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RWH002: Investing Wisely in an Uncertain World w/ Howard Marks

whatshot 13 snips

Mar 15, 2022

Guest

Howard Marks

Howard Marks, a distinguished investor and author, shares his wealth of experience in navigating the unpredictable financial world. He reflects on his early encounters with market bubbles and how they've shaped his investment philosophy. Marks emphasizes the importance of buying undervalued assets and discusses the emotional challenges investors face. He also reveals his changing perspective on Bitcoin and offers a bullish outlook on China. Throughout, he stresses integrity and living on one's own terms as keys to success in both investing and life.

01:11:25

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ANECDOTE

Early Influences

Howard Marks's parents, having lived through the Depression, instilled in him a cautious approach to risk and finances.
His father, a "world champion pessimist," further reinforced this mindset.

question_answer

ANECDOTE

Nifty Fifty and Junk Bonds

Marks's early career involved navigating the Nifty Fifty bubble, where he witnessed the dangers of overpaying for "great" companies.
This experience, coupled with his later success in junk bonds, taught him the importance of price over perceived quality.

insights

INSIGHT

Shifting Perspectives

Conversations with his son, Andrew, challenged Marks's traditional value investing principles.
Andrew argued for the importance of holding great companies long-term, even at seemingly high prices, emphasizing the value of future growth.

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Shaping Investment Philosophies Through Family and Experience

02:00 • 19min

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Embracing Change in Investment Strategies

20:35 • 5min

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Navigating Market Dynamics

25:20 • 24min

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Investment Strategies in a Rising Interest Rate Environment

49:05 • 5min

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Navigating Crypto Investments and Ethical Strategies

53:36 • 15min

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Defining Success on Your Terms

01:09:02 • 6min

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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.

Poor Charlie's Almanack

The Essential Wit and Wisdom of Charles T. Munger

Charles T. Munger

Peter D. Kaufman

Originally published in 2005, Poor Charlie's Almanack is a collection of eleven talks delivered by Charles T. Munger between 1986 and 2007. Edited by Peter D. Kaufman, this book draws on Munger's extensive knowledge across various fields to provide a framework for rational and rigorous approaches to life, learning, and decision-making. It is renowned for its sharp wit and rhetorical flair, making it an essential read for investors, entrepreneurs, and anyone seeking to enhance their wisdom and critical thinking skills.

Thinking, Fast and Slow

Daniel Kahneman

In this book, Daniel Kahneman takes readers on a tour of the mind, explaining how the two systems of thought shape our judgments and decisions. System 1 is fast, automatic, and emotional, while System 2 is slower, effortful, and logical. Kahneman discusses the impact of cognitive biases, the difficulties of predicting future happiness, and the effects of overconfidence on corporate strategies. He offers practical insights into how to guard against mental glitches and how to benefit from slow thinking in both personal and business life. The book also explores the distinction between the 'experiencing self' and the 'remembering self' and their roles in our perception of happiness.

1984

None

George Orwell

Published in 1949, '1984' is a cautionary tale by George Orwell that explores the dangers of totalitarianism. The novel is set in a dystopian future where the world is divided into three super-states, with the protagonist Winston Smith living in Oceania, ruled by the mysterious and omnipotent leader Big Brother. Winston works at the Ministry of Truth, where he rewrites historical records to conform to the Party's ever-changing narrative. He begins an illicit love affair with Julia and starts to rebel against the Party, but they are eventually caught and subjected to brutal torture and indoctrination. The novel highlights themes of government surveillance, manipulation of language and history, and the suppression of individual freedom and independent thought.

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.

The intelligent investor

Jason Zweig

Benjamin Graham

Written by Benjamin Graham, 'The Intelligent Investor' is a seminal work on value investing that has inspired millions since its original publication in 1949. The book emphasizes the importance of distinguishing between investing and speculation, calculating the intrinsic value of companies, and maintaining a margin of safety. The revised edition includes updated commentary by Jason Zweig, who provides modern examples and insights to help readers apply Graham's principles in today's market. Warren Buffett, a disciple of Graham, has praised the book as 'the best book about investing ever written'.

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, YOU'LL LEARN:

04:31 - How Marks was shaped by his first experience of a stock market bubble and crash.
12:04 - How conversations with his son have led him to modify his investment principles.
18:20 - Why he came to believe that buying cheap assets is the key to successful investing.
26:01 - What is his view of the current investment environment?
36:37 - Why Marks regards emotion as the “greatest enemy” of superior investing.
48:40 - How to invest successfully in a period of high inflation.
54:48 - Why Marks now believes that his “knee-jerk skepticism” about Bitcoin was wrong.
58:43 - Why Marks is bullish on China at a time when most foreign investors are running scared.
01:04:03 - Why moral values like integrity, candor, and fairness are essential to a good life.
01:14:00 - How to succeed by playing to your own strengths and living life on your own terms.

*Disclaimer: Slight timestamp discrepancies 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, and the other community members.
Howard Marks’ Memos.
Howard Marks’ “Something of Value” Memo.
Howard Marks’ book, The Most Important Thing Illuminated.
Howard Marks’ book, Mastering the Market Cycle.
Preston and Stig discuss The Most Important Thing book on We Study Billionaires Episode 073.
Trey interviews Howard Marks on We Study Billionaires Episode 073.
William Green’s book, “Richer, Wiser, Happier” – read the reviews of this book.
William Green interviews Ray Dalio on We Study Billionaires Episode 410.
William Green’s Twitter.

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