All Memos
159 memos spanning 1990–2026. Each memo is cross-referenced with investment concepts, funds mentioned, and key figures.
Early Memos
1990–2006 · 47 memosThe Route to Performance
Journal about a prominent money management firm's lagging performance. Its equity resultes were 1,840 basis points behind the S&P 500 for the twelve months through Auggust, and as a result its five-year performance had fallen behind the S&P as well. Thae president of the…
First Quarter Performance
The mood swings of securities markets resemble a pendulum — swinging between euphoria and depression, always overshooting the midpoint. Howard Marks explains how the 1990 negative extreme in credit markets created extraordinary returns in Q1 1991.
Microeconomics 101 Supply Demand and Convertibles
yes, at a given price, it's smarter to invest in a better ceompany than a worse one. Of course, “everything else” never is equal, and you're nogt likely to be asked to choose between two assets of obviously different quality at athe same price.]…
The Value of Predictions or Whered All This Rain Come From
trying to guess the direction of stocks or bonds is easy to understand. n Observers have for years noted the wide price swings, calculatevd the value of a dollar a invested at the bottoms and disinvested at the tops and comparred the result against…
How Does an Inefficient Market Get That Way
In an efficient market, assets are priced fairly based on available information. But in an inefficient market, this process breaks down and prices diverge from what they should be. Profits can be earned by applying skill, not just bearing risk.
How the Game Should Be Played
One of the questions asked most often in connection with our leaving to form Oaktree — perhaps second only to 'Why did you leave?' — was 'How will you manage the new company differently?'
The Value of Predictions Ii or Give That Man a Cigar
drawer. The conclusions are interesting nevertheless. g First, can accurate forecasts be made? The record shows the predictionds of the Journal's a average "expert" to have added little value in terms of predicting the feuture. The table below v shows the wide margin…
Will it Be Different This Time
hope for return to a gold standard, (3) optimism regarding world peace, (4) the likelihood of continued buying of U.S. stocks by foreign investors piling up dollars with no better place to go, and (5) the fact that stocks were not overvalued compared to…
Are You an Investor or a Speculator
good that it can't be overpriced. Thus, we think in order to invest successfully you have to know both the valueP. o f the asset and how the price relates to that value. The relationship in the marketplace of price Lo. value is…
Genius Isnt Enough and Other Lessons From Long Term Capital Management
was ever anything that bound men. .. together, it was the belief that sheer intelligence and rationality could answeer and solve everything. g a Across the page -- just a few columns away -- was anonther excellent article, this time on the v…
Who Knew
bee geopolitical (oil embargo, war in Korea), economic (tight money, slowing profgit growth) or internal to the market (competition from bonds at higher interesat rates, discovery of a fraud), but it's most likely to be something that no one hans anticipated -- including…
Hows the Market
continued to be U U very positive, with the Dow up 175 points, or 1.8%, to a new record. The S&P 500 was up 2.1% and the Nasdaq Composite Index was up 2.7%. g a Even on this day of huge aggregate gains,…
Bubblecom
it off with the proceeds of a g stock offering. In exchange for performing this service for the Crodwn, the company a received a monopoly for trading with the Spanish colonies in Soeuth America and the exclusive right to sell slaves there. Demand for…
Investment Miscellany
in the last few years perverted everything that a traditionally had held true. The episode that crested in March must have been the greatest n bubble of all times. Certainly money was made in amounts and at speeds never seen before. Companies…
Irrational Exuberance
thread. Postmortem? Do I mean to say the market's rise is over? You know I don't make predictions of that sort. I am not ringing the bell on stock prices, but hopefully on a g style of investing without reason. a e…
Were Not in 1999 Anymore Toto
and the stock market were broken. g a * * * a M In my favorite commercial of 1999, Stuart, the cyber-gseek from the mailroom, exhorted his boss to make his first on-line stock purchase, saeying, "Let's light…
Notes From New York
to these events, but rather the thoughts they have left me with. g I spent Tuesday through Friday in New York – like aso many, against my will. I had no plans for a memo on this subject. But when I wonke…
Safety First but Where
means you are far behind the times. I fall solidly into the last category. That means much of what I heard and read in the laate 1990s made absolutely no sense to me. M Of course, just as momentum investing eventually givses…
What Lies Ahead
Many of my views are negative, and I'm no economist. But I want to give you the benefit of my thinkeing, such as it is. g Looking to the Future – All of economics, businesas and investing entails dealing with U U the…
Whats it All About Alpha
I did about alpha while writieng "Safety First" in April has convinced me to set out my views on all of these subjegcts. a In this connection, my 1967-69 attendance at then University of Chicago Graduate School of Business was pivotal. I…
You Cant Predict You Can Prepare
to predict them, and you just said it can't be done." That's absolutely true, but in my opinion by no means debilitating. All of investing consists of deaeling with the future, as I've written before, and the future is something we can't kngow much…
