In his book The Most Important Thing Illuminated, Howard Marks wrote this –
Our goal isn’t to find good assets, but good buys. Thus, it’s not what you buy; it’s what you pay for it.
Obviously there is merit to this. Warren Buffett 1.0 could agree with Howard Marks here.
But clearly this contradicts with Charlie Munger and Warren Buffett 2.0, who are willing to pay fair price for good assets.
The “fallacy”, if any, could origin from Marks’ expertise in distressed debts.
A huge difference between equity and debt is that debt doesn’t have unlimited upside.
Debt’s blue sky scenario is limited – receive full payment in interests and face value. Thus price is extremely important.
Equity could have “unlimited” upside for a good company. These good assets have unlimited upside, which makes paying fair price a good deal.
That unlimited upside makes the additional 10% or 20% discount in entry price less relevant.