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Mark Lin
Mark Lin
Articles (212) 

Notes on 1992 Howard Marks (Oaktree Capital) Memo (Classic Guru Shareholder Letters Review)

November 07, 2012 | About:

It is common for investors to read the latest shareholder letters from investment gurus to understand their latest positions and opinions. However, it is often that the real wit and wisdom of the investment gurus are found in old classic shareholder letters.

This is one of many in a series of articles where I will extract relevant portions of classic Guru shareholder letters and share with readers my views.

Here is an overview of the 1992 Howard Marks (Oaktree Capital) Memo.


(1) "...Two principal factors determine whether an investment will be successful. The first is the intrinsic quality of the underlying entity being invested in...The second factor determining whether something will be a good investment is price..."

(2) "...We are less concerned with the absolute quality of our companies than with the price we pay for whatever it is we're getting. In short, we feel “everything is triple-A at the right price”. We have many reasons for following this approach, including the fact that relatively few people compete with us to do so. But we feel buying any asset for less than it's worth virtually assures success. Identifying top quality assets does not; the risk of overpaying for that quality still remains..."

(3) "..., holding the level of supply constant -- price will be higher if there is more demand and lower if there is less. And that's why buying when everyone else is can, in and of itself, doom an investment...Conversely, buying what no one else will buy at any price almost assures eventual success..."


(1) Yes, investment is all about price versus quality. It is so easy and so difficult as well. Acquiring the skills to

accurately determine price and quality can take a lifetime of learning and investing.

(2) The greatest challenge in selecting Warren Buffett-style investments is to avoid overpaying for quality.

(3) Be contrarian; I can't emphasize this enough.

You can read Howard Marks' full memo here.

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Mark Lin

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