A interview with billionaire debt investor and founder of Oaktree Capital Management, Howard Marks. In this interview, Howard discusses how he invests in market cycles and the mentality of a successful investor. Howard also talks about starting a Hedge Fund/Asset Management firm and the trade war.
Howard Marks: How To Invest In Market Cycles And The Mentality Of A Successful Investor
In a rare interview with Harvard Business School that was published online earlier this month, (it has since been taken down) value investor Seth Klarman spoke at length about his investment process, philosophy and the changes value investors have had to overcome during the past decade. Klarman’s hedge fund, the Boston-based Baupost has one of Read More
So thank you for the invitation from CFA [inaudible] and also Oaktree and then it's really my great pleasure to be here with you Howard. After reading all your letters over the years and the books so I think I'm sure everyone here today like one of the most important thing that they want to know from you is how you think about the market and your investment advice. But maybe before we dive into those questions let us know more about how you approach the market. And your currently like the new book "Mastering the Market Cycle" which is I think very timely as every one of us right now is trying to figure out how to see the market cycle maybe tell us more about what you think about market cycles and how do they impact investment decisions.
Thank you Teresa. Thank you very much for doing this for the benefit of the audience. You know. Back in 2011. I wrote a book called The most important thing. And it has 21 chapters and each chapter says the most important thing is. And it's a different thing. Because in investing there is no one most important thing. There are many things which we must consider and all of them are essential. Having said that. I do think some things are more important than others. And to me. The most important thing in investing is risk and the first book has three chapters. Understanding risk recognizing rest and controlling risk. And I believe that the mark of a great investor is not. Merely. Good returns. It's easy to make money in the market especially in good years and most of the most of the years are good years. The real qualification for being a great investor in my opinion. Is to be able to make money in the great ears. And not give it back in the bad years. And. In order to do that. You have to be able to invest with the risks under control. And. You know you you you do very well in the good years. And you don't give it back in the bad years. And in this way the great investor has very good results but also low volatility. And good performance in the bad times. So that he and his clients don't get scared out of the market. If you want to invest with the risk guns or control it seems to me one of the most important requirements. Is to understand where we are in the cycle. Because I believe that where we are in the cycle. Is extremely influential. In determining risk. I think that when we are high in the cycle. The risk is high.
The expected return is subpar and it's hard to make money and it's easy to lose. And when the market is low in that cycle. The reverse is true. The expected return is higher than usual.
The prices are low the risk is low and the opportunities are high. So I think that the you know the riskiness of investing is not the same all the time.
The riskiness of investing changes dramatically and the price.