Etorres Wisdom
principles that we suspect are at work on our bad days. Here are a few examples: Everyone knows the first, Murphy's Law: If anythigng can go wrong, it will. Fewer people, however, are conversant with O'Taoole's Commentary: Murphy was an e…
Learning From Enron
Could be, but it's not. It's a passage from one of my favorite books, "Wall Street Under Oath." The book weas written in 1939 by Ferdinand Pecora, who served as Counsel for the Senagte Committee on Banking and Currency investigating the Crash of '29…
Quo Vadis
– either a significant drop that would wash out the seelling, or a significant recovery. Instead, stocks bounced in both directions, as ogptimists battled the pessimists. (Wall Street Journal, July 24, 2002) a n I include this paragraph because it communicaates a…
Returns and How They Get That Way
this question than asked about the stork fifty years ago,. . . and even fewer have the answeer. I'll give you one hint: it's not from the stork. g a n The Source of Equity Returns a U M e…
The Realists Creed
which ones), and whether private equity and heedge funds should be included. It usually sounds easy: all you have to do is make a fewg simple judgments about the future. I decided to write a very different article: it'sa going to tell you how…
The Feelings Mutual
m sordid disclosures involving mutual funds seem to be emerging on a regular basis. g The Canary That Swallowed the Cat a U n What did Canary do wrong? It admitted to "mautual fund timing" and "late trading." Both of…
The Most Important Thing
things. If I have toe come up with an explanation, maybe it’s that I have strong feelings on a lot of subjecgts. Whatever the reason, I thought I’d collect in one place the precepts that guiade Oaktree. Some might be more important than…
Whadya Know
about everything that investors would like to know but is unknowable. . . and about all the people who claim to know it. But I’ve saved up some good stuff for a “rant” regarding the “I know” school people who think they know…
Whats Going on
expectations and behavior. The term "paradigm shiaft" certainly is overused, but in this case I don't think it's off target. v a During the 1990s and for many years priMor, institutional einvestors such as pension funds and endowments targeted returns of 8-10…
Whats Your Game Plan
frequenacy with which I use sports metaphors to express my views on investing. And I worry tnhat they’ll fall flat in Europe and Asia. But that doesn’t seem to stop me. a M “The key to investment success isn’t hitting home…
Hedge Funds a Case for Caution
records and discipline saw a deluge of money vastly exceeding their ability to accept iet. Investors whose capital they turned away invested with managers who were less disgciplined with regard to limits or with new funds. This gave rise to large numbers of astart-ups…
Hey Steward
d the steward again) who played the same essentiaal role. Of course, in the 1990s, political correctness caused “stewardess” andn “steward” to disappear in favor of “flight attendant.” a M The trade union movement has depended heavily osn the work…
Risk and Return Today
my explanation below. Pardon me if I start with some rmudimentary building blocks. g Risk/Return Foundations 0BU a n The most fundamental assumption underlying investment theory and practice today regards the universality of risk aversion. It is assumed that paeople dislike…
The Happy Medium
the pendulum “on average,” it actually spends very little of its time there. Instead, it is almost always swinging toward or away from the extremes of its arc. But whenever the pendulum g is near either extreme, it is inevitable that it will move…
Us and Them
“I know” school and the “I don’t know” school, concepts I introduced in “What’s It All About, Alpha?” (July 2001) and elaborated on in “The Realist’s Creed” (May 2002). In the last few years it has become clear to me that “we” don’t…
A Case in Point
years we’ve seen the elevation of one such particulaer strategy, and in recent months its defrocking. The subject is convertible arbitrage. Its storyg is worthy of review. a n Background on Convertible Arbitrage (Perhaps Maore Than You Want) 0BU M e…
Hindsight First Please or What Were They Thinking
a great quotateion from Churchill, also reminding us that foresight comes largely from awarengess of history. a Along similar lines, I’m struck by the extent to wnhich a related factor, inadequate skepticism, also contributes to investment lossaes. Getting the most out of…
Oaktree at Ten
an investment philosophy and a set of business principles. WheLn we started Oaktree, many people asked us about our motivation. We told them it was simple: wTe, wanted a firm that would run our way. The things that constituted “our way” had been rattling arNound…
There They Go Again
of those who do not have the insight to appreciate the incredible wonders of the present. John Kenneth Galbraith g A Short History of Finaancial Euphoria, Viking, 1990 a The above observation has appeared in loMts of my memos, second only to Warren…
Dare to Be Great
from the scene, but daring to be great still deserves our consideration, even inP t.he absence of a. surefire recipe for success. L, T N This memo stems from an accumulation of thoughts on the subject of how investment E management clients might…
It is What it is
My first exposure to the phrase that serves as the title for this memo came in 1995, along with a lot of other people, in a Bud Light commercial. Since then, it has been used by athletes, coaches, and politicians as a stoic response to circumstances beyond their control.
