>> welcome to day break australia. >> i'm so forth so forth in hong kong, welcome to daybreak australia. the bloomberg terminal right now, teresa may is said to a plan to postpone brexit, that's right, that is he bloomberg terminal headline crossing right now pass the current march 29 deadline. happens, it would be a

major u-turn for the british prime minister. t is to avoid the no deal brexit crashing out of the e.u. as many critics say it could be an economic shock for all. we're taking a look at the ritish pound against the dollar, up more than .1 of a percent. we'll watch that as the headlines continue to develop. teresa may is said to consider a to, that's right, postpone heidi.ionity, haidi: toward the march 29 to line, teresa may said postpone brexit rather leaving scenario.sy no deal let's get to britain, is this a normal that teresa may has simply run out of options now? emma: yes, that's right. he she is egypt trying to win deal.er instead she heard one e.u. leader after another racing the delay, a delay was

the logical thing to do and businesses on both sides of the e.u. and the deal re worried a no brexit would be catastrophic for jobs, food and medicine supplies. teresa may has had to hang on to weapon of threatening to walk away from talks with no deal as a negotiating tactic. wanted to hang on to that even in the face of massive opposition from parliament and recently from within her cabinet. so on wednesday, there is going parliament, a n general brexit strategy and she basically facing the risk that a large number of her government were going to walk and vote against her. that seems to be why she is now going to consider delaying article 50 which is is going to t, she put to the cabinet on tuesday statement to

parliamen -- iament haidi: i want to check that we you. have it seems like we lost her. to this me context report that we are hearing that teresa may is prepared to delay deal brexit and to extend that article 50, essentially the road which the markets have been expecting. we're also getting quite a bit in terms of labor opposition leader also suggesting that he is not in of potentially a second saying another public vote should be put on brexit. ramey, certainly it does seem teresa may is getting to a point where there isn't much in that she term options has left than an extension of article 50 and kick to can down have more time. remy: it's basically coming when it o or die here,

comes to a no deal brexit which is seems she does not want to do. the british pound do a bit of a rise there, now up by a quarter of a percent at the screen, 1.31 r against the u.s. dollar, terminal,he bloomberg at its highest right now in the past month. in addition, we want to get you date with how u.s. markets close today. there was definitely a risk on rally. the dow up by a quarter of a perfect here because of the cross 24 hours ago with u.s. president donald trump saying that he would for raising date tariffs on chinese imports there. postponements on with ides of the atlantic brexit and china. sophie kamaruddin. as ie: it may be tested some say the tariff delay don't say it's all clear. after the best

winning streak in a year that was led by china. he large cap gauge of mainland shares, close indeed a bull market after rallying 6% and market, we're e after an eye on oil tumbled lled after the after trump's tweeting. keeping a close eye on in ralian gold companies particular as barrick makes a bid for newmont. mining came out to say it would be interested in any discarded by barrick in the event of a takeover. light when , we are it comes to some heavyweight figures, but this afternoon, we getting factory and t data from singapore from taiwan. jobless numbers due from taiwan later this afternoon. hong kong, we are getting a check on trade performance for january.

haidi, that trade continues to loom large over the region. haidi. it from here.ke join us for some more context is founder and c.o.o., always good to see you here. of breaking time news with brexit. a planmay is considering to postpone brexit. how should investors read into this? far any kind of deal. >> right, right, on the margin, little less risk of an imminent shock and so we're very from a cyclical point of view how that intersects with cycle.e are in a we are in a slowdown, but are we vulnerability. if we are, a shock is a recession nature shock. we are not there yet. on the margin, this is a little bit of good news, it reduces the a negative shock. i think you could take a little, here is a little less risk out

there as a result. remy: a little less risk, a bit of positivity. i wonder, how long can this last? also talking about some, what's happening with u.s.-china there, d the headlines there is a risk on rally, i don't know about rally, but a for how long? >> in this framework that we have where we look at where are these he cycle and potential shocks, we're always by definition, a shock is something that kind of surprises you. we're all fixated in the headlines, the trade negotiations, there is going to deal. trump wants a deal politically. she needs a deal economically. there is going to be a deal. does that mean everything is ok? no. it just removes this one risk of based on the road trade war breaking out or escalating. cyclical risk has not gone away at all. it is fully in play and hasn't gone anywhere.

