We Study Billionaires - The Investor’s Podcast Network RWH063: Avoid Disaster w/ Howard Marks
In a captivating discussion, Howard Marks, co-founder and co-Chairman of Oaktree Capital, shares his investment wisdom gleaned from decades in the industry. He emphasizes the importance of steady excellence over chasing high returns, drawing parallels between investing and tennis. Howard highlights the significance of risk posture in portfolios and warns against overly optimistic tech investments, comparing today's market euphoria to the dotcom bubble. He also reflects on balancing work with personal life, making thoughtful choices rather than succumbing to the frenzy of wealth accumulation.
01:20:17
Minneapolis Dinner That Shaped Oaktree
- Howard recounts a 1990 dinner where a pension fund's conservative returns produced poor long-term rank.
- That lesson inspired his first memo and Oaktree's motto to avoid losers.
Prioritize Avoiding Big Losses
- Avoiding large losses matters more than chasing occasional big winners.
- "If you can avoid the losers, the winners will take care of themselves."
Fixed Income Is A Negative Art
- Fixed-income investing is a "negative art": performance improves by excluding losers.
- The key is assessing which borrowers will keep their promises of interest and principal.
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Intro
00:00 • 27sec
Minneapolis Dinner That Shaped Philosophy
00:27 • 2min
Fixed Income as a 'Negative Art'
02:19 • 4min
Playing Within Yourself in Investing
06:09 • 3min
Lessons from Big Blowups
08:46 • 1min
Surviving Market Storms
10:15 • 3min
Calibrating Your Risk Posture
13:24 • 3min
When to Act vs. When to Sit
16:40 • 4min
Making Infrequent, High-Conviction Calls
20:30 • 49sec
Taking the Market's Temperature
21:20 • 3min
Ad break
24:20 • 3min
Institutional Idiosyncrasy and Avoiding Bureaucracy
27:50 • 1min
Bruce Karsh: The Ideal Partner
29:00 • 8min
Specialization and Inefficient Markets
36:45 • 5min
Preparing for Unpredictable Extremes
42:08 • 3min
Getting the Odds on Your Side
45:30 • 5min
Ad break
50:53 • 4min
Mental Models and Charlie Munger's Influence
54:30 • 3min
How Today's Market Echoes the Dotcom Bubble
57:24 • 4min
AI: World-Changing But Risky for Investors
01:01:47 • 5min
Why He Avoids Bitcoin and Gold
01:06:28 • 4min
Opportunity in Credit and Lending Assets
01:10:13 • 3min
Managing Wider Risk and Keeping an Even Keel
01:13:40 • 6min
Balancing Work, Family, and Fulfillment
01:19:40 • 4min
Outro
01:23:57 • 27sec
#11820
• Mentioned in 4 episodes
The most important thing illuminated
Howard Marks
In this book, Howard Marks compiles his memos into 19 key concepts for successful investing.
He stresses the importance of second-level thinking, which involves considering not just the obvious but also the less apparent implications of investment decisions.
Marks emphasizes risk management, noting that good times often teach bad lessons about risk and that successful investing requires a disciplined and adaptive approach.
He also discusses the concept of value investing, highlighting that buying assets at a price below their intrinsic value is a reliable path to investment profit.
The book underscores the need for contrarian thinking and the ability to act against the consensus to achieve above-average returns.
#1462
• Mentioned in 23 episodes
Pioneering portfolio management
An Unconventional Approach to Institutional Investment, Fully Revised and Updated
David Swensen
This book provides a comprehensive guide for actively managed investment portfolios, drawing from David F. Swensen's experience as Yale's Chief Investment Officer.
It outlines an unconventional approach to institutional investment, focusing on non-traditional assets such as private equity and venture capital.
Swensen offers insights into asset allocation, risk management, selecting investment advisers, and navigating market pitfalls.
The book is filled with real-world examples and strategies that have contributed to Yale's endowment's remarkable annualized returns of 16.
2 percent.
#836
• Mentioned in 35 episodes
Mastering the market cycle
Getting the Odds on Your Side
Howard Marks
In 'Mastering the Market Cycle: Getting the Odds on Your Side,' Howard Marks provides a comprehensive overview of market cycles, emphasizing the importance of understanding the patterns of ups and downs influenced by economics, markets, companies, and human psychology.
Marks draws on his decades of experience to explain how investors can position their portfolios to take advantage of market cycles by studying past cycles, understanding their origins, and remaining alert for the next cycle.
