The Best Of Howard Marks’ Memos

To commemorate 35 years of my memos, I’m enjoyed launch this collection of the ones I believe are the very best.

These memos fall mostly into 2 classifications. Some set out what I think about the long-lasting realities of investing– from the requirement for second-level believing to the value of threat control, the inevitability of cycles, and the futility of macro forecasting. Others chronicle the most impactful monetary occasions of the last 3 years: the dot-com bubble, the Global Financial Crisis, and the total change in rate of interest policy that occurred in 2022.

Composing the memos is an outright happiness for me. They function as the lorry through which I share my thinking with the financial investment neighborhood, enable me to get in touch with Oaktree’s customers and workers, and function as my innovative outlet. I prepare to keep at it.

Howard Marks

October 12, 2025

The Path to Efficiency

October 12, 1990

The Path to Efficiency is the very first memo I composed. It articulates what would later on end up being a core part of Oaktree’s financial investment approach: that long-lasting financial investment success is best accomplished through a string of regularly excellent returns and a lack of bad years, instead of by going for fantastic successes, arriving in some years and tumbling in others.

Very First Quarter Efficiency

April 11, 1991

In the very first quarter of 1991, markets swung from severe pessimism towards more sensible belief, causing outstanding efficiency for sub-investment grade credit. The pendulum-like variation in between optimism and pessimism, worry and greed, and threat tolerance and threat hostility stays among the most reputable functions of the financial investment world.

How the Video Game Ought To Be Played

Might 26, 1995

Utilizing sports metaphors to highlight Oaktree’s financial investment approach, I explain how our “tactical plan” is directed at preventing strikeouts and attaining a high batting average in time, not at swinging for the fences on every journey to the plate.

bubble.com

January 2, 2000

This was the very first of my memos to stimulate any action from readers! It explains the psychology of market bubbles in the context of a dot-com boom that would quickly end up being a dot-com