haidi: in terms of brexit, you as d extend this to trade well. none of the outcomes look particularly straightforward or you have the kicking of the can down the road when it lot of brexit, a uncertainty when it comes to trade and also these reports corbin has supported the second referendum, a great deal of uncertainty for leaders and corporate for making these decisions? >> the uncertainty remains and here is -- i take your point, the kicking the can down the road, we're going to extend. that. going to do this and it takes away maybe the immediate negative shock and to cycle risk, it's the combination of this window vulnerability, when the cycle gets to a certain point of combine that if you that with a current or an imminent negative shock, that's a recession. that combination is not present you, e moment, but mind

everywhere, britain, the united states, china, the global still have it cycling down. e are not cycling up, even if the shocks were to be resolved tomorrow. haidi: this doesn't change the that they would potentially take, policymakers a widetill be looking at array of down sides arising from this? i sit looking at cycles, certainly on the growth down, no re cycling upturn in sight. that's one reason pushing policymakers, u.c.b., federal, china, japan, toward an easier also when we look at separate, this is a little cyclesated, but separate in inflation, they are not -- cycles different than in growth. they're over the last several onths, what is striking is the

intensity of the drivers of the inflation cycle have actually to the ed further downside. whether they know it or not, olicymakers, monetary policymakers will have more leeway. now, how effective that is seen, just because the fed went on pause does not turning cycle is around. we have to look at the forward indicators to see any indication it's not d so far, showing up. talk more about inflation and what we're hearing of the fed, t conversations of that. us are staying around with to talk about the global themes. let's get to bloomberg news with jessica in new york. to allay fears post-brexit. trading continues in the event of a no deal divorce. england, and the

u.s. commodity futures trading commission are promising a transition with existing deals carried over no the r how the u.k. leaves single market. oil plunged on both sides of the after president trump again treated that prices are too high. opec to take on it easy. the most in two months. has recently rallied on optimism that the beyond what it had pledged and balance the market. a price rally of 20% this year production cuts from opec and its allies. has announced es more sanctions on venezuela after ng state governors he maduro regime blocked aid convoys. the action wasn't a bold move by transient leader but a desperate acts of a tyrant clinging to power. will impose even

tougher measures. group nations ll to immediately freeze the assets. econd, we urge you to transfer ownership of venezuelan assets n your country from the henchman to the other government. >> there has been no official eaction to his decision and no reason given for what prompted it. the veteran diplomat led iran's team during the 2015 nuclear deal with world powers. a day on s 24 hours air and at tictoc on twitter 2,700 by more than journalists and analysts in more than 120 countries. i'm jessica summers, this is bloomberg.

remy: thank you, jess, president trump is talking to summit and signing adding the deal may not happen at all. our china correspondent joins us from beijing. om, make heads or tails of this, what exactly is happening? if you pool together all of the comments from president trump about these week, alks over the next you can talk he is pretty deal.ient to get a he wants it and fairly quickly. we're waiting from the official response. he is going to extend the tariff deadline. we'll get some indication as to just how far down the line they extended this deadline on tariffs. if terms of a meeting between to two presidents, you have bear in mind as well. resident xi has his own politics to deal with in beijing. au're probably not looking at

meeting until the end of march, if it does come to that. interestingly, the chinese have cautious on these negotiations. they said, yes, the gaps have een closed on many areas, but there is the space for new difficulties as they get closer end of this process. haidi: tom, interestingly it xi said that dent it seemed like china is taking a on the deleveraging campaign to establish growth. it take the pressure off policymakers then? does, to some extent it you hear from the investment banks, they say that actually started to bottom out in the fourth quarter and some of the additional credit is come to playing to in the economy and starting to support growth. hen you've got others who say that actually if this deal is relatively consequential and reforms and the opening up additional sectors here, that could add some movement to kind revive areas of the economy