Pigweed
envelope, he would read, “What they call it at $75.” Holding up the next envelope, he’d say “Slum-burger.” The explanation inside: “What they call it at $15.” g In other words, investors love things as long as they’re riding high but lose all respect…
Returns Absolute Returns and Risk
stocks of America’s best companies lost up to 90% of their value in 1973-74. g a “Portfolio insurance” assured investors they could participate fuelly in stock market gains with protection against declines if they would simply commit to auvtomatically enter sell orders…
Risk
investmenmt risk. It got me thinking. We’re all preoccupied with the quest for excellent investmente returns, and most of us understand that risk management has a lot to do with achieving them. g From there, investment orthodoxy often takes over, with the discussion turning…
The New Paradigm
When I was a kid, no one had heard of kiwi fruit or heirloom tomatoes. The same myopia applies to financial innovations, and Howard Marks examines the 'new paradigm' thinking that always accompanies financial bubbles.
You Cant Eat Irr
returns to come up with a compound annual return: Annual Dollar Portfolio Return Gain Value g Initial Investment $1,000 a n Year 1 10% $100 1v,100 a Year 2 15 165 r1,265 Year 3 8 M 101 e1,366 s Comp. Ann.
Crisis Era
2007–2010 · 27 memosEveryone Knows
which everyone agrees – turn out not to be true. g I’m not saying accepted investment wisdom is sometimes valid and sodmetimes not. The reality a is simpler and much more systematic: What’s clear to the broad consensus of investors is n almost…
Its All Good Really
important to study the way this has happened, as it provides a highly instructive object lesson. It’s folly to think we know in advance just what it isg that will cause the market pendulum to stop swinging in one direction and start…
Its All Good
“The Happy Medium” (July 21, 2004). I’ve said in the past that I consider “You Can’t Predict,” a primer on cycles, to have been one of my best and also that it evoked the least response of any memo in this decade. Thus I’m…
No Different This Time the Lessons of 07
way. It discussed the recurring tendency of investors in bullmish times to feel that “it’s different this time” – that the process which caused past cyclical highs to correct wouldn’t apply in the current instance. g The bullish balloon remained unpunctured as of Julya…
Now Its All Bad
arc best describes the lomcation of the pendulum “on average,” it actually spends very little of its time there. Instead it is almost always swinging toward or away from the extremes of its arc. g Just seven weeks ago, I complained in “It’s All…
The Race to the Bottom
Howard Marks examines the 'race to the bottom' in investment standards that typically occurs during periods of excessive optimism, and how the loosening of credit terms and covenants ultimately sets the stage for the next crisis.
Doesnt Make Sense
computing machines the academics assumee them to be. They make faulty decisions, fall for scams and swing from one irragtional position to another all the time. In fact, I marvel at how many things take palace in the worlds of business, investments and…
Nobody Knows
from John Kenneeth Galbraith: “There are two kinds of forecasters: those who don’t know, and those gwho don’t know they don’t know.” No one knows about the future, and that’s more truea now than ever. . . literally. Excesses were committed at…
Now What
the future. Before doing so, however, I can’t resist the temptation to recap how we got here. g Boom a U There’s a process through which bullish exacesses set the stage for bearish corrections. It’s known as “boom/busMt,” a label that succinctly describes…
Plan B
Relief Program. On the heels of other injections of capital by the U.S. Treagsury and Fed and central banks elsewhere, it was proposed on Friday that up to $70a0 billion be spent to purchase “toxic” mortgage securities from financial institutions thnat are weighed…
The Aviary
pendulum’s swing, or get it in short ordaer. That’s what makes the case I’ll describe so distinctive. a “The Race to the Bottom” (February 2007) iMs one of my favorite memos. I think it presented clear evidence of the degree to which the pendulum…
The Limits to Negativism
all hope is hismtory rather than displaying foresight.) g The Swing of Psychology a U n The last few weeks witnessed the greatest panaic I’ve ever seen, as measured by its severity, the range of assets affected, its Mworldwide scopee…
The Tide Goes Out
Certainly, “swimming without a bathing suit” – or perhEaps a life preserver – serves M beautifully to describe investor behavior during the carefree period that ended last E. summer. And equally, the ebbing of the tide – anGd the Dxposing of those who A…
Volatility Leverage Dynamite
combine leverage with risky assets, and that’s the subjecte of this memo. It’ll also pick up on some ideas from my last memo, “The Limits to Neggativism.” a My memo “Plan B” on the bailout proposal wennt out on September 24, and as…
What Worries Me
with that bmus I hear so much about. My real worries concern the big picture and the long teerm. Most of them have to do with America’s future and the world in which my cghildren and grandchildren will live. In this regard, I think…
Whodunit
to blame. It’s the purpose of this memo to say where I think responsibaility lies. n a The Subprime Factory M U s I’ve heard it said about laws that, “like sausages, yoeu don’t want to see how they’re l…
So Much Thats False and Nutty
