Howard S. Marks, an eminent investor and co-founder of Oaktree Capital Management, has several claims to fame. The Septuagenarian investor has worked his way up to become a global name in the world of investing and finance.
He is the largest investor in distressed securities worldwide and is known for his famous ‘memos’ detailing his perspective of the economy.
Even the legendary investor Warren Buffett once said of Marks, “When I see memos from Howard Marks in my mail, they're the first thing I open and read.”
Howard Marks is known for value investing and for his knack for distressed and undervalued assets to invest in. He is widely known for redefining investment strategies which are followed by investors around the world.
Here we share some of the key lessons which one can learn from Howard Marks:
1. Management of risk
Risk-free investments will usually bring risk-free returns. Investment isn’t about avoiding risk altogether. Instead, we should think about managing risk via rebalancing, diversification and long-time horizon, among other tools.
2. Distinguish between luck and skill
It’s not recommended to follow an investor just because of great results for one year or two. Investing is seen as a game of poker, instead of chess.
So, success could be temporary due to luck. It's advisable to look into their investment process and strategy to make sure that you are convinced of the investing philosophy instead of getting carried away with high returns.
3. Failure is a better teacher
It’s not advisable to learn from a bull market. After all, it is a bad teacher because it makes you feel infallible so much so that you tend to go overboard with your forecasts. On the contrary, make use of the market decline to refine your investment philosophy.
4. Learn to like lower prices
It is expected for investors to like something less when its price rises, but in case of investing, stocks with rising price is preferred over others. However, if you want to make big gains, you should welcome market declines.
5 About forecasting of markets
One common feature among great investors is that they tend to ignore forecasts of all kinds. It is quite tempting to believe that you can also get a sense of future by adhering to the gurus.
But always bear in mind that no one can predict the future correctly and even a broken clock is right two times a day.
6 Psychology over analysis
Investors often make a number of mistakes not because of one or more analytical factors, but because of psychological ones.
Information is now readily available round-the-clock to anyone and everyone. What, however, matters and is capable of changing the fortunes is how we react to this information.