The book highlights that market cycles are driven by cause-and-effect relationships and that investors should prepare rather than predict market outcomes.
It also delves into the psychological markers and emotional factors that influence investor behavior during different phases of the cycle.
#1381
• Mentioned in 24 episodes
Winning the loser's game
Timeless Strategies for Successful Investing
Charles D. Ellis
In 'Winning the Loser's Game,' Charles D. Ellis explains that investing has become a 'loser's game' where the outcome is determined by the mistakes of the loser, rather than the skills of the winner.
Ellis advocates for a focus on developing and adhering to wise and appropriate investment policies, emphasizing the importance of understanding client needs, avoiding high fees, and investing for the long term.
The book includes updated chapters on bond investing, investor behavior, and the impact of technology on investment decisions, while reinforcing core principles of successful investing such as indexing and reducing costs.
#1266
• Mentioned in 26 episodes
Devil take the hindmost
A History of Financial Speculation
Edward Chancellor
In 'Devil Take the Hindmost,' Edward Chancellor traces the origins of the speculative spirit back to ancient Rome and chronicles its revival in the modern world.
The book covers various financial bubbles and crashes, including the tulip scandal of 1630s Holland, the South Sea Bubble of 1720, the railway mania of the 19th century, the crash of 1929, and more recent events like the dotcom bubble and the Japanese bubble economy.
Chancellor explores how human psychology and financial practices have led to repeated cycles of speculation and financial instability over the centuries.
#9463
• Mentioned in 4 episodes
Damn Right
Janet Lowe
This book provides an in-depth look at Charlie Munger's life, from his early days to his significant contributions to Berkshire Hathaway.
Written by Janet Lowe, it draws from extensive interviews with Munger himself, his family, Warren Buffett, and other business associates.
The book offers insights into Munger's business strategies, his personal life, and his evolution as a corporate strategist and exceptional citizen.
It is organized thematically and includes a timeline in the appendix to help navigate the complex history of Munger's career.
#163
• Mentioned in 109 episodes
Richer, Wiser, Happier
How the World's Greatest Investors Win in Markets and Life
William Green
In Richer, Wiser, Happier, William Green draws on interviews conducted over twenty-five years with many of the world’s greatest investors.
The book highlights that the most successful investors are mavericks and iconoclasts who question conventional wisdom and think rationally, rigorously, and objectively.
They maximize their odds of long-term success in markets and life by drawing insights from diverse fields such as neuroscience, economic history, psychology, philosophy, and more.
Green explains how these investors can teach us not only how to become rich but also how to improve our thinking, decision-making, risk assessment, and resilience, and how to turn uncertainty to our advantage.
In this episode, William Green chats with multibillionaire investor Howard Marks, the co-founder & co-Chairman of Oaktree Capital Management. Since its launch 30 years ago, the firm has grown into a global powerhouse in alternative investments, with $218 billion in assets.
IN THIS EPISODE YOU’LL LEARN:
00:00:00 - Intro 00:04:01 - Why Howard Marks aims for “steady excellence,” not shooting the lights out. 00:05:59 - What investors should learn from great (& not-so-great) tennis players. 00:13:13 - How to figure out the right “risk posture” for your investment portfolio. 00:20:12 - How he managed to pull off 5 major market calls in the course of his career. 00:33:24 - What makes Bruce Karsh, his long-time partner, a superb investor. 00:36:52 - How specialization can give you a powerful edge. 00:57:53 - How today’s investment environment resembles the dotcom bubble. 00:54:21 - Why Howard expects most AI companies to “end up worthless.” 00:58:55 - Why he’s deeply wary of investing in Bitcoin & gold. 01:10:46 - Why bonds now strike him as a relatively attractive investment. 01:20:05 - How he reached the pinnacle without sacrificing family, friends or hobbies.
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
BOOKS AND RESOURCES
- Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.
- Inquire about William Green’s Richer, Wiser, Happier Masterclass.
- The Complete Collection of Howard Marks’ Memos.
- Howard Marks’ book The Most Important Thing Illuminated.
- Howard Marks’ book Mastering the Market Cycle.
- Charlie Ellis's book Winning the Loser’s Game.
- David Swensen's Pioneering Portfolio Management.
- Edward Chancellor's Devil Take the Hindmost.
- William Green’s book, “Richer, Wiser, Happier” – read the reviews of this book.
- Follow William Green on X.
- Related books mentioned in the podcast.
- Ad-free episodes on our Premium Feed.
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