For over three decades, Howard Marks, co-founder of Oaktree Capital Management, has been writing investment memos that have become legendary in financial circles. What began as a simple attempt to explain market events to clients has evolved into one of the most influential bodies of work in investment philosophy. His reflections, compiled in “35 Years of Memos,” offer profound insights that extend far beyond stock picking—they’re lessons in clear thinking, managing uncertainty, and making better decisions.
The Humble Beginnings
Marks didn’t set out to become a financial sage. In 1990, he started writing memos without any grand plan—simply to help clients understand notable market events and his investment reasoning. From the start, he prioritized clarity over jargon, making complex concepts accessible to anyone willing to engage with the material.
For the first decade, feedback was scarce. In a pre-internet age where readers had to physically mail responses, Marks continued writing simply because he found the process creative and fulfilling. This commitment to the craft, regardless of immediate validation, would prove prescient.
Calling Out the Storms
Two memos cemented Marks’ reputation as an essential voice in finance. During the dot-com bubble in 2000 and again before the 2007 global financial crisis, he published warnings that cut through the prevailing market euphoria. What made these memos remarkable wasn’t just their timing—it was their focus on investor psychology rather than financial metrics alone. When everyone else was celebrating, Marks was asking the uncomfortable questions. These turning points demonstrated the power of skepticism when exuberance runs high.
The Art of Being Contrarian (and Right)
At the heart of Marks’ philosophy is contrarian investing—buying when others are fearful, selling when others are greedy. But he adds a crucial caveat: “You must not only be contrarian but also correct.” He likens investing to jiu-jitsu, using market forces to your advantage rather than fighting against them. This requires both timing and insight, a combination far more difficult than simply going against the crowd.
The challenge? Contrarian positions feel uncomfortable by definition. When you’re buying and everyone else is selling, you’re actively betting against the consensus. This demands conviction built on rigorous analysis, not just a reflexive desire to be different.
Risk: The Most Important Four-Letter Word
If there’s one principle Marks returns to repeatedly, it’s risk. Understanding, recognizing, and managing risk stands above all other investment considerations. Good returns aren’t just about making money in bull markets—they’re about controlling downside so that losses remain limited during inevitable downturns.
This focus on risk management distinguishes sustainable success from lucky streaks. Markets will rise and fall; the investors who survive and thrive are those who never forget that preservation of capital matters as much as its growth.
Psychology, Humility, and the Limits of Knowledge
Investment decisions, Marks emphasizes, are driven by psychology as much as by numbers. This is why intellectual humility—recognizing what you don’t know and accepting luck’s large role in outcomes—is so critical. Overconfidence and the belief that you “know” the future is dangerous. Markets are humbling by nature; humility leads to better long-term results.
This extends to his concept of “second level thinking.” Outperformance requires not just thinking differently from others, but thinking better than others. It means considering what the consensus believes, why they believe it, and where they might be wrong.
Patience and Adaptability
Sometimes markets offer little opportunity, and investors must be willing to wait rather than force returns in unfavorable conditions. Opportunity often arrives during crises when others panic—but only for those with patience and dry powder.
Equally important is adaptability. Marks notes that the investment environment shapes results. The multi-decade decline in interest rates, for example, created a “moving walkway” that made many investors look smarter than they were. When conditions change—and they always do—investment approaches must evolve. Extrapolating the past into the future is one of the most common and costly fallacies in finance.
Process Over Outcome
Perhaps Marks’ most sophisticated insight is the distinction between process and outcome. Good outcomes can result from bad decisions (luck), and bad outcomes can follow sound decisions (bad luck). This is why process matters as much as results. Judging investment decisions solely by their outcomes confuses skill with randomness, leading to overconfidence after wins and excessive self-doubt after losses.
A Legacy of Clarity
Howard Marks continues writing today, driven by the same motivation that started his journey in 1990: offering people new perspectives on navigating uncertainty. His memos transcend finance—they’re primers on clear, rational decision-making in any uncertain environment.
Whether you’re an investor or simply someone who wants to think more clearly about risk, psychology, and decision-making, Marks’ 35 years of wisdom offers a master class. In a world obsessed with predictions and certainty, he reminds us that humility, patience, and rigorous thinking matter more than being right about any single bet.
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