Howard Marks

“In investing, you can put together a portfolio rather than one that will produce maximum success. If a certain future unfolds, you can put together a portfolio Which will do fine if several, any of several futures unfold, and not too terribly if a bunch of oth…”

“History, the things that have happened so far and people's reaction to history have Semi-predictable implications for the future.”

“The things that have happened, for example, in the economy and the markets are likely to induce certain behavior in the future, and you can know a little bit about that. And, but when the history and the past behavior has been extreme, the ability to infer fro…”

“Rather than thinking of cycles as ups and downs, which I think most people do, think of them as excesses and corrections.”

“It stands to reason that it would. If America, if we programmed AI to find the elements and expect the patterns that produced success in the past and left it alone. And since we're told AI does not have greed or fear or optimism or pessimism, you would think t…”

“Well, I think that the recovery is, ah, I think it's, ah, it's gone on a good while, and, ah, it's, ah, it's not nascent, it's not adolescent, ah, it's, but it's also not, ah, ah, geriatric. I think it's in middle age, ah, and I think the US economy, if that's…”

“I think that most ambition starts with the dollar sign. In enlightened cases, it transitions to non-dollar.”

“When I think about my early decades, not years, decades, and I think about you know, what I did from, let's say, I would say from the beginning of, let's say high school until starting Oak Tree in, in 95. So that 35 year period, which took me up to age let's s…”

“And if you bought those stocks, the day I got to work in September of 69, if you held them tenaciously for five years, you lost about 95% of your money. 95%. Because for many of them, something did go wrong, and for all of them, the price was too high. The P.E…”

“I've been in high yield bonds for 48 years. And in our experience, 99% of the bonds have paid interest in principle as promised.”

“If you go into a field that everybody likes and they like it a lot and have bid up the price, then your returns are not likely to be high. If they, if you go into a field where everybody else has been blind to the merits and says, I wouldn't touch that with a …”

“The base, the most important fundamental skill set is predicting the probability of the fault better than other people. That's where if we don't have that, that's the necessary condition for superior performance.”

“Over the last 40 years, on average, something like 3.6 or 3.7% of all high yield bonds have gone into default every year. And our default rate has been Roughly a third.”

“When you look at a portfolio and you see a stock that's down 80%, It's usually because something wasn't covered. And because the analysis was not disciplined enough to touch all the bases.”

“Who is the person in the investment business today who will find the most success in the next 10 years? The answer is, in my opinion, the person who best understands AI and its capabilities and implications.”

“Neither can most people. So, so what that says is there is a role for exceptional people, even in an AI world.”

“My answer is that indexation has taken over as it has, not because it's so good, but because active management was so bad.”

“The bad times create an opening for active management. But it's still hard, and not many people can do it well. Why do bad times create an opening? Because panic drives down, let's say, stock prices. But the same panic causes most people to panic, which means …”

“So if your excitement level, and by that I mean your insight level, is average, you don't have an edge. Your, and you get involved in AI, your performance will be average. You will go along with the tide if it works. You'll be schmeiced if it doesn't work.”

“Readily available, quantitative information about the present cannot hold the key to success. Because everybody has it. Success in investing is doing better than others. Investing is a funny field because it's really easy to be average, and it's really hard to…”

“This is a competitive game... You don't have to, it's not a matter of being right or wrong. It's a matter of being more right than the other person or less wrong.”

“Asking me how to become a second level thinker is like in basketball, we say you can't coach height. All the coaching in the world will not make your team taller. So can you, I can tell you that you must become a second level thinker to be successful as an inv…”

“Second level thinking or contrarian thinking is not just different from the herd. That's not enough. It has to be different from the herd and better.”

“If you believe that consensus is as close to right as most people can get, then if you tell Claude, I only want non-consensus thinking, then it has a high probability of being wrong.”

“There are certain themes that re that rhyme from instance to instance in history. And They mostly have to do with human nature. And I think human nature doesn't change incredibly slowly. I mean, when we talk about fight or flight, people will start talking abo…”

“If you have to be right all the time, if there's something in your makeup that recall, that says you're going to be unhappy if you're not right all the time, don't become an investor.”

“I would suggest that what we might be seeing is the exact result of everyone copying the Yale model. You know, Howard Marks famously said, you make a lot of money when you do something non-consensus and accurate. But what if everyone copies David Swenson? What…”

“If your parents were adults during the depression, they were traumatized, and you grew up hearing things like, don't put all your eggs in one basket and save for a rainy day. I think, if nothing else, that may be a rather, I would say, cautious person.”

“If you held the stocks for five years from the day I got there, you lost about 95% of your money in great companies.”

“As time passed, I rounded that into a belief that there is no asset so good that it can't become overpriced and dangerous, and very few assets which are so bad that if it's cheap enough, it can't be a good idea.”