as well. it's something of a prestiging oom for president xi as he looks ahead to this annual parliamentary meeting. others have warned that longer tensions between the two sides over china's rise will even if you get a relatively decent deal out of he back of these talks between the two sides. haidi: our china correspondent watching that l trade story with the mixed messaging from trump. in the meantime, president trump on his agenda, hanoi later on tuesday along with kim jong-un or the second summit meeting, talking about denuclearization korean war to the and attempt to put flesh on the ine bones declaration signed singapore. steve, you were there in ingapore, a lot of criticism that there were no details, nothing substantial or set ceable in the points

out in this deal. what are we expecting this time? steve: you're absolutely right, said it in the beginning there, they want to put some meat on the bones of that bare that was aration union.in singapore last just what is kim jong-un willing to concede and what is the united states willing to concede. those are the questions we have to be asking and try to find answers to as this week progresses. as you mentioned, we're expecting kim jong-un likely to this morning.e he traveled by train down through china and crossed the will be d will or crossing the border between expected vietnam, his arrival is unconfirmed later this morning. unconfirmed,, again but expected to have touched down in hanoi sometime later today. a n there is likely to be dinner between the two gentlemen tomorrow and then the real summit on thursday. yeah, you're right, there is a lot of meat to be put on the in s that was left

singapore. stephen engle on the ground in hanoi as we look ahead to the second summit. have in-depth analysis on that second summit between countries ofof the the united states and north korea live from hanoi all this week. in the meantime, we got some news coming across the bloomberg terminal as well from ancy pelosi, speaker of the house, saying donald trump is violating the founding fathers vision when it comes to this power grab. what she is saying in terms of what's been happening trump's sident donald emergency declaration to build that wall on the southern border. are taking their to thwart mr. trump's emergency decree. that vote is set on tuesday. we'll get more on that as that to develop, haidi. ahead, still coming up we're hearing from howard marks s he speaks to bloomberg as

part of our masters in business series. prospects e and the for global growth continuing right ahead. this is bloomberg. ♪

rami welcome back, i'm inocencio in new york. aidi: just recapping the breaking news at the top of the hour, we have a report according to people familiar with the prime minister teresa may is considering a potential delay to that brexit deadline. course, as the clock ticks down to march 29 for the for the u.k. to exit the european union and the state of disarray with a deal. considering a plan to delay brexit. the plan that she is expected to debate within her cabinet on tuesday at a crunch meeting or a otentially a vote revelation of a conclusion made on the following day.

does go some way to stop the expected from ns her own party from e.u. upporters there and risks disenfranchising some of the you'ro skeptics within her own as well. the markets are seeing that pop bit e pound potentially, a of a fad relief if just a kicking down the road later on. take a look at what -- really a tale of two markets as out ook at the asset class there. >> let's go right to the did hot because, yes, we

have stocks maintaining the biggest gain in four months. we close.k at the way you can see futures also showing the positivity continuing into tuesday's trade. let's quickly go to some of the movers. 15%. soaring as much as said he was tists the first to create a gene used a similar treatment here. lots of questions. billionaire buffet is hanging on to the stock, not buying more. you can find our stocks, this shows g.e. for its first rally since 2015, a rare thing. let's quickly go to after-hours, notice a lot of stocks moving in big ways. chart.he after-hours ertz, a struggling rent a car

etsy a strong outlook, doing real well. e saw oil come down a big way as trump treated out five words to opec, take it easy. they need to ink be cutting at the level they are. oil has been up 23% year-to-date. there. picture story >> that is your line here. hop to the bloomberg terminal, i want to show you the library and

looking at for the economists medium forecast, 2%. this yellow line. this yellow line is donald optimistic growth. saying that donald trump is wrong? >> yes, he is wrong. longer term question as to what is our potential growth and there have been some that we were going to get scape velocity and long trend growth, 3, 4, 5%, whatever the are.rs the simple math is demographic growth and e productivity growth. both are languishing.

