The Memo by Howard Marks The Indispensability of Risk
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Apr 17, 2024 Exploring the parallels between chess and investing, Howard Marks discusses the importance of taking risks. He emphasizes that not taking enough risk can be risky and highlights the significance of embracing uncertainty for gains. Drawing on insights from Warren Buffett and Charlie Munger, the podcast delves into the need for calculated risks in investments.
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A Mother's Sacrifice
- Maurice Ashley's mother left him and his siblings in Jamaica to seek a better life in the U.S.
- She succeeded after a decade and brought them to the U.S., demonstrating the power of risk-taking.
The Risk of Playing it Safe
- In chess, conservative play can be risky, as it allows skilled opponents to capitalize on inherent positional advantages.
- Avoiding risks entirely can be the riskiest strategy.
The Investor's Trilemma
- Investors face a trilemma: avoid risk for no return, take modest risks for modest returns, or embrace uncertainty for substantial gains or losses.
- The challenge lies in pursuing the latter, as market efficiency limits high-return, low-risk opportunities.