Howard Marks (born 1946) is the co-founder and co-chairman of Oaktree Capital Management, the Los Angeles firm that became the world’s largest investor in distressed securities. He is even better known as a writer: his client memos, published free since 1990, are among the most widely read documents in investing, and his books The Most Important Thing (2011) and Mastering the Market Cycle (2018) codified a philosophy built on price discipline, respect for risk, and knowing where you stand in the cycle.
Marks was born in New York City and raised in Queens. He graduated cum laude from the Wharton School in 1967 and earned an MBA from the University of Chicago in 1969, then spent sixteen years at Citicorp, rising to director of research and then vice president for convertible and high-yield securities. In 1985 he joined TCW, where he and Bruce Karsh built the firm’s high-yield, convertible, and distressed-debt groups and, in 1988, launched one of the first distressed-debt funds from a major financial institution. In 1995 Marks, Karsh, and three partners left to found Oaktree. The firm went public on the New York Stock Exchange in 2012, and in 2019 Brookfield acquired a 62% stake while Marks and his team kept day-to-day control. Forbes estimated his fortune at $2.2 billion in 2022.
The memos began on October 12, 1990, with “The Route to Performance,” and they have never stopped. Marks writes about whatever the market is doing at the moment — bubbles, crashes, credit cycles, investor psychology — always circling back to the same questions: What is this worth? What could go wrong? Where are we in the cycle? Warren Buffett’s verdict is printed in Mastering the Market Cycle itself: “When I see memos from Howard Marks in my mail, they’re the first thing I open and read. I always learn something.” In October 2025, marking 35 years since the first memo, the memos entered the permanent collection of the Museum of American Finance. Marks is also a lifelong games player — gin, poker, blackjack, backgammon — and credits games with sharpening his feel for probability; his 2020 memo “You Bet!” discusses Ed Thorp’s Beat the Dealer by name. He serves as an emeritus trustee of the University of Pennsylvania and a trustee of the Metropolitan Museum of Art.
His philosophy starts with what he calls second-level thinking. First-level thinking is simplistic: “It’s a good company; let’s buy the stock.” Second-level thinking asks what the consensus already believes and whether that belief is wrong. From there everything follows. Risk, for Marks, is not volatility or beta; it is the probability of permanent loss, and it can never be fully measured in advance. Price matters more than asset quality, because a great asset bought too dearly is a bad investment and a mediocre one bought cheaply enough can be a fine one. Markets swing like a pendulum between euphoria and despair, rarely resting at the fair midpoint, and the investor’s job is to sense the swing’s position. Above all, defense wins: if you avoid the losers, the winners take care of themselves. Notably, Marks downplays his own title — he applied the label “the most important thing” to nineteen different things, and concludes that there is no single most important thing in investing.
Core Ideas
- Second-level thinking: To beat the consensus, you must think differently from it, and be right. Being contrarian is not enough; you have to be contrarian and correct.
- Risk is permanent loss: Not volatility, not beta — the chance that capital is gone for good. It cannot be precisely quantified, so humility and margin of safety come first.
- Price decides: It is not what you buy; it is what you pay for it. No asset is so good it cannot be ruined by a high price; few are so bad they cannot work if cheap enough.
- Know where you are in the cycle: Markets swing like a pendulum between “flawless” and “hopeless.” You cannot predict the future, but you can locate the present.
- Defense and survival: Avoid losers and losing years, ensure survival under bad outcomes, and let the winners take care of themselves. Consistency beats brilliance.
Howard Marks Quotes
“Risk means more things can happen than will happen.”
— The Most Important Thing (2011)
“The possibility of permanent loss is the risk I worry about, Oaktree worries about and every practical investor I know worries about.”
— The Most Important Thing (2011)
“It’s not what you buy; it’s what you pay for it.”
— The Most Important Thing (2011)
“No asset is so good that it can’t become a bad investment if bought at too high a price. And there are few assets so bad that they can’t be a good investment when bought cheap enough.”
— The Most Important Thing (2011)
“Investors are right and wrong all the time for the wrong reasons.”
“I like to say, ‘Experience is what you got when you didn’t get what you wanted.’”
“One of the biggest mistakes you can make is to think that overpriced and going down tomorrow are synonymous. Markets that are overpriced often keep going.”
“Memory — and the resulting prudence — always comes out the loser when pitted against greed.”
“We have to practice defensive investing, since many of the outcomes are likely to go against us. It’s more important to ensure survival under negative outcomes than it is to guarantee maximum returns under favorable ones.”
“It’s frightening to think that you might not know something, but more frightening to think that, by and large, the world is run by people who have faith that they know exactly what’s going on.”
Howard Marks Books
The Most Important Thing — His landmark book: twenty chapters on second-level thinking, price and value, risk, and defensive investing, drawn from his memos. As Marks jokes, he applied the title to nineteen different things.
The Most Important Thing Illuminated — The 2011 text annotated in the margins by Christopher Davis, Joel Greenblatt, Paul Johnson, and Seth Klarman, plus Marks’ own notes. The annotations alone are worth the price.
Mastering the Market Cycle — His second book: how economic, profit, and psychology cycles interact, and how to position a portfolio based on where the pendulum stands. Includes the famous Buffett endorsement of the memos.
Browse all 11 Howard Marks quotes in the Quote Library.
