20:29
      be careful! I said Greenblatt was uninteresting compared for instance to Russell Napier and they removed my comment... second time around
    • AK
      Andrew K.
      12 February 2021 @ 23:08
      Howard makes unsophisticated investors feel special.
    • KJ
      Kjell J.
      13 February 2021 @ 14:40
      1000% agree Matt V. They broach the topic of endless Government stimulus and 0% Fed rates being sustainable but really don't get into it. They have seen all kinds of cycles, explain to us how the Fed won't have to implement YCC if Bond yields start to rise. Howard says rates can only go up, Up to What Level Howard? The entire system is a castle build on a sand foundation and we just added many more levels to the castle. US10YR at 3% in Q4 2018 tipped the equity market over. Whats that level now, 1.5%, 2.0%. What sectors do they like, whats their current allocation, what did they do well in 2020, what did they do poorly in 2020, etc, etc. If RV paid these guys to do this interview I question the value.
    • CL
      Chris L.
      13 February 2021 @ 22:00
      These are 2 of the greatest investors of all time. I find their honesty refreshing. It shows a tremendous amount of confidence to openly have a discussion without having all the answers, and to discuss their framework of investing in such unprecedented macro conditions. Just because they didn't stick their neck out with concrete predicitons in one of the most dynamic enviroments of our lifetime, does not mean there was not an incredible amount of knowledge to be gained from this discussion.
  • JR
    Jack R.
    13 February 2021 @ 21:40
    Two brilliant and successful thinkers. However; As usual, Marks is a waste of time. You can read his book for 16 hours, or watch a video for one hour and walk away with 0 investment ideas. Mr. Marks; PLEASE Tell me something I don't know! Joel Greenblatt. Another waste of time. Every interview is like a lecture to really smart MBA students -- which is his passion -- but his content assumes that his audience has minimal real world investment knowledge. Not your typical Real Vision member. His mutual funds are among the highest fees out there with average performance
  • NR
    Nelson R.
    13 February 2021 @ 19:33
    Lets do another video with two other independent thinking value investors analyzing if the fact that two of the greatest value investors of all time saying this time is different means: (1) we are in a giant bubble (2) even the brightest minds have given in to the enormous peer pressure bubbles impose.
    • FL
      Fabrizio L.
      13 February 2021 @ 20:16
      I think that the sheer length and intensity of this period that precedes the inevitable outcome, has exhausted every rational market participant. These guys have businesses that rely on their reputation and they are very careful about making predictions publicly. They do refer repeatedly to margin of safety, we should all understand what that means both at the position and portfolio level. Good luck guys!
  • NC
    13 February 2021 @ 16:16
    This is like sitting in the sauna at the Washington Athletic Club listening to old dudes talk about how everything has changed and how ya gotta stay in touch with young people. These are nice guys, I listened to them, and I have no regrets; but next time I go in the sauna, I'm bringing a magazine with me.
    • FL
      Fabrizio L.
      13 February 2021 @ 20:08
      Are you long bitcoin?
  • KK
    Kaj K.
    13 February 2021 @ 18:24
    I think about the high valuations not as people being optimistic, but as if they were dealing with a, fear induced, manic episode, and experiencing euphoria as a side effect. When you don't think positively of the future, you don't invest in the new, but clamp down on what you know and try to hold onto it. Could also (partly) explain the private savings rate spike at the beginning of the lockdowns.
  • TS
    Terry S.
    13 February 2021 @ 17:32
    What a conversation! Two investing wizards going back and forth, sharing their ideas, sharing how they think about today’s environment and their process. Overloaded with investing wisdom and intellect. Also, what is pleasant is how humble they seem to be.
  • MO
    Master O.
