Howard Marks

Howard Marks is one of the most respected voices on Wall Street. As the co-founder of Oaktree Capital Management, he has built a reputation as the world’s leading expert in distressed debt and credit markets. Marks is perhaps even more famous for his “memos” to clients—deeply insightful essays on market psychology and economic cycles that even Warren Buffett claims to read the moment they arrive in his inbox.

The Most Important Thing: Risk Management

In his seminal book, The Most Important Thing, Marks argues that successful investing is not about finding the next hot stock, but about avoiding losers and managing risk. He introduced the concept of “second-level thinking”—the ability to look beyond the obvious and consider what the market is missing. While first-level thinkers say, “It’s a good company, let’s buy the stock,” second-level thinkers ask, “It’s a good company, but everyone thinks it’s a great company, so it’s overpriced. Let’s sell.”

Distressed Debt: Finding Value in the Rubble

Oaktree Capital specializes in “distressed debt”—buying the bonds of companies that are in or near bankruptcy. While most investors run away from such situations, Marks realized that if you buy the debt of a fundamentally sound company that has a broken balance sheet, you can often end up owning the company for a fraction of its true value through the restructuring process. This contrarian approach has made Oaktree one of the most profitable firms in the world during economic downturns.

The Importance of Luck and Humility

Unlike many ego-driven fund managers, Marks is incredibly humble about the role of luck in investing. He believes that the range of possible outcomes is always much wider than the single outcome that actually occurs. Successful investing, therefore, is about preparing for multiple futures rather than betting everything on one prediction. He emphasizes that “being right too soon is indistinguishable from being wrong.”

Top 5 Wisdoms from Howard Marks

Detailed Sources & Further Reading

• Marks, H. (2011). The Most Important Thing: Uncommon Sense for the Thoughtful Investor. Columbia Business School Publishing.
• Marks, H. (2018). Mastering the Market Cycle: Getting the Odds on Your Side. Houghton Mifflin Harcourt.
• Oaktree Capital: The Memo Archive (Essential reading for any investor).
• Masters in Business Podcast: Barry Ritholtz’s interviews with Howard Marks.
• YouTube: Howard Marks’ lectures on “Risk and Return” at various universities.