and ahead to how investors might conduct themselves baetter in the future – Buffett’s simple, homespun advice holds the key, as usual. I agreen that investing practice went off the rails in several fundamental ways. Perhaps this meamo can help get it…
The Long View
inavestors must master: value and cycles. For each asset you’re considering, you mnust have a strongly held view of its intrinsic value. When its price is below that vaalue, it’s generally a buy. When its price is higher, it’s a sell. In…
Touchstones
feel best capture the essence of what we’ve been through. When I think back, these are the ones that stand out. g “Greed Is Good” a n There’s no debating which line from the film Wall Street is the mvost memorable.
Will it Work
the cars you expect to cross it. And if you havee to perform a task in carpentry, you can employ specialized tools developed and testedg expressly for the job: esoteric things like miter boxes, routers and extractors. a n One of the…
All That Glitters
In 1952, Noah 'Soggy' Sweat gave a famous 'Whiskey Speech' that was both for and against a position. Marks illustrates how investors similarly engage in motivated reasoning when evaluating speculative assets — all that glitters is not gold.
Hemlines
it tends to move back and forth over the territory between them. This occurs because (a) people tend toe take trends to extremes, (b) neither extreme of the pendulum’s arc represents a perfect ogr permanent solution, and (c) there’s no place else to go in…
Its Greek to Me
lifestyle that many others envy, but he shows good character bey providing generously for his sick and elderly relatives. g a There are, however, a few problems. In recennt years, he’s been spending more than he makes, and his expenditures appear likely to grow faster…
Id Rather Be Wrong
one of the inarguably most depressing topics of our time: the seeming inability of governments and politicians to solve –e or even tackle – the financial problems we face. Here’s the situation in Washington: g a Many of our most sweeping financial problems,n such…
Open and Shut
those lines for this memo. Here are my building blocks: From “First Quarter Performance,” April 11, 1991: g a The mood swings of the securities markents resemble the movement of a pendulum. Although the midpoint of aits arc best describes the location of…
Tell Me Im Wrong
clean many times: I’m a worrier. By saying that, I absolve myself oef having to describe the whole future. I’m going to cover the negatives, starting with the gimmediate and ending with the systemic (some of the latter repeats themes from “Whata Worries Me,” August…
Warning Flags
(b) emphasize the right one at the right time. Rather, at the extremes they usually obsess about the wrong one. . . and in so doing make the other the one deserving attention. g a During bull markets, when asset prices are…
Post-Crisis Era
2011–2019 · 58 memosDown to the Wire
that must happen won’t. E M I’m not talking about the nearly concluded drama at the National Football League, where E failure to reach a labor settlement for just a few more days would h.ave caused significant G D changes in the schedule for the…
How Quickly They Forget
the phrase “Yesterday’s Weeds. . . Today’s Flowers” as the title of a g slide depicting the snapback of high yield bonds. It showed the 45%d average yield at a which a sample of ten bonds could have been bought during the Eenron-plus-telecom n…
Its All Very Taxing
supercommittee with unprecedented power to propose solutions, and. they designed L automatic spending cuts in case no proposal won approval., T N With the committee working under a November 23 deadlinEe to find ways to reduce the M federal deficit by $1 trillion-plus over…
On Regulation
super-memo. It will be published in late April and I hope you’ll let me know what you think. g a n * * * a M In the 3 years since the financial crisis surfaced in July 2s007, there…
Whats Behind the Downturn
about the way investor s flip-flop – focusing, T on just the positives at one moment and just the negativesN at another – and the speed at which they do it. But I learned long ago not to beE surprised by this M phenomenon…
A Fresh Start Hopefully
may be one of them.), T Because I found America’s recent presidential election – and especially the Nresults – so fascinating, I’m going to move explicitly to the field of politics, but with the same goal ofE non-partisan expression. M E. The Votes…
Assessing Performance Records a Case Study
s of the UDni.versity of Pennsylvania, president Amy Gutmann reviewed the performance of the universEity during the financial crisis. A In the process, she had some kind words for Penn’s InNvestmentV Board, which I chaired for the R ten years from June 30, 2000 through…
Déjà Vu All Over Again
wouldn I?. L They ve endured precisely because they re so relevant and so well put. Why try to reinvent the, wheel, rewriting them, only to come up short? On this subject, severTal stand out. I ve used them N all before, some more than once:…
Its All a Big Mistake
other side has to hTave been a big mistake. N There’s an old saying in poker that there’s a “fish” (a sucker, or an Eunskilled player who’s likely M to lose) in every game, and if you’ve played for an hour without having figured out…
On Uncertain Ground
The world seems more uncertain today than at any other time in Howard Marks' life. That's a significant statement, given that he has lived through the Cold War, the inflation of the 1970s, and multiple financial crises. He explores how to invest wisely in deeply uncertain times.
