The Most Important Thing - Howard Marks

[onyx1]

[amazonsearch]The Most Important Thing:  Uncommon Sense For The Thoughtful Investor[/amazonsearch]

 

Forty five years of value investing experience distilled into 180 pages.  I now understand why Buffett reads Howards Marks letters as soon as they are published.  This book is short, sweet, and dripping in wisdom.  It will stand the test of time.  I plan to re-read it every year.

[Packer16]

This probably one of the best books I have read on how to outperform the market and others.  His focus is being different and correct.  He also stress the importance of value and provides some tips on how to deal with market psychology and what creates underpriced assets. 

 

Packer

[Liberty]

I'm a couple chapters in and I quite like it so far. Very concise and insightful.

 

(yes, I read 3-4 books in parallel -- also reading Free Capital, Steve Jobs, Money Masters of Our Time, and this)

[Ben Graham]

This probably one of the best books I have read on how to outperform the market and others.  His focus is being different and correct.  He also stress the importance of value and provides some tips on how to deal with market psychology and what creates underpriced assets. 

 

Packer

 

Howard Marks, the chairman and cofounder of Oaktree Capital Management, is renowned for his insightful assessments of market opportunity and risk. After four decades spent ascending to the top of the investment management profession, he is today sought out by the world's leading value investors, and his client memos brim with insightful commentary and a time-tested, fundamental philosophy. Now for the first time, all readers can benefit from Marks's wisdom, concentrated into a single volume that speaks to both the amateur and seasoned investor.

 

Informed by a lifetime of experience and study, The Most Important Thing explains the keys to successful investment and the pitfalls that can destroy capital or ruin a career. Utilizing passages from his memos to illustrate his ideas, Marks teaches by example, detailing the development of an investment philosophy that fully acknowledges the complexities of investing and the perils of the financial world. Brilliantly applying insight to today's volatile markets, Marks offers a volume that is part memoir, part creed, with a number of broad takeaways.

 

Marks expounds on such concepts as "second-level thinking," the price/value relationship, patient opportunism, and defensive investing. Frankly and honestly assessing his own decisions--and occasional missteps--he provides valuable lessons for critical thinking, risk assessment, and investment strategy. Encouraging investors to be "contrarian," Marks wisely judges market cycles and achieves returns through aggressive yet measured action. Which element is the most essential? Successful investing requires thoughtful attention to many separate aspects, and each of Marks's subjects proves to be the most important thing.

 

"This is that rarity, a useful book."--Warren Buffett

[Liberty]

Ben, did you just cut & paste this page?

 

http://cup.columbia.edu/book/978-0-231-15368-3/the-most-important-thing

[Rabbitisrich]

Liberty, no. Ben Graham wrote that page.

 

I like the book but it's more useful to a new investor. An experienced investor in need of a refresher would probably benefit from The Checklist Manifesto by Atul Gawande.

 

[Liberty]

He works for Columbia University Press? i had no idea.

[Packer16]

There is new edition out with annotations by Seth Klarman, Joel Greenblatt and Chris Davis.  This book much like The Intelligent Investor is better each time I read it.  It has a very unique description of risk and states that the goal is to ensure you get adaquately rewarded for taking risk.  He describes risk in the traditional sense (business quality and moats) but also introduces valuation risk and posits the question at what valuation does any security become less or more risky due to price.  He also states that risks include illiquidity and leverage.  The notion of loss is when risk meets adversity so you may never see risk until a challenging period happens.  He tries to focus on securities that others deem too risky and thus avoid and ensures that he get enough upside to compensate for the risk.  This is the first book that I have seen deal with risk in this way.

 

Packer   

[giofranchi]

I agree with all of you: "The Most Important Thing" is a terrific reading!

 

What's even better is that now we can partner with Howard Marks, investing in OAK. OAK looks significantly undervalued right now: at the link below you can find a good analysis and evaluation of the company.

 

http://brooklyninvestor.blogspot.it/2012/04/oak-oaktree-capital-management-ipo.html

 

giofranchi

[racemize]

I agree with all of you: "The Most Important Thing" is a terrific reading!

 

What's even better is that now we can partner with Howard Marks, investing in OAK. OAK looks significantly undervalued right now: at the link below you can find a good analysis and evaluation of the company.

