How To Get Hired By Famous Value Investor Howard Marks

How to Get Hired by Famous Value Investor Howard Marks by John Szramiak was originally published on Vintage Value Investing

A few months ago I wrote an article called How to Get Hired by Warren Buffett.

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That article described the three characteristics Warren Buffett looks for in people when he hires them: intelligence, energy, and integrity.

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Well, I recently came across a video interview with famous value investor Howard Marks – who co-founded Oaktree Capital Management and wrote the great investment book The Most Important Thing – where Marks also talked about what he looks for in people when hiring them.

As it turns out, Howard Marks – just like Buffett – looks for just three (very similar) things when hiring: intelligence, curiosity, and the ability and willingness to be a team player.

How to Get Hired by Howard Marks

Intelligence

Number one: There’s no substitute for IQ. But it’s not technical knowledge which is essential – it’s intelligence and in particular the ability to learn (the technical skills).”

As I pointed out in How to Get Hired by Warren Buffett, everyone wants to hire and work with smart people. So intelligence is often a baseline requirement to do any job. And it’s the first thing Warren Buffett looks for when hiring as well.

But as Howard Marks notes, it’s not technical knowledge. It’s raw intellectual power, and more importantly the ability to learn those technical skills and whatever else is required to be successful at that job.

Curiosity

“Number two: Curiosity. Curiosity leads you to read, curiosity leads you to make the connections – like ‘something I read over here and something I read over here, they connect and together they mean something that nobody’s ever thought of.’ I think curiosity and intellectual drive are very important.”

Howard Marks likes people who are intellectually curious and have the drive to read, learn, and to be successful.

It’s interesting that Howard Marks keeps coming back to learning – he’s looking for people with a desire to learn and a thirst for knowledge. And it’s also interesting that he specifically mentions curiosity and reading.

Warren Buffett is famous for his reading voracity (Buffett says he reads 500 pages a day and, when he was first starting his career, he says he used to read 1,000 pages a day).

Charlie Munger is also famous for how much he reads. He jokes that his grandchildren call him an encyclopedia with two legs sticking out. Here are some great quotes from Warren Buffett and Charlie Munger on the subject of curiosity, learning, and reading:

“Read, cultivate curiosity, and strive to become a little wiser every day.” – Charlie Munger - Click To Tweet

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“Go to bed smarter than when you woke up.” – Charlie Munger - Click To Tweet

“I just read and read and read… I have always enjoyed reading.” – Warren Buffett - Click To Tweet

“I just sit in my office and read all day.” – Warren Buffett - Click To Tweet

Team Player

“And then what we look for is we look for team players. The investment business is full of testosterone and machismo and, you know, there’s a mentality in some parts of the investment business that you eat what you kill. Whoever makes the most money gets the highest bonus, and the others we don’t care about.

But we want people who want to work together to form a successful team and contribute to the success of each other and of the whole company, and people who want to exchange information and exchange expertise and help their colleagues. And clearly I think we’ll get much more out of our people that way than people who are lone wolves, who are just trying to gain an advantage. I think there’s such a thing as being too Darwinian.”

Finally, in an industry where it’s usually every man for himself, Howard Marks says he looks for people who are willing and able to be team players.

Warren Buffett’s third criteria was a similar intangible: integrity. Buffett described integrity as being honest, being generous, doing your fair share, and being someone that other people want to work with… all of which are characteristics that make up a great team player.

Summary

Howard Marks and Warren Buffett make leading a team and building world class organizations seem so easy.

They both look for just three simple things when hiring people. For Marks, it’s intelligence, curiosity, and being a team player. For Buffett, it’s intelligence, energy, and integrity.

Howard Marks

Howard Marks

There definitely seems to be a common theme between these two great investors (and great managers). They’ve built their teams and filled their businesses with people who are (#1) incredibly smart, (#2) have a drive to learn and to make things happen, and (#3) have great moral character that allows them to work with other people effectively.

So my question to you is: Do you think you have these characteristics? Does your team?

While you can’t really control your raw IQ, the good news is that it doesn’t matter beyond a certain point. So focus on what you can control: your desire to learn and your willingness to set your ego aside and be a team player.

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Ben Graham, the father of value investing, wasn’t born in this century. Nor was he born in the last century. Benjamin Graham – born Benjamin Grossbaum – was born in London, England in 1894. He published the value investing bible Security Analysis in 1934, which was followed by the value investing New Testament The Intelligent Investor in 1949. Warren Buffett, the value investing messiah and Graham’s most famous and successful disciple, was born in 1930 and attended Graham’s classes at Columbia in 1950-51. And the not-so-prodigal son Charlie Munger even has Warren beat by six years – he was born in 1924. I’m not trying to give a history lesson here, but I find these dates very interesting. Value investing is an old strategy. It’s been around for a long time, long before the Capital Asset Pricing Model, long before the Black-Scholes Model, long before CLO’s, long before the founders of today’s hottest high-tech IPOs were even born. And yet people have very short term memories. Once a bull market gets some legs in it, the quest to get “the most money as quickly as possible” causes prices to get bid up. Human nature kicks in and dollar signs start appearing in people’s eyes. New methodologies are touted and fundamental principles are left in the rear view mirror. “Today is always the dawning of a new age. Things are different than they were yesterday. The world is changing and we must adapt.” Yes, all very true statements but the new and “fool-proof” methods and strategies and overleveraging and excess risk-taking only work when the economic environmental conditions allow them to work. Using the latest “fool-proof” investment strategy is like running around a thunderstorm with a lightning rod in your hand: if you’re unharmed after a while then it might seem like you’ve developed a method to avoid getting struck by lightning – but sooner or later you will get hit. And yet value investors are for the most part immune to the thunder and lightning. This isn’t at all to say that value investors never lose money, go bust, or suffer during recessions. However, by sticking to fundamentals and avoiding excessive risk-taking (i.e. dumb decisions), the collective value investor class seems to have much fewer examples of the spectacular crash-and-burn cases that often are found with investors’ who employ different strategies. As a result, value investors have historically outperformed other types of investors over the long term. And there is plenty of empirical evidence to back this up. Check this and this and this and this out. In fact, since 1926 value stocks have outperformed growth stocks by an average of four percentage points annually, according to the authoritative index compiled by finance professors Eugene Fama of the University of Chicago and Kenneth French of Dartmouth College. So, the value investing philosophy has endured for over 80 years and is the most consistently successful strategy that can be applied. And while hot stocks, over-leveraged portfolios, and the newest complicated financial strategies will come and go, making many wishful investors rich very quick and poor even quicker, value investing will quietly continue to help its adherents fatten their wallets. It will always endure and will always remain classically in fashion. In other words, value investing is vintage. Which explains half of this website’s name. As for the value part? The intention of this site is to explain, discuss, ask, learn, teach, and debate those topics and questions that I’ve always been most interested in, and hopefully that you’re most curious about, too. This includes: What is value investing? Value investing strategies Stock picks Company reviews Basic financial concepts Investor profiles Investment ideas Current events Economics Behavioral finance And, ultimately, ways to become a better investor I want to note the importance of the way I use value here. It’s not the simplistic definition of “low P/E” stocks that some financial services lazily use to classify investors, which the word “value” has recently morphed into meaning. To me, value investing equates to the term “Intelligent Investing,” as described by Ben Graham. Intelligent investing involves analyzing a company’s fundamentals and can be characterized by an intense focus on a stock’s price, it’s intrinsic value, and the very important ratio between the two. This is value investing as the term was originally meant to be used decades ago, and is the only way it should be used today. So without much further ado, it’s my very good honor to meet you and you may call me…