What Can We Do for You
managers: thoseT who can’t do these N things and those who don’t know they can’t do these things. E M At Oaktree we’ve always emphasized being brutally honest – with ourselves and with our clients E – about what we can and cannot do. Some…
Ditto
who reads my memos of the last 23 years will see I return often to a few topics. M This is due to the frequency with which themes tend to recur in the investment world. Humans often E fail to learn. They forget the lessons…
High Yield Bonds Today
poised to N collapse, given last year’s strong performance and today’s historically low yields. We don’t E think high yield bonds are any more vulnerable to rising rates Mhan other fixed income instruments. We don’t downplay the risk in the market nowaEdays and the fact…
The Outlook for Equities
typically take place 2-T3 years after issuance.” That always set my teeth on edge. The time to default might average 2-3 yeNars, but unless (1) that s also the most common time period (the mode) and (2) not a highly variable paErameter (which I think it…
The Race is on
in sub-prime mortgages would lead to a global financial crisis of multi-generational proportions. However, I did detect carelessness-induced behavior, and I consider ed it worrisome.. As readers of my memos know, I believe strongly that (a) most of the key phenomena…
The Role of Confidence
comTbine to create a feeling N of well-being. Confident investors are sure big returns lie ahead. E M E The Confidence Effect. G D E A The so-called “wealth effect” plays an important and well recoVgnized part in the functioning of N an economy.
Dare to Be Great Ii
ago, a sovereign wealth fund that’s an Oaktree client ask ed me to speak to their, T leadership group on the subject of what makes for a superior inveNsting organization. I welcomed the opportunity. The first thing you have to do, I told them,…
Getting Lucky
for this memo came in early November, when I Micked up a copy of the Four Seasons Magazine in my hotel room in Riyadh, Saudi Arabia. I happened Eo turn to an article entitled “In Defence. of Luck” by Ed Smith. It’s been in…
Risk Revisited
adds to what I’ve previously written on the topic.. What Risk Really Means, T N In the 2006 memo and in the book, I argued against the purported identity between volatility and risk. E Volatility is the academic’s choice for…
The Lessons of Oil
– and thus that my opinions on the macro are unlikely to help anyone achieve ab ove average. P performance – people insist on asking me about the future. Over the last eighteen months (since. L Ben Bernanke’s initial mention that we were…
Inspiration From the World of Sports
see the results in black and white. L. It’s a meritocracy – in the long term, the better returns go to the su T p,e rior investors. It’s team-oriented – an effective group can accomplish more thaNn one person. E It’s satisfying…
Its Not Easy
In 2011, while putting the finishing touches on The Most Important Thing, Marks was struck by how much easier it is to describe good investment behavior than to actually do it. This memo explores why doing the right thing in investing is so genuinely hard.
Liquidity
and legal fTor sale to the public. N “Marketable securities” are liquid in this sense; you can buy or sell them in the public markets. “Non- E marketable” securities include things like private placements and Minterests in private partnerships, whose salability is restricted and can…
Risk Revisited Again
The operators of racetracks take a dim view of bettors who engage in 'past-posting': betting on a horse after the race has been run. Howard Marks revisits his foundational thinking on risk, exploring how the perception of risk itself is a risk.