long term cap on trend growth for the u.s. and he g-7 and that math is even restricting the growth of emerging markets. seeing longer trend growth going down for example. it's across the board. is a s a big issue that multi-year issue on a cyclical the upturn in see greatwe saw it in 2016, a cycle upturn since 2010. saw the same cyclical indicators rolling the other way. had was a cyclical upturn in growth that has turned and gone the other way and in cases we're entering these windows of vulnerabilities. in european economies and so on and so forth on the brink of recession like italy. what down, down, is you're saying here to be clear. is there a catalyst that we can

so -- to change this equati equation. pause, things would be better. >> so president trump and xi, a sit down and hold up signed agreement, that won't change the cycle. a sign agreement and one risk factor. ther shocks can come, maybe oil, maybe something else that an combine with a window of vulnerability in the cycle. not there just yet. that's where you get a recession. what we're watching for. when i say look at the leading indicators and they haven't urned up, that's what i'm talking about. they haven't turned up for the u.s. or china. for -- i'll agree with trump on one thing. prices be nice for oil to go down, the consumer is under pressure more and more.

have beeng indicators moving to the downside. that's a risk. area is that the one that we could potentially see that you're just not removing risks, but negative could see the pop to the upside, animal spirits which is a sentiment? >> i don't want to predict the predictors. that's a dangerous game. i'll track them and i'll watching that. what we've seen is that first things most, you have like c.e.o. surveys. they have become quite negative. that gets followed by small businesses surveys which were quite high. down and then subsequently some of the consumer expectations started to go. a typical sequence. they're fairly short leading sequence. all have been moving to the downside. we will certainly watch to see stabilization there. you want to see other indicators

surveysm the other soft also moving up and collectively, if they start to bottom, i'm upturn. look for an we don't have it just yet objectively looking at the data. great to have you on with us. co-founder and chief operations officer, not terribly positive take it.'ll we're coming up with howard investing and the business landscape next. this is bloomberg. ness landscap. this is bloomberg.

haidi: it is 9:30 a.m. here in sydney. markets open in about 30 minutes time. trading in asia yesterday, a solid rally extending. seeing declines across utilities and real estate. politics really taking center stage with the summit in hanoi. both leaders expected to be in vietnam by today. we are watching developments on the postponement of higher tariffs on friday.

just shy of .5% at the open. --di: daybreak are watching australia. we want to welcome our viewers around the world for special coverage of a bloomberg event. withd marks will sit down bloomberg opinion columnist harry riddles fern hour conversation -- for an hour long conversation coming up, and markets,look at the investing, and business. we will bring that to you live when it begins in a few moments. in the meantime, first word news with jessica summers. jessica: prime minister theresa may is bowing to pressure at home and in the european union. she is suggesting putting a vote

on hold while she tries to drive her brexit deal through parliament. the deadline is the 29th of march. we are unlikely to consider an extension. i believe in the situation we are in, an extension would be irrational solution. >> meanwhile, jeremy corbyn has vowed to party pressure. theresa may has dismissed another public vote saying it would undermine faith in democracy. the u.k. and u.s. are taking action, setting up emergency

policy to ensure derivative trade continues in the event of a no deal divorce. commission is promising a seamless transition with existing deals carried over no matter how the u.k. leaves the market. oil plunged on both sides of the atlantic after president trump again tweeted that prices are too high. opec to "take on it easy." the president's intervention follows a price rally of about 20% this year due to production cuts to opec and its allies. announced states has more sanctions on venezuela, regime.g maduro's said the action was a desperate act of a tyrant

