Marks: Prepare portfolios for multiple middle-probability outcomes rather than maximizing single scenarios
Howard Marks · Howard Marks: AI, Debt vs Equity & The Next 40 Years Of Investing | Nikhil Kamath | People by WTF · Nikhil Kamath · May 4, 2026 · at 11:09
Howard Marks, co-founder of Oaktree Capital Management, discusses why economic forecasting fails and explains how to build robust portfolios under uncertainty.
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“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 other futures unfold. Now you can't prepare simultaneously for the positive tail and the negative tail. If you prepare for a total disaster Then you're unprepared for a great future. If you prepare for enormous success and you're going to maximize your outcome, should this success unfold, then you're probably totally unprepared for a very negative. But you can prepare if you If you, ah, suboptimize for a number of possible outcomes in the middle of the probability distribution.”
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