The Memo by Howard Marks Behind the Memo: Fewer Losers, or More Winners?
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Sep 20, 2023 In this podcast, Howard Marks talks about the importance of avoiding losers and holding a diversified portfolio. He discusses the concept of risk in investing and emphasizes the need to bear risk intelligently. He uses tennis as an analogy to discuss the concept of balancing offense and defense in investing. He explores a graph that helps explain the relationship between risk and returns and emphasizes the importance of making informed choices. Lastly, he discusses the impact of alpha on investment outcomes and whether investors should focus on fewer losers or more winners.
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Avoiding Losers Shapes Oaktree
- Howard Marks recounts learning the value of avoiding losers in investing from early experiences and client insights.
- He shares how this philosophy shaped Oaktree's investing approach: "always good, sometimes great, never terrible."
Intelligent Risk Bearing
- Investing means bearing risk intelligently with an expectation of profit.
- Avoiding risk altogether limits returns; instead, seek risks others fear but you don't.
Tennis as Investing Metaphor
- Tennis illustrates investing choices: amateurs win by avoiding losers; pros succeed by hitting winners.
- Marks emphasizes assessing skill to decide if one should play offensively or defensively in investing.