clinging to power. mr. pence: we call on all lima group nations to immediately freeze the assets. you to transfer ownership of venezuelan assets in your country from maduro's henchmen to the president's government and to do so immediately. hashe prime minister resigned after posting and message. we throw this to you now. haidi: jessica summers in new york. bloomberg is hosting a special event, a conversation with place in newtaking york. let's take a listen. ande is the cochairman

cofounder of oaktree capital, which now manages over $120 billion in assets. high-yield bonds, distressed debt, equity and other strategies back in 1995. he won 17 separate stress test bonds, unless it has risen to are about 700 basis points above peers in the fixed income space, routinely beating equity funds over the same time. he is the author of "the most important thing: uncommon sense for the common investor. his new book is mastering the market cycle and getting the odds on your side. thank you for being here. fewll get to the books in a minutes. i want to start with an

interesting question. i think people may not be aware of your background. you began as an equity analyst. how does one of the world's most famous finance managers began his career as an equity analyst? >> starting as an equity analyst was the normal course. that nobodyn area was interested in. there were two european refugees in the research department at citibank and they would publish a biweekly bond summary. point, oneat one said bonds were the last issue. you remember how was. stocks were doing so well. but to get out of what was doing and get into what was doing

poorly required something that had not been invented yet at that point. in 1968, came job back after grad school in 1969, became a senior analyst and a director of research. and then i got my lucky break in 1978 when i switched to what was called the bond department. convertible bonds and in the summer of 1978 i got the phone call that would change my life. there is a guy in california named milken or something and he deals in something called high-yield bonds. can you figure out what that means? and i was smart enough to say yes. the transition from equities to regular bonds to high-yield bonds, how do you end up over at ?rust company west

>> i went to california and i was studying a group that doesn't exist anymore called the conglomerate. after the company visits, my in-laws lived in laguna beach. i went down there and spent the week and i fell in love with california. i moved there in 1980. i got citibank to move me in 1980. trust company west, and l.a. and that'sroached me how i moved there in 1985. a youngere supervising whiz kid named jeff gundlach. tell us what it was like working with him.

he seems to be a person who doesn't lend himself to being told what to do. >> i never get it myself that i was actually supervising -- kidded myself that i was actually supervising him. -- he kind ofd to respected me intellectually. so we got along. he was very innovative in his approach. he was managing mortgage backed securities, which was innovative. would figure out strategies and share them with me in the hope that i would understand. would assume you did understand pretty well. fast forward a couple of years.

, youade or so after that decide to part ways with trust company of the west -- jeff decided to part ways with trust company of the west and came to you for career advice. >> he didn't decide to part ways with them. they decided to part ways with him. he got canned, technical term, in december of 2009, if i'm not mistaken. he had a great following among his clients and his staff. , theon as he got let go rest of them quit. >> his whole team. >> i think his whole team. he, through a brokerage firm -- nowadays they say investment bank -- approached us and said will you help us get ?tarted

we were again smart enough to say yes. it wasn't a matter of finances. it was a matter of infrastructure. we started oaktree, people would say what is the biggest surprise? was howest surprise much interest there was in an investment management job. we helped him with that. we would chat periodically. that under accounting rules, in order to bring in our share of profits, we would have to own 20%, so we bought another 7% and got diluted down to 20%, which is where we are now. extremely happy. is thedouble line

fastest growing at the firm to reach 100 million dollars? >> i believe that's right. >> let's conclude with the memos that your somewhat infamous for. i'm going to quote warren buffett. when i see memos from howard marks in my inbox, they are always the first thing i read. tell me what led you to publishing the chairman's memos? when did they start and why did you feel the need to write them? >> they started in 1990. and i don't remember thinking that if i wrote them i would get more business or anything like that. there are two events that environment, the juxtaposition of which i thought was extremely informative. >> you are well known for them today.