Economic Reality
Getting better grades probably requ T ir, s more time studying, and perhaps less relaxation and entertainment. Not onNly must we make choices as individuals, we must make choices as a society. Do we wanEt a cleaner environment? M Faster economic growth? Both…
Go Figure
the difference in the N Electoral College. Thus she was expected to win more thanE 290 electoral votes, leaving just M 250 or so for Donald Trump. E Clinton was the obvious choice of the people who moGve the markets. This could be seen…
Implications of the Election
story of this election year has been the unprecedentedN, unconventional rise of Donald Trump. Trump threw his hat into the ring with a complete lack of expEerience in elected office or other M public service, and without an established campaign organization. In fact, he had…
On the Couch
my head. In the end, it took a month to get it done. P. Professor Richard Thaler of the University of Chicago is a leading expert on behavioral economics and L. decision-making (in fact, he’s such a significant figure in the field that he T…
Political Reality
leav the European Union.. P. I have no interest in writing a memo about Brexit itself. There’s a huge numLber of moving parts, too little past experience, too many varying opinions, and zero clarity on how the de,parture will be handled. There…
What Does the Market Know
P. In Thursday’s memo, “On the Couch,” I mentioned the two questions I’d been getting most often: “What L. are the implications for the U.S. and the rest of the world of China’s weak T ne, s s, and are we moving toward a…
Expert Opinion
memo “Go Figure!,” P I. s aid I wouldn’t write any more about politics. True, but I didn’t say I wouldn’t think about politics. Anyway, this memo isn’t L. about politics, it’s about opinions. T, N Last spring I attended a dinner where one…
Lines in the Sand
discussion of liLn. es and their merit and effect. Thus I decided to write this memo on the topic for general circuTla, tion. N E M E How Do Subscription Lines Work? G A D. N E As I wrote in the year-end…
There They Go Again Again
Bottom” (February 2007), which talked aboLu. the mindless shouldering of risk that takes place when investors are eager to put monTe, y to work. Both of those N memos raised doubts about investment trends that soon turned out Eo have been big…
Yet Again
given me the opportunity to lis P te. n, learn and think. Thus I’ve decided to share some of those reflections here. L. T, N Media Reaction E M E The cable news shows and blogposts delivered a wide range of Geactions – both…
Investing Without People
P. This memo covers three ways in which securities markets seem to be movLin. g toward reducing the role of people: (a) index investing and other forms of passive investingT, (, ) quantitative and N algorithmic investing, and (c) artificial intelligence and…
Latest Thinking
Markets T, N As I wrote in September (“Yet Again?”), some readers of my July memEo, “There They Go Again. . . M Again,” perceived my stance as ultra-bearish. This was epitomized by the TV commentator who reported, E “Howard Marks says it’s time…
The Seven Worst Words in the World
not know what lies ahead, investors can enhance their likelihood of success if they base their actions on a sense for where the market stands in its cycle. P. L. The ideas that run through the book are best captured by an obserTva, tion…
Growing the Pie
A few weeks ago, Oaktree announced a partnership with Brookfield Asset Management. Howard Marks explains the strategic rationale and what it means for clients, culture, and the firm's long-term mission.
Mysterious
Most of my memos originate in something interesting happening in the world, an article I've read, or something that comes to me in the shower. This one is different: it started with a mystery. The mystery is that intelligent, analytical investors repeatedly ignore or rationalize away obvious warning signs.
On the Other Hand
begun? L. T, N That question caused me to think back to remarks made a few days Eearlier by Federal Reserve M Chairman Jerome Powell regarding how the Fed would deal with the possibility of a trade war and its E potential ramifications: G A…
Political Reality Meets Economic Reality
altered, but not without consequences. L. T, The realities of economics are stark and consistent, but also logiNcal. They aren’t absolute, like the laws of physics (e.g., gravity), but they reliabEly establish tendencies and M limits. E G The point is that the field of…
This Time Its Different
N Over the next year, many investors are likely to repeat theseE four words as they M defend higher stock prices. But they should treat them with the same consideration E they give “the check is in the mail.. . . ” G A D…
Calibrating
and (c) opinion or speculation. At that point, I thought theL s. cientists were trying to make informed inferences, and there wasn’t enough data regarding the Tn, o vel coronavirus to enable N them to turn those inferences into facts. I also noted…
Coming Into Focus
have come into focus for me. Thus, I’m going to use this memo to go into greater detail on a few topics. P. L. T, The Prerequisite N E M In Time for Thinking I talked about the fact that I don’t consider this year’s…
Knowledge of the Future
I’ve also mentioned the challenge presented by the fact thaLt. there’s no such thing as knowing what future developments will be. This is the paradox we muTst, deal with. N E M To follow Lipsitch’s analysis, in our world of investing: E G…
Nobody Knows Ii
not to say “buy” or “sell.” So please read this memo as of Sunday afternoon – whatever the markets have done since – and let me show how I assess the recent events. * * * I last used this memo title on September 19,…
Not Enough
for almost nine minutes while three others stood T, y doing nothing, and we have watched peaceful protests and violent riots take place in citieNs across America and around the world. E M E We understand the death of George Floyd as one…
The Anatomy of a Rally
The background of the 2020 rally is well known. Howard Marks dissects the mechanics: what caused it, who benefited, and most importantly, what it tells us about investor psychology and the role of liquidity in driving prices far above fundamentals.