 

http://brooklyninvestor.blogspot.it/2012/04/oak-oaktree-capital-management-ipo.html

 

giofranchi

 

Thanks for the link, this is something I've been considering as well. We should start an investment thread for this.

[meiroy]

 

 

I'm half way through and find it to be quite tedious, hope it gets better...

 

[alwaysinvert]

 

 

I'm half way through and find it to be quite tedious, hope it gets better...

I just read it and actually quite agree with you. When he explained that skepticism is not only being negative in a positive environment but also positive in a too negative environment my eyes rolled to the back of my head. There were some gems and he is obviously a talented writer but he dragged it out way, way too long and repeated himself many times. And that's not a very flattering review for a book that short.

[rukawa]

I never understood the appeal of this book to Buffett or other fund managers. There must be something I am missing. I think Francis Chou also really likes it. To be honest I just don't get it.

[Liberty]

I never understood the appeal of this book to Buffett or other fund managers. There must be something I am missing. I think Francis Chou also really likes it. To be honest I just don't get it.

 

Because you already knew what's in it or because you disagree with what is being said?

 

[Packer16]

I found the appeal to be the theoretical framework (mental model) for risk and the movements in markets.  I suppose he could have provide some examples to illustrate his points.  This has made me think seriously about position sizing, how risk is related to price and not just uncertainty of outcome and where to find bargains.  Maybe this is obvious to some folks but this book has done a great job describing these aspects of investing.

 

Packer

[rukawa]

"Because you already knew what's in it or because you disagree with what is being said?"

 

To the extent that I agree with him I find that what he has written has already been better explained by others or is obvious. There is rarely anything I learn that is new or unexpected. My brain is so bored by what he writes that I am incapable of learning anything.

[PlanMaestro]

Better than the book.

http://www.gurufocus.com/news/209022/oaktrees-howard-marks-thinks-the-recovery-is-in-the-early-days-and-he-likes-real-estate

[Guest wellmont]

marks has kind of a way of repeating himself in the same document. he's still a brilliant guy. but I see what a lot of you are saying about his writing style.

[biaggio]

I think is also good read from 1994:  http://www.safalniveshak.com/howard-marks-how-to-identify-investment-opportunities/

[luck]

thanks plan for the marks video link. 

 

i just read "the most important thing illuminated", which had some interesting annotations by joel greenblatt (had him as a prof at columbia b school and as great a guy as he is an investor).

 

i can't really jive with howard mark's approach for some reason, but i did get a few takeaways: 

 

1. patient opportunism.  let the game come to you, don't go on tilt like a gambler.  buffett quote in the book about mr. market being a pitcher throwing gm at 49!, etc.  you don't have to hit and just stand up to bat and score your runs in the dark of the night.

 

2. specializing in niches and people.  this quote means different things to different people.  it immediately got me a little more focused on the compounder/operator stocks (lbtya, tdg) where you know the capital allocation history has been stellar.

 

 

[TwoCitiesCapital]

Really great book for a higher level perspective of the value investment framework. As others have mentioned it's more generalized and conceptual. I really liked it though as it's one of my first books that I've read from the generalized perspective that I felt was useful.

 

I started out reading the Intelligent Investor, the Little Book that Beats the Market, etc. and I generally took from those very specific criteria for value investments. They have to have a low P/E, or a low P/B, or high ROIC with a reasonable price, etc. It was very specific and very limiting. Over time I've been generalizing value investing theory to better be able to apply to different securities and situations. This book is very good at synthesizing at this higher level to get you thinking about investments in that way. I would have this in my top 5 - not necessarily because the writing is stellar but because the content is great and it's hard to get this view elsewhere (from what I've read over the past 7 years).

[eclecticvalue]

I want to buy the book. Should I get the regular or illuminated edition? Are the annotations insightful or did it distract you?

[peter1234]

I want to buy the book. Should I get the regular or illuminated edition? Are the annotations insightful or did it distract you?

 

I liked them, there is no downside in getting the illuminated edition.

;)

[jawn619]

just re-read this yesterday. Great book.

[feynmanresearch]

I am looking forward to reading Marks book. I have heard so many good things about it