Book of the Month 03-20

March 2020 – Scott Morrison’s pick this month is The Most Important Thing by Howard Marks.

Written by Howard Marks, the chairman and co-founder of Oaktree Capital Management, one of the largest credit investors in the world, The Most Important Thing is an investors’ classic.  Marks is renowned for his insightful assessments of market opportunity and risk. This book chronicles the thoughts and lessons of a very experienced distressed debt investor.

After re-reading this book recently for the umpteenth time, I kept on thinking about how the book ages today?  With the current trend of central banks manipulating economies via interest rates, would we be able to apply some of the contrarian lessons in this book: how do we best take advantage of market dislocations caused by excess debt and investor greed at the company level, as central banks monetize more and more of the world’s debt load.

I liked this book so much I tracked Howard Marks down at a financial conference and got him to autograph my copy.

Wise Words

“Experience is what you get when you didn’t get what you wanted.”

“To Outperform the average investor you have to be able to outthink the consensus.”

“There are few things as risky as the widespread belief that there’s no risk.”

“Investment risk comes primarily from too-high prices, and too-high prices often come from excessive optimism and inadequate skepticism and risk aversion.”

“The paradox exists because most investors think quality, as opposed to price, is the determinant of whether something’s risky.”

“Large amounts of money aren’t made by buying what everybody likes. They are made by buying what everybody understimates.”