The Most Important Thing
by Howard Marks
With only a few weeks left in my MBA career, I am now fully aware that being astudent again offers some very valuable perks. Through my fellowship on UCLAAnderson’s Student Investment Fund I have had access to a number of greatinvestors. But, by far my biggest break was having the opportunity to meet withHoward Marks, the founder of Oaktree Capital Management and author of so manymemorable investment memos. Like many of you who unfailingly read Marks’smemos right when they are released on Oaktree’s website, I was thrilled when Iheard that Marks was going to publish a new book on investing. However, I neveranticipated that I would be lucky enough to receive an advance copy from Howardhimself or have the opportunity to review it for my blog. But, as I said, being astudent again is not too bad. So, in an attempt to revive the book-reviewing skillsthat have been lying dormant since middle school, the following is my commentaryon Howard Marks’s soon-to-be-released book,
The Most Important Thing.
Oddly enough, I think it is important to start off with a disclaimer.
The Most Important Thing
is not a how-to book about investing. Marks doesn’t provide a JoelGreenblatt-esque magic formula or any shortcuts to becoming a great investor. Infact, on the very first page of chapter one Marks reminds us that no investing rulealways works. The book also does not separate out specific investment techniquesfor different asset classes. Instead, in the tradition of Ben Graham’s
Investor and Seth Klarman’s
Margin of Safety,
it is a book on how to
aboutinvesting. In reality, Marks builds on the ideas of the most famous value investorsby adding his own insights and anecdotes. For people who are devoted valueinvestors, the philosophy he articulates will sound familiar and certainly will notdrastically alter the way you invest. However, what is both unique and strikingabout this book is the way he breaks down the important aspects of his investmentapproach into very approachable and wisdom-filled sections. When the reader hasfinished the book, the lasting impression is that Marks was able to provide acomprehensive and detailed overview of his investment approach in less than 200pages.In his thoughtful and didactic way, Marks aims to help the reader develop themental tools and investment framework that are required for success in this verydifficult and treacherous domain. Specifically, using his four decades of experienceas a basis, Marks introduces the reader to his investment philosophy with acombination of new material and a brilliant integration of passages from previousmemos. The transitions between the original and previously articulated ideas are soseamless that Marks comes off like a wise grandfather who always has a perfectlypoignant story to tell, no matter what the context. For example, even in theintroduction, the reader gets the sense that Marks has been able to leverage hisvast experience in way that gives him an investment edge: