Howard Marks (Trades, Portfolio) is a billionaire guru and the author of the classic book "The Most Important Thing." Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio), longtime investment partners at Berkshire Hathaway (BRK.B, Financial), agree that this is a great book worth reading.
Marks is the co-founder of Oaktree Capital (OAK, Financial), an investment firm that was formed in 1995 by a group of individuals who had been investing together since the mid-1980s in high yield bonds, convertible securities, distressed debt, real estate, control investments and listed equities.
Marks is similar to Seth Klarman (Trades, Portfolio), Buffett and Joel Greenblatt (Trades, Portfolio). These gurus follow legendary value investor Benjamin Graham’s investing advice; however, in this book Marks talks about differentiating advantages and how there are multiple factors that are the most important thing when it comes to investing.
This book is unique because Marks starts every chapter "The Most Important Thing," then he gives the chapter title. This is a great way of giving perspective to the reader because it shows there are multiple important factors to consider when you’re making investments.
I like how Marks simplifies risks; in one of his chapters he says, “None of us can know the future with certainty; risk is inescapable.Thus, dealing with risk is an essential — I think the essential— element in investing.” He then goes on to say later in the chapter, “Risk exists only in the future, and it’s impossible to know for sure what the future holds. ... No ambiguity is evident when we view the past.”
I also really liked how he talks about recognizing risk. “The truth is, risk tolerance is antithetical to successful investing. When people aren’t afraid of risk, they’ll accept risk without being compensated for doing so.” Munger says in "Poor Charlie's Almanack" that learning from others' mistakes is a great thing for you because then you don’t have to learn the hard way by making them yourself.
Simplifying risk is the most important thing because most people stop before they start investing due to their fear of risk. One thing I have learned is to always think “What's the worst that can happen?” I always ask myself that before I make an investment decision that involves taking risk.
This was a great book. I learned a lot from reading "The Most Important Thing," and I am grateful Marks took the time to write it. I would recommend this book to everyone.
Below is a great YouTube where Marks further explains his investment philosophies
Cheers to your investment success.