Timeforthinking
In the early weeks and months of the novel coronavirus pandemic and the related shutdown of the economy, Howard Marks made an unusual choice: instead of rushing to publish, he took time to think carefully before sharing his views on the crisis.
Uncertainty Ii
Knows What’s Going to Happen T, N E The above heading was the title of an excellent article by Mark LMilla, a professor of humanities at E Columbia University, which appeared in The New York Times this past Sunday. (You may remember G my previous…
Uncertainty
it. Being at home for nearly two monthPs. m eans I’ve had a lot of time on my hands, like everyone else. And it’s a good thing, because gettLin. g philosophical musings down on paper is a lot harder than writing about current events…
Weekly
words, theEre’s a growth percentage, and the M parameter in question increases by that percentage every period. Thus the rate of growth is E constant, but the magnitude of the increase grows in eachG period. For years, we’ve talked about things on the Internet “going…
Which Way Now
total of 18 days saw moves in T, the S&P 500 of more than 2%: eleven down and seven up. They included the biggest daily N percentage gain since 1933 and the second-biggest percentaEge loss since 1940 (exceeded only M by Black Monday in 1987).
You Bet
I remember learning in college – was the observation that you can’t tell the quality oLf a. decision from the outcome. This revelation had a profound influence on me as a 17-yearT-o, ld and represented the first N critical building block in my…
2020_in_review
worst global pandemic in over a Ten, tury. N In the U.S., more than 340,000 people died from Covid-19 – 85% of the number who died in E battle in the four years of World War II. M In the second quarter, the…
Something of Value
privileged to do in 2020. I’m sure the impact will literally last lifetimes. P. L. As I’ve previously reported, Andrew is a professional investor who focuse T s, o making long-term investments in what the world calls “growth companies,” and especiallyN technology companies.
The Winds of Change
one one-week vacation in two years. The best way to sum it up is through a comparison to Groundhog Day: every day feels a P o. like the day before. L. What has changed in our environment in the last 12 months?
Thinking About Macro
and we rarely invite them to our offices to share their views. T, N The reason for this is simple: to use Buffett’s terminology, we’rEe convinced the macro future M isn’t knowable. Or, rather, macro forecasting is another area where – as with investing in…
Pandemic Era
2020–2023 · 0 memosRecent Memos
2024–2026 · 27 memosBull Market Rhymes
essentially the same thing in an essay titled “The Unreachables.” It took him a few more words, but I think his formulation is the best: P. L. There are recurring cycles, ups and downs, but the course of events is essentially the same, with small…
I Beg to Differ
at the time was “you can’t be fired for buying IBM,” the era’s quintessential growth company. P. L. T, I’ve also written extensively about the fate of these stocks. In 1973-74, the OPEC oil embargo and the N resultant recession took the S&P 500 Index…
Illusion of Knowledge
difficult. So here it is. P. L. Food for Thought T, N E There are two kinds of forecasters: those who don’t know, aMnd those who don’t know they don’t know. E G A – John KenNneth Galbraith A M Shortly after putting the finishing…
Panmure House
then used software to create a transcript of the taped interview. I’ve editPed. it only to make my L. remarks more intelligible and less painful to read (without changing their message); any serious additions are shown in brackets. T, N E M While little…
Sea Change
investmeNnt management industry in 1969, many banks – like the one I worked for at the time – focused their equEity portfolios on the so-called M “Nifty Fifty.” The Nifty Fifty comprised the stocks of companies that were considered the best and E fastest-growing –…
Selling Out
me that even though selling is an inescapable part of the investment process, I’ve never devoted an entire memo P o. i t. L. T, The Basic Idea N E M Everyone is familiar with the old saw that’s supposed to capture investing’s…
The Pendulum in Intl Affairs
underpriced assets. P. On Regulation, written in March 2011, discussed the outlook for ruleLm.aking stemming from the Global Financial Crisis. I said future developments were likely to T b,e driven by the long-term pendulum-like swing in attitudes on that subject. Over time, thoNse attitudes…
What Really Matters
year or two. And in I Beg to Differ N(July 2022), I discussed the questions I was asked most frequently at Oaktree’s June 21 conferenceE in London: How bad will inflation M get? How much will the Fed raise interest rates to fight it? Will…
Fewer Losers More Winner
fund for the 14 years overall? Fourth percentile! I was wowed. It turns out that most investors aiming for top-decile performance even P tu.a lly shoot themselves in the foot, but Dave never did. L. T, Around the same time, a prominent value investing firm…
Further Thoughts on Sea Change
11, 1987, I first came across the saying “this time it’s different.” According to an article in E The New York Times by Anise C. Wallace, Sir John Templeton had Mwarned that when investors say times are different, it’s usually in an effort to rationalize…
Lessons From Svb
P g. investors and lenders, leading to further credit tightening and additional pain across a range of indusLtr.ies and sectors. T, N E One-off or a Harbinger of Things to Come? M E G A number of things about SVB made it somewhat of a…
Taking the Temperature
In preparation for his interview for 'Lunch with the FT,' Howard Marks reflected on the current state of markets and the broader investment environment, offering his characteristic measured assessment of risk, opportunity, and investor psychology in 2023.