“The basic Thing is, I have to think I have something to write, which not everybody else has been writing or talking about, or I have to see something differently from everybody else. The last thing I want to do is put out a memo that says, me too.”

“As I say, if you do things nobody else wants to do, you can usually get a good deal. But then eventually other people figure out that it's a good idea. They flock in. It becomes more popular. And then of course, like everything, it gets overdone. Then the oppo…”

“And I would say that the aspect of being undiscovered and unloved is over. It's a reasonable thing to do if you do it carefully, but I don't think it's a special strategy. It's just fairly priced.”

“That still presents a big problem because if you want to apply high standards and somebody else has lower standards, then they can bid more for a given deal.”

“So it's on today, but I don't think it's terrible today. It's just, the markets are a little bit generous today.”

“If we avoid the losers, the winners take care of themselves. That's our official motto. And that's the right way to think about fixed income.”

“I wrote a memo in December, 22, called The Sea Change, and it talked about the change in the interest rate climate, which I think is structural and long-lasting.”

“I totally trust this guy. I read his book. It's incredible. I'm going to buy into this weird Greek shipping company. That he just bought, you know, fifty million dollars of equity in. And so I put like a hundred grand into it and it goes out of business.”

“You want that to be true when you make the investment, but you don't want to be very non-consensus for long. You want to quickly be consensus and right. You just don't want anybody to see it until you make that bet. But like, you don't want to make that bet an…”

“That's right, David. Previously, that was held by a, when I wrote, I think it was in January of 14 or 15, called Luck, in which I talked about how lucky I've been and that I'm a big believer in luck and it's great to be on the right side of it. And I listed ab…”

“In the credit field, where I've spent the last 44 years, we historically have not had contact with what you would call a tech company.”

“And by the way, when I say the value investor does this and the growth investor does that, Probably the biggest single theme of the memo was that that dichotomy should not be so hardwired.”

“Human knowledge is cumulative, and lately it's been rushing forward at an incredible pace, so it's hard to imagine that there's a piece of information that I can get off the internet that's going to make me any money for the simple reason that everybody else c…”

“We don't want the lone wolf. We don't want the you eat what you kill kind of person. And we don't pay people on the basis of their one year's quantitative performance as an individual, and we don't want people to work that way.”

“This idea that as soon as there's a profit, you should take some of it off the table, seems like a huge mistake.”

“And a huge amount of people's preoccupation, in my opinion, is with avoiding regret. Embarrassment in front of others, regret themselves.”

“You know, it all comes down to maybe we can think better about the selling decision if we rebrand it and we call it the decision to unbuy. The thought process should be the opposite of the buying decision and not some chicken stuff about being afraid to lose.”

“In 1990, I went to visit a client in the Midwest who told me that the pension fund he ran for 14 years was between the 27th percentile and the 47th percentile every year for 14 years... That pension fund was in the fourth percentile of all pension funds for th…”

“For the first 10 years I never had a response. Not only did nobody say it was good, nobody ever said, I got it.”

“Most firms, if they have a very successful fund, will follow it up with another fund which is larger on the back of that. But if you think about it, if you had a success in a given area, the good performance of that fund is synonymous with appreciation. In oth…”

“There were debt crises, or crises in general, in 1991, oh one oh two, oh eight oh nine, and then of course a brief one in 2020. And the biggest funds we've raised were the funds that invested in those years. Usually because we had some foresight about what lay…”

“I remember when our good friends, Bruce Karsh and Howard Marks left Trust Company in the West to start Oak Tree and almost instantly had more capital than we did, or at least as much, and we had started a few years earlier, and part of it was that they underst…”

“Funny story, about two or three years ago, when interest rates were heading into unprecedented territory, I told my partners I needed to talk to some macro experts, and I did everything I could to find my way to Howard and Stan Druckenmiller, and I was thrille…”

“Whether it's like Howard Marks or Warren Buffett or Charlie Munger, whoever they're all like great investors or whatever, but they're not technologists and it's a blind spot.”

“Macro predictions are very hard to make, and I don't think either of us bases our investment decisions on macro forecasts. That's not a way to have a good batting average.”

“With that disclaimer out of the way, first of all, nine months ago, a global depression was absolutely a possibility. With the, most of the developed countries Certainly outside of Asia, shutting down their whole economies in order to limit contacts and bend t…”

“But our government's been running deficits since the global financial crisis, And this was the slowest recovery in post-war history, and it didn't kindle any inflation.”

“You make the big money when you do the things that other people are unwilling to do.”

“In March, the middle two weeks of March, the ninth to the 23rd, were very productive for us in terms of producing bargains.”

“We think our returns will be very attractive relative to the low overall level of interest rates, but nothing like in the past.”