The Most Important Thing: Howard Marks

by: Mitchell Mauer

The Most Important Thing Howard Marks

The Most Important Thing highlights twenty-one investment truths which Howard Marks at one point found he had repeatedly emphasized to clients.

Marks, an investment manager overseeing $100 Billion at Oaktree Capital, has been writing memos to clients for decades. The memos are so jam-packed with valuable information that he decided to turn them into a book.

While each chapter is dedicated to explaining one "most important thing", the book flows in such a way that the reader feels all twenty-one topics are separate components of one truly most important investment belief.

Second-Level Thinking

The summation of Marks' philosophy is that buying stocks at a steep discount to intrinsic value is the only way to beat the market and obtain wealth as an investor.

This is accomplished through a "second-level way of thinking" which entails: being a contrarian, applying a large margin of error, and dealing with risk.

Even though these principles have been written about before, Marks accomplishes the goal he laid out in the book's introduction and makes the reader say: "I've never thought of it this way."

Less Risk = More Reward

This is especially the case when reading his explanation of risk in chapters 5, 6, & 7.

No other author has been able to comprehensibly rebut the academic definition of risk vs. reward as Marks does in this text. His argument that less risk can be synonymous with more reward is enlightening on every level.

Behavior Over Analysis

None of the elements discussed in The Most Important Thing are analytical; they're all behavioral.

The implication of this is clear: investment success (and in turn, mistakes) are overwhelmingly due to proper behavior, rather than analysis. Investors at every stage in their career will find the profound advice delivered on every page to be remarkably beneficial and straightforward.