MACRO MATTERS

“The lesson I have learned is that it isn’t reasonable to be agnostic about the big picture” David Einhorn

"For the value investor who is traditionally involved mostly as a stock picker, I think today should pay more attention to the top down" Jean Marie Eviellard

"Macro-agnosticism has become mainstream.  This development is dangerous and hubristic in our view" Frank Martin

“If you are a value investor and you invest whenever you find a stock which is selling for one-third less than your estimate of intrinsic value, and you say, I don’t care about the macro, nor what I call the temperature of the market, then you are acting as if the world is always the same and the desirability of making investments is always the same. But the world changes radically, and sometimes the investing world is highly hospitable (when the prices are depressed) and sometimes it is very hostile (when prices are elevated).” Howard Marks

"I used to completely ignore the macro environment, but now I pay attention and try to have a basic view that informs how we look at everything." Rickey Sandler

“Not paying attention to the macro side could be hazardous to your health,” Robert Rodriguez

“You cannot micro-manage your way out of macro problems” Wilbur Ross

“What I’ve learned to do is to pay more attention to the macro. But I can’t completely fix it. I can’t completely get my head around the future unknowns in the world.” Mohnish Pabrai

"2008 made an indelible impression on me, and I think of my clients and I have adjusted the way that I look at things to try to better incorporate my world views into my overall security selection in portfolio construction, still very much a bottom-up stock picker, but just trying to be wiser about the process"  Chuck Akre

“Where we do cast an eye to the macro is usually with respect to what can go wrong” Matthew McLennan

“Tyring to value a business without taking into account the macro and competitive environment is like music without instruments; it doesn’t work” Neil Woodford

“Let me tell you about the ones [value investors] who refused to fancy themselves macro-economists. Investors who turned a blind eye to credit – to monetary policy, to the Federal Reserve- didn’t notice the stupendous build-up of bad debt through 2007. They tended to own a lot of optically cheap financial stocks that got cheaper and cheaper until they weren’t there anymore” Jim Grant

“I think it is unrealistic and maybe hubristic to say, ‘I don’t care about what is going on in the world. I know a cheap stock when I see one.’ If you don’t follow the pendulum and understand the cycle, then that implies that you always invest as much money as aggressively. That doesn’t make any sense to me. I have been around too long to think that a good investment is always equally good all the time regardless of the climate.” Howard Marks

"Everyone makes mistakes. A mistake in security selection involves that security. A mistaken macro bet engulfs the entire portfolio.”   Jeff Gundlach

"Bottom-up value investors would not wish to bet the ranch on a macro economic view, but neither would they be wise to ignore the macro economy altogether" Seth Klarman

"For years I had believed that I didn't need to take a view on the market or the economy because I considered myself to be a ‘bottom up’ investor. Having my eyes open to the big picture doesn't mean abandoning stock picking, but it does mean managing the long-short exposure ratio more actively, worrying about what may be brewing in certain industries, and when appropriate, buying some just-in-case insurance for foreseeable macro risks even if they are hard to time." David Einhorn

"Warren Buffet's vision of the world is not as narrow as some think.  His actions speak volumes about his awareness of both the micro and the macro environments" Frank Martin

"The tour we've taken through the last century proves that market irrationality of an extreme kind periodically erupts--and compellingly suggests that investors wanting to do well had better learn how to deal with the next outbreak. What's needed is an antidote, and in my opinion that's quantification. If you quantify, you won't necessarily rise to brilliance, but neither will you sink into craziness.  On a macro basis, quantification doesn't have to be complicated at all."  Warren Buffett

"We are not macro investors. That said, we are not completely blind to the extremes of the world." Keith Trauner

"You can have a much higher degree of confidence about the prospects for company performance than you can about the macro outlook.  The type of trade in which you can get a big position and stay with it for years is therefore more likely to be company driven rather than macro driven.  Having said that, though, the macro outlook is still very important.  There are three things I like to see when I buy a stock: a favourable macro situation, a secular trend, and good company management"  Martin Taylor

"Our focus used to be much more on the micro, which meant we focused on the company and didn’t look at the macro enough—and that’s something you have to take into account if you want to be a good investor. Certain times we got into trouble and made mistakes; I think there were macro issues that were really out of management’s control. But having said that, shame on us. We should have known that this would happen or would be an issue. We didn’t focus on it enough. And about five years ago we set up a macro asset and allocation group, which has been invaluable and made a huge difference in how we think." Henry Kravis

"Putting money to work in equities and credit today requires a thoughtful perspective on global events. Macro analysis is no longer just for macro traders"  Dan Loeb

"Trying to understand the macro context at any given moment is vitally important in being able to successfully trade, protect and grow private capital for the long term. However, the quest for such understanding is often a thankless and inconclusive task." Paul Singer

"Value investors thought for a long time they could ignore the big picture, the macro-economic environment.  We believe the use of debt becomes pervasive.  So over time when we see countries or industries with too much debt, we pay a lot of attention to that.  Debt may help economies, things may look cheap, companies maybe highly profitable.  But we know it is artificial and the party will stop.  A good example was in Japan in the late 1980’s." Charles De Vaulx