Experienced Voices

The Legendary Teacher 02: Returns & Risk

“Return alone – and specially return over short periods of time – says very little about the quality of the investment decision.” Howard Marks

Return, Return & Return! the obsession of investors with return is not unknown. When an investor is exposed to the simplified Security Market Line like below, People more often then not come with two interpretations: 1. Riskier assets give higher returns or 2. For higher returns, people need to take higher risks. Unfortunately none of them are the absolute truth. One person, who has been educating the aspiring investors about the right ways to think about the returns & risk is Howard Marks, Another Legendary Teacher.

Howard Stanley Marks is an investor, thinker, and writer. He is the co-founder and co-chairman of Oaktree Capital Management, which he founded in 1995 along with three of his colleagues. Recognized as the largest distressed securities investor and one of the largest credit investors worldwide, Oaktree specializes in alternative investment strategies. Over the years Mr Marks has largely been responsible for overlooking the firm’s key investment principles, communicating closely with clientele regarding products and strategies, and contributing his experiences and knowledge relating to investments.

Mr Marks has built up his career on the mantra- “You can’t predict. You can Prepare.” As of 2020, the 74-year-old investor known for his insightful assessment of market opportunities has a net worth of $2.2 Billion and in 2019, he was ranked 370th on the Forbes 400 rankings of the wealthiest Americans. He has been a pioneer in the field of investments, Oaktree Capital in its three decades+ history has beaten their respective indexes by a huge margin. The overall TWRR for their closed ended funds have been in high teens. [Check the Link]

Howard Marks was born and raised in Queens, New York. He holds a B.S.Ec. degree cum laude from the Wharton School of the University of Pennsylvania with a major in finance and an M.B.A. in accounting and marketing from the Booth School of Business of the university of Chicago, where he received the George Hay Brown Prize. He is also a CFA charter holder. His first job after university was in investment research for Citibank. He then went onto TCW, the US asset manager, before Oaktree. He is also a published author of books: “The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor” & “Mastering the Market Cycle”.

Howard Marks propagates that Investment success doesn’t come from “buying good things,” but rather from “buying things well”. One of his success traits would be making money off finding situations where he can buy low, especially distressed assets, then sell high. Timing your buying is more important than the quality of what you buy, he says. He has been contributing towards the development of next generation of thoughtful value investors by writing his investor memos. His memos are worldly acclaimed and are widely anticipated for their detailed investment strategies and insights into the current economic conditions. Currently, Mr Marks is assessing the unprecedented times through a pandemic as an investor, though he remains hopeful. In his recent memo, he says “I’m writing to take a closer look at the market’s rise and where it leaves us. The goal, as usual, isn’t to predict the future but rather to put the rally into perspective.” One can reach his memo’s published over last 30 years easily on the website of Oaktree capital. (Link to Memos)

Bottom Line: there’s no such thing as a good or bad idea regardless of price!” Howard encourages everyone to go ahead and take their set of risks in life as risks mean more things can happen than will happen. Though those risks should be a conscious decision and approach should be to get the odds in your favor.

Happy Investing & Keep Learning!

On the Teacher’s day Sep 5′ 2020, I decided to share the list of such legendary teachers to help you on your investment journey. Look out for this section for more legendary teachers on Investing & learn a thing or two from them. The article was prepared with the help from Nawaal Kareem.


The Most Important Thing Illuminated – Howard Marks

One of my latest readings have been the book “The Most Important Thing Illuminated”. I wish, I have read it a couple of years back, when i was starting to engage in the investment world. I am a big fan of Howard Marks and have been reading his quarterly news letters for quite sometime but didn’t get the opportunity to read his book so far. This time i got lucky to get my hand on  this book.

This is one of the best book, which can help you think and visualize the different aspects of investing. The part which i liked the most; The way he defines the risk in investing and to spoil the guess is not the volatility which most of us thought to believe. i would strongly recommend to read through the chapters 5-9 for all investors out there.

Those who do not know Howard Marks, He is a Co-Founder of Oaktree Capital Mgmt with AUM of USD 122bn. He is a Billionaire rank #370 in the Forbes billionaire list with his net worth reported as USD 2.2bn (Forbes). The most important thing that he is one of those investor who have pre-warned about the vanity of investors before earlier financial bubbles of 2001-02 & 2007-08.

Now probably, If you are a novice investor and just started dabbling in the world of finance with no prior knowledge of financial theories like Efficient market hypothesis, Modern Portfolio Theory, or Capital Allocation line etc. May be you wont get some part of the whole process he is navigating, though you will thoroughly enjoy the reading and the stimulation it provides to your thought process towards investing. I would strongly recommend this book to people who likes to take investing seriously either in their profession or on personal finance in equity markets specially and have the basic foundation in place.

My summary will be that to be a good Investor “You not only have to outperform the market but you have to do it more consistently. You can not do that by doing what most investors are doing and still expecting they will outperform. It is an art of buying things at a price equal to or lower than their value consistently.

Attached below is the link to help you buy it, I love amazon to make it so convenient to order your favorites on your finger tips. It is definitely helping me to buy these classics and make my own collection.

The Most Important Thing Illuminated

If you have read it, How did you like this book? I would love to know your thoughts. Also, if you are looking for any specific topic or Book, let me know if i have read it then i can share my thought on those as well.

Happy Reading & Happy Investing!