Value Investing

Howard Marks On Building Oaktree Career And Advice

An interview with billionaire debt investor and founder of Oaktree Capital Management, Howard Marks. In this interview, Howard discuses his career and creating Oaktree. Howard also talks about his theory of luck, mentors and the best piece of advice he has received.

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Billionaire Howard Marks Building Oaktree Career And Advice

Transcript

Oaktree Capital Management is the world’s largest distressed debt manager and today I’m sitting down with the co-founder and chairman Howard Marks to find out about his journey to the top job. It is a Warner on his potential successors were all thank you so much for having us in the Los Angeles offices. Okay great. My pleasure John. What do you think is the biggest misconception people have about starting out on your own. What people what don’t people anticipate. When we were a year old everybody said to me what has been the biggest surprise by which they meant the biggest negative surprise. And I said the biggest surprise for us was how much non investment work there was to do. You know everybody thinks as well you hope you take office as you get you get some desks. You sit down and start buying and selling investments. But there’s payroll personnel insurance tax I.T. is a huge thing and so many considerations that I mean.

So and you can’t do a good job of the work itself if you don’t have a supportive infrastructure. So that that’s a huge thing. Now of course we know we started off and within two years we were a ten billion dollar financial institutions or we needed a lot of infrastructure. The guy who is developing the next great widget in a garage doesn’t but for us that was the biggest the biggest surprise and you need a lot of people to do all those jobs and people management becomes important. And so you know whereas you might deceive yourself into think it’s this intellectual pursuit of profit.

You really have to do a steady job of blocking and tackling I want to take you back to the university years the very beginning. You attended more as an undergraduate and then you went on to the University of Chicago where you received direct B.A.. A lot of people have that debate whether to go back to school to get that formal education that advanced degree because they don’t know whether the payoff is worth the cost of time and money. Looking back would you say that that formal education that advanced degree prepared you specifically for an executive role or what you have been able to pick up the tricks of the trade on the job.

I think the main reason is to go back to school are to pivot a direction make new contacts be exposed to new areas. If your career is going in the right direction and all you need is time you get that on the job and expertise you can study. You can learn and you can have mentors you can take a professional education course if you need something specific you need to make a change if you need new science new technology. And I think schools are appropriate. You have some theories on Lucht which I want you to elaborate on.

Do you make your own luck. Do you think people are just born lucky. What do you think. Well I think there seem to be some people who are born lucky. Now maybe it’s because they’re better prepared. You know I think that success is what happens when preparation meets opportunity.

But certainly we look out and we see that somebody who’s you know consistently lucky that somebody who can’t catch a break. I consider myself to have been systematically lucky. But I do think that you know when I first moved to L.A. back in 1980 I think it was I heard Armand Hammer give a speech and he said you know if I find that if I work 40 hours a day six seven days a week and well I get lucky. So certainly hard work preparation. Little things like IQ being born in the right time the right place to the right parents who pushed you in the right direction. All these things contribute.

But then I think that too to really get to the top you have to have luck also. And there are lots of people out there who are smart and well-intentioned and hardworking and willing and don’t catch a break. So those of us who do get lucky I think should recognize it.

Thank their lucky stars. And you know Cicero the ancient philosopher said that the thankful heart is not only the greatest of all virtues but as the parent of all the other virtues. And if you don’t have appreciation you don’t have anything. Speaking of mentors you then graduated and headed to Citicorp where you grew tremendously within that company. Were there people there whether colleagues supervisors co-workers and any kind of mentors there who really encouraged you to go forward. Or was it purely self-motivated. I had a boss who was my boss too removed. We were a tandem and we worked together.

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