It’s all fun and meme coins, until the markets turn

financialpost.com:

— Howard Marks, co-founder Oaktree Capital Management Inc.

As this year ends, I am witnessing things that I have only rarely seen in my investment career, going back nearly 25 years, with the current levels of market euphoria reminding me of what I saw in 1999 and 2007.

This includes Wall Street veteran and well-known bear, David Rosenberg, offering an apology for his stock-market pessimism, BlackRock Inc. writing a piece saying that the world economy has exited the “boom and bust cycle,” and some market strategists calling for the S&P 500 to be as high as 15,000 in the next four years.

It has reached the point that I’m now seeing pictures of Benjamin Graham’s book The Intelligent Investor being thrown in the garbage on social media, and a cryptocurrency named fartcoin with a market cap at the time of nearly US$800 million.

In response to this, someone recently posted on my X feed an interesting take on why being older and going through a few market cycles can actually work against you during such times: “If my memory serves Gerald Tsai who was a portfolio manager (PM) at Fidelity in the 60s had a comment about needing to hire young PMs in bull markets cause the older vets were too timid to go all in and stay invested throughout. Few individual investors even remember 2008/2009 anymore I find.”

For those targeting today’s higher growth and highly speculative strategies, this is probably a fair comment. However, while everyone is cheerleading the strong returns from bitcoin recently, I still have a very hard time seeing how the average investor or portfolio manager could stomach their clients experiencing three major drawdowns, -78 per cent, -82 per cent and -55 per cent, over the past 12 years. With the last large