The Memo by Howard Marks
The Indispensability of Risk
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.
12:20
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Quick takeaways
- Not taking enough risk can be the riskiest strategy in investing.
- Success in investing requires accepting losses as part of a well-reasoned strategy.
Deep dives
The Role of Sacrifice in Investing and Chess
The podcast discusses the importance of sacrifice in investing by drawing parallels to chess. Sacrifice in chess involves giving up pieces for strategic gains that may not be immediately tangible, similar to making calculated risks in investing where losses are incurred for potential future gains. Examples like buying a ten-year U.S. Treasury note as a sham sacrifice versus other real sacrifices in the investment world are highlighted. The narrative emphasizes the necessity of bearing meaningful risks to achieve high returns in both chess and investing.
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