them.t has lauded when you first started publishing these, what was the like?se >> it was 10 years before i had a response. notonly did anybody say -- -- not only did nobody say that was good. nobody said i got it. this was in the days of using a xerox machine, folding them up, putting the address on, and as far as i knew, they went to the trash because i never had a response. i kind of remember what made me write the first one. i had no idea -- have no idea why i kept going. >> i specifically remember one down to the giant cover on it, bubble.com in january of

not ofhe timing could been better. tell me about that particular one. in our business, it doesn't farny good to be right too ahead of time. if i had published the same , i you forgotten because it would've taken three plus years to work. it happened to take only a couple of months to work. beenelecom bubble had pushing stocks up for the past few years. it was overdone. the subject of excessive optimism and excessive faith in the future. and entirely free of any kind of analytical valuation rigor.

we are used to saying 15 times -- seeing 15 times earnings for an average company and maybe 30 for what we think is a great company. but how do you value a company that has no earnings? hold on. how do you value a company that has no sales? we were valuing an idea. in the investment business, there is a tendency to come to platitude generalizations. what was going on in 1988, 1999 -- 1998, 1999 was the internet is going to change the world. so any stock e-commerce related was the right price for infinity. and as i say in the book -- can i say in the book customer quite short. >> as i say in the book, if you the bubble,rstand

the defining characteristic is the belief that there is no price too high. if it was an internet stock, there was no price too high. course, it is obvious ist everything -- there nothing so good that it can't be overvalued. if you bought it at a price excessive for its merit, it will require magic to make it into a successful investment. memo.as the theme of the i talked about businesses. we see some today that do not have a profit plan. as i said in the memo, people

used to say the great thing about this company is the cost is almost zero. and i said that's great because the revenue is absolutely zero. my dad was a joke teller, and he said two guys were talking and one guy said everything i sell i at cost. how do you make money? i by below cost. but the internet business model was completely irrational but stocks were selling at guy high prices. in a memo that reviewed this progression later, in my first 30 years in the popped,, after a bubble we would see a table in the upper right-hand corner of the journal, and it would show all the stocks down 90%, remember? with this, they showed all the

stocks down 99% or more. popped.bubble the memo looked smart. after 10 years, i became an overnight success. >> let's talk about the first book, "the most important thing, -- common sense for the thoughtful investor." to say ivated you know, let's write a book? >> it simple. i got a letter from warren memott saying -- i wrote a . i forget which one it was. it was right up his alley. i said did you see this one? he said yes. by the way, if you write a book, i will give you a quote for your

jacket. enough said. by.don't pass that one i thought i would write a book pulling the philosophy together when i retired. instead, it got accelerated. >> what was the experience of writing a book like? >> it was great. for me, the challenge is not to think up what to say, the challenge is to get there. the thoughts are coming so fast, you are afraid they are going to .vaporate >> let's talk about some of the book's advice. we can make thoughtful observations with no need to make guesses about the future. doesn't that run counter to how people deal with capital?

wax the irony is, what is investing? positioning your capital to profit from the future that unfolds. book, we can't know what the future holds. so i espouse macro forecasts. i don't believe we ever know enough about coming economy markets, currencies, trades, to successful, superior investor. it's very hard to hold of you that's a consensus and it's very -- it'shave a nonsense very hard to hold a view that has consensus and it's very hard to hold a non-consensus view

that comes true. importantis much more in moving the market. how can you not do macro forecasting? i was sitting and having dinner and warren a few years ago he said to me, for a piece of information to be desirable it has to satisfy two criteria. it has to be important and the macro is extremely important. it has to be knowable. you can have something which is very important, but if you spend your time trying to figure it could be a waste of time if it's not knowable. i believe the macro future is not knowable. the mostrst book,

important thing, there are 21 chapters and each starts with the title, the most important thing is -- and then a different thing. investing does not have one thing that is the most important. according to the book, there are 21 things, all of which are the most important thing. and one of those is knowing where we stand in the cycle. and when it was time to write a second book, i pulled that out, and that's what i devoted the book to. >> let's talk about the second book, mastering the market cycle, getting the odds on your side. of all those 21 chapters in the first book, why cycles? why did you pick that, issuing chewing the0 -- es other 20? >> of the 21 most important

