Howard Marks is a highly regarded value investor and cofounder of Oaktree Capital Management with $75 billion under management. Warren Buffett even believes Howard Mark’s memos are a must read, so the rest of us humans should pay attention. Even though I don’t think of myself as a value investor (more of a growth-value hybrid), I certainly respect the craft, especially since the wealthiest investors on this planet are value investors. Several years ago I started reading Howard Mark’s memos and really enjoyed his writing style as he doesn’t waste words. His thoughts on investing usually run a bit deeper than most. Like this one: The Role of Luck.
I finally got the chance to read his book, The Most Important Thing Illuminated when I was on vacation this past week. I can see why it’s used as mandatory reading at Columbia Business School. Marks’s memos are intertwined throughout the book as well as comments from Joel Greenblatt, Christopher Davis, Paul Johnson, and Seth Klarman. It truly is a classic that I should have read earlier.
Marks’s goes into detail about the type of thinker it takes to be a successful investor, and also that a lot of lessons can’t be taught they have to be experienced.
“Experience is what you got when you didn’t get what you wanted.” – Howard Marks
“Few people have what it takes to be great investors. Some can be taught, but not everyone…and those who can be taught can’t be taught everything.” – Howard Marks
He also does a great job of talking about inefficient markets and going against the crowd:
“Inefficiency is a necessary condition for superior investing” – Howard Marks
“I should limit my efforts to relatively inefficient markets where hard work and skill would pay off best.” – Howard Marks
“Inefficiencies – mispricings, misperceptions, mistakes that other people make – provide potential opportunities for superior performance. Exploiting them is, in fact, the only road to consistent outperformance. To distinguish yourself from the others, you need to be on the right side of those mistakes.” – Howard Marks
Marks’s devotes a lot of the book on the topics surrounding the psychology of investing and evaluating risk. Instead of me quoting the rest of the book, go read it for yourself 🙂 it is well worth it.
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