Howard Marks

For the Nifty 50, there was no price too high and for the high yield bonds, there was no price low enough.

And of course, both stances are wrong.

And if you bought the nifty 50 the day I got to work, and if you held it tenaciously for five years, you lost almost all your money in the best companies in America for the main reason that they had been priced too high.

The normal PE ratio for the S&P is 16 post-war.

These things, a lot of them were selling between 60 and 90.

Some of each.

They were all priced too high, but some in addition, it was illusory.

Let's go down the list.

The granddaddy was IBM.

The saying was, you can't be fired for buying IBM.

Did IBM go bankrupt?

Maybe, I don't remember.

Close.

Xerox was number two.

They completely lost their market to imports.

They had to find a new business model.

The consumer companies and the tobacco companies were part of that too.

And for the most part, they did better.

But I'll tell you one consumer company that didn't do well, and that's Simplicity Patterns.

That was in the 50.