    13 February 2021 @ 06:54
    The video started the question are we in a bubble. I will provide two perspectives what Ray Dalio deems to be a bubble and what George Soros definition of a bubble. Ray Dalio says the most defining characteristics of bubbles that can be measured are: 1) Prices are high relative to traditional measures 2) Prices are discounting future rapid price appreciation from these high levels 3) There is broad bullish sentiment 4) Purchases are being financed by high leverage 5) Buyers have made exceptionally extended forward purchases (e.g., built inventory, contracted for supplies, etc.) to speculate or to protect themselves against future price gains 6) New buyers (i.e., those who weren’t previously in the market) have entered the market 7) Stimulative monetary policy threatens to inflate the bubble even more (and tight policy to cause its popping) George Soros said that financial bubbles don’t grow out of thin air. Bubbles have a solid basis in reality, but a reality that is distorted by a misconception, therefore bubbles are assets that are artificially expensive based on a belief that happens to be false. You can also have assets that are grossly undervalued based on misconceptions. To identify bubbles you need to identify misconceptions and the market narrative that feeds into the bubble.
  • KT
    Kris T.
    13 February 2021 @ 06:30
    Record low interest rates may mean that maybe it’s not a bubble. It’s been said before but to hear it from these guys is great. I also finally got growth versus value. Very good.
  • MC
    Mark C.
    13 February 2021 @ 05:50
    I enjoyed this interview. Hope they can do this again in a year or so. Thanks
  • SS
    Stephen S.
    12 February 2021 @ 19:57
    Does anyone else find the video scrubber does not work?
    • AA
      Andrew A.
      12 February 2021 @ 20:15
      It works, but it's inaccurate. The content of RV is excellent, but I think the video UI isn't great. Can't stream to Chromecast from a mobile device too. Hope they sort it out soon.
  • AP
    Antonio P.
    12 February 2021 @ 19:05
    hi, I am being censored again
    • AP
      Antonio P.
      12 February 2021 @ 19:47
      and for a comment which was not offesinve at all ... pathetic!
  • BV
    Bas V.
    12 February 2021 @ 19:47
    This interview is the definition of intellectual honesty. 11 out of 10. Love-it (!)
  • DC
    David C.
    12 February 2021 @ 19:43
    "we have to help now..." by printing more fiat, adding to sky rocketing national debt. It all feels so fake, everything feels like a bubble including our national culture.
  • PE
    Paul E.
    12 February 2021 @ 18:03
    Fascinating to be able to hear this conversation and their thoughts. I never miss reading a Howard Marks memo and always find value in each one. Much wisdom in this one, really appreciate it!
  • CK
    C K.
    12 February 2021 @ 16:12
    Excellent discussion. Completely agree with Joel Greenblatt's questioning of benchmarks and whether they are meaningful. I think a possible alternative to the current process would be, say, to give a US Large Cap Equities manager a mandate, but with an absolute rather than a relative benchmark. If they have negative returns, then that would be bad. However, if they have positive returns, but lower than those of S&P, then the client can blame their investment consultants (who are responsible for their asset allocation and manager selection, and who have such dominance over the UK and US market), for not recommending an ETF / passive fund instead, or a better manager, rather than blaming the manager. For the record, I'm not a professional active manager, nor have I ever been.
  • EG
    Eyup G.
    12 February 2021 @ 16:09
    Really enjoyed watching the video of two great investors.. A suggestion: both Howard and Joel are value investors, so they basically tell the same arguments. I believe Howard talking to a growth investor could be also very educational to watch, while they comment to each others investment philosopies..
  • FL
    Fabrizio L.
    12 February 2021 @ 13:56
    It also came up in the video with David Rosenberg: Is it sensible to be discounting future cashflows at today`s rates given that they are at the low end of historical ranges? What are historical median interest rates? Do we start counting in the Old testament? or When in the 1500 the Vatican's letters of credit where the only game in town? Or an average of the 10 year US bond for the last 200 years? Or how about the last 5 years 2 year bond? Of course the latter will be favoured by who supports current valuations, the previous three that come out as very close matches 6 to 10% will be dismissed as difficult to extrapolate to the next quarter. maybe.
  • ML
    Max L.
    12 February 2021 @ 13:05
    Thanks, this was fantastic.
  • JM
    J.C.M. M.
    12 February 2021 @ 12:12
    Real value for understanding, thanks!
  • PU
    Peter U.
    12 February 2021 @ 10:55
    Two great investors and people! Excellent! Thank you.
  • SC
    Sam C.
    12 February 2021 @ 10:36
    amazing to watch these two guys talk. kind of sad the Audio is so bad.
  • MR
    Mahesh R.
    12 February 2021 @ 07:35
    First !