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Howard marks is a legendary investor and co-founder of oak tree Capital Management whenever he publishes one of his memos to investors everybody pays attention and one of his most Avid readers is none other than Warren Buffett so in this video we look at his latest missive which is called sea change and it's about a radical change in markets which is going on right now we look at what he says and what it means to us as investors this video is sponsored by Nord pass which lets you securely manage your passwords across multiple platforms so let's look at Howard Marx's sea change in a bit more detail so here is Howard marks being interviewed on CNBC and in fact his background is really interesting he's worked in the investment industry for over 50 years so he's seen many crises come and go and I'd say his specialty is in the corporate bond space so this would be either distressed debt where a company's issued some debt run into financial trouble holes and then its debt becomes hugely discounted and what is very good at is selecting the companies which are going to make it out of that crisis he's also very good at macroeconomics and working out where we are in the credit cycle but also the economic cycle so I think he's very useful to listen to when it comes to finding turning points and what he's saying right now is that we are going through one of those turning points in fact it's only the third one he's witnessed of such a large size in his career so large in fact that he calls it a sea change which if you're not familiar with it is a complete transformation or a radical change of Direction and attitude and goals so now let's go through those three C changes and see what we can learn from them sea change 1 is to do with risk versus return Marx recounts how when he first started in the investment industry everybody thought that you should just go for super safe companies these were blue chips like IBM which were really sound and if you went for these stocks people thought you didn't have to look at valuation at all even if you were hugely overpaying for the stock you'd be fine because it was a great company right well not so much in fact the index which was known as the nifty 50 at the time suffered huge losses and that's because people have just overpaid massively for the stocks many of them were hugely overvalued and trading at price to earnings multiples of over 50 times such that during the sell-off in the years that followed 1972 you can see that these stocks went from hugely overvalued to hugely undervalued relative to the S P 500 so one of Howard Marx's early lessons was that it's not just about buying good companies it's buying them at...