things, i believe two are more , riskant than the others and where we stand in the cycle. i believe risk management, risk control is the mark of an exceptional investor. it's not hard to make money in the market. it's especially not hard when the market goes up, and the market goes up most of the time. most of the time, everybody in the market makes money. but if you don't know what you are doing, if you are throwing darts, if you are beta schlepping, that's not an accomplishment. to me, and exceptional investor is someone who makes a lot of money when things go well but does it with the risk under won'tl so that he or she lose a lot of money when the market does poorly. in thee three chapters first book to risk, understanding risk, recognizing

risk, controlling risk. i think that is the mark of the superior investor, number one. number two, the cycle. i believe there is a connection here because i believe where the market is in its cycle determines how risky it is. when everything has been going swimmingly and as a consequence the market is elevated in its cycle relative to something we might think of as the midpoint or the intrinsic value, then i think it's risky. and when it's depressed in its low relative to intrinsic value, then i think is low. even though we cannot benefit from predictions of the future, i believe where the market is in its cycle can tell us a lot about what the odds are, and you

mentioned the subtitle of the book, getting the odds on your side. i actually prefer the subtitle for the title. , i hope, aconveys sense or a belief that we cannot know what the future holds. the future is nothing but a probability experiment, but if we think and study right, we can have an idea about the shape of the probability distribution and what returns are morse -- are most likely. >> it's interesting that you say you prefer the subtitle, because the title itself is sort of at odds with some things you have said before. you have said not only can people not predict the future, they can't find the market very

well either. -- time the market very well either. >> let me say upfront that i that wevery firmly sometimes have a sense of when something is going to happen. never know when. when you say timing, the word time i discard. everybody at oaktree writes a letter every quarter to clients. -- and a guy there who i i review all the letters before they go out. -- one of them, or portfolio a portfolio manager said if you name a date, don't name the price. if you name the price, don't name the date. you never name both the date and the price and you can never be wrong. ideathink you can have an

of what the future holds. you can have an idea of whether this is a good time to invest or not, but you never know when the things you're hoping for will unfold. , i if you think about it believe that everything in falls under one of , asset selection and cycle positioning in order to avoid using the word timing. what do they mean? asset selection means trying to hold more of the things that will do better and less of the things that will do worse. positioning means having more of your capital invested in more aggressively when the odds are favorable and less of your capital invested defensively

when the odds are your -- are against you. we can know something about the odds. that doesn't mean we are going to be right or right away, especially. that can enable us to positioningdo cycle through an understanding of where we stand in the cycle. >> you mention two things i have to circle back to. one was the concept of intrinsic value. the second is the implication psychology. i have to come back to that. intrinsic value clearly refers to paying less for an asset than you think it is ultimately worth . you have written of the advantages of being a value investor. let's explore the

psychology of that. it seems easier to buy when things are going up than to sell. and conversely, when things are going down, it's easier to sell with the crowd. >> first of all, intrinsic value, every asset that produces cash flow, you can talk about its intrinsic value. what would you pay to get those cash flows? it might be a company, a stock, bond, a building. anything with cash flow can be valued. that's what value investors do. we try to figure out the value and buy for less. that makes sense, in my opinion. now the next question is, do assets sell at their intrinsic value? the answer is no. variesce of the asset significantly from the intrinsic value from time to time. why? you said it. psychology.

andtimes people are excited the price goes way above the intrinsic value. sometimes they are depressed and the price goes below. the next thing you mentioned was how easy it is to things as they are going up. you mean easy psychologically? >> yes. know, dave swenson, who runs the endowment at yale, which is probably the best performing endowment in the country over the last 30 years, wrote a book in which he said that superior performance in investment management requires the adoption of uncomfortably idiosyncratic vision. in other words, the job in investing -- let me say this. investing is a funny area