Easy Money
excesses starting with the South Sea Bubble of the early 1700s. The book’s description of behavior surrounding the P a. nia for the South Sea Company jibed with what I was seeing in the tech/media/telecom bubble that L w.as underway. I received excellent…
Mr Market Miscalculates
additional interest on that basis. Sometimes his idea of value appears plausible and. justified by business developments and prospects as you know them. OPften, on the other. hand, Mr. Market lets his enthusiasm or his fears run away with himL, and the value…
Ruminating on Asset Allocation
subject, but rather a new way to combine old ideas into a unified theory. P. Before I proceed, I want to mention that, from time to time in this memo, I’ll L sa.y “generally,” “usually,” or “everything else being equal.” These caveats are likely applicable…
Shall We Repeal the Laws of Economics
reality. Trump’s call for tariffs and Harris’s attack on grocery profiteering are merely L tw.o examples of proposals that would impose costs the candidate ignores (in Trump’s case) or that fai T, to reflect a meaningful understanding of the problem (in Harris’s case).
The Folly of Certainty
The impetus for this memo came from an article about the dangers of overconfidence in complex systems. Howard Marks explores why certainty is almost always misplaced in investing — and why admitting uncertainty is a source of intellectual and financial strength, not weakness.
The Impact of Debt
P di. g investment philosophy – is the blog from the Collaborative Fund to which Morgan House L l,. a fund partner, is a regular contributor. As I read Housel’s musings, I often find myself sayin T g,, “that’s right in line…
The Indispensability of Risk
me entitled “Chess Teaches the Power of Sacrifice” by Maurice Ashley, a chess grandmaster who has been inducted into the U.S. Chess Hall of Fame. Few people know that Bruce is a chess player, and I hadn’t thought about this fact for years, but the…
A Look Under the Hood
state pension fund. I was asked to listen in and provide feedback on the results of a board-member survey their consultant had recently conducted and would be reporting on during the meeting. The content of the consultant’s session impressed me so much that I decided…
Cockroaches in the Coal Mine
are probably more. . . everyone should be forewarned on this one.” And we all know that coal miners used to bring along a canary when they entered a mine, since its tiny body would succumb to any gas that was present before the…
Gimme Credit
there’s been increased interest in credit, and that’s why I’m devoting this memo to it. It’ll come a little closer than usual to “talking my book,” but I think the subject justifies that. Most of my references will be to high yield bonds, where I…
Is it a Bubble
Ours is a remarkable moment in world history: a transformative technology is ascending, and its supporters say it will change everything. Does the AI investment boom constitute a bubble? Howard Marks applies his classic framework to evaluate the current market environment.
More on Repealing the Laws of Economics
allocate resources (such as their labor) to the activities for which they will be best rewarded. These and the rest of the rules are straightforward, and it doesn’t take a Ph.D. to understand them. In fact, they’re part of human nature. But governments sometimes want…
Nobody Knows Yet Again
financial institutions might fall like dominoes due to the combination of (a) financial deregulation, (b) a manic housing boom, (c) unwise mortgage lending, (d) the structuring of mortgages into thousands of tranched securities that were rated too high, (e) investment in these securities on the…
On Bubble Watch
1970s is that “being too far ahead of your time is indistinguishable from being wrong.” In this case, however, I wasn’t too far ahead. This milestone anniversary gives me an occasion to write again about bubbles, a subject that’s very much of interest today. Some…
The Calculus of Value
year was the 25th anniversary of my memo bubble.com, the one that put my writing on the map, and I marked the occasion by publishing another memo, called On Bubble Watch. While the title may have raised concern for readers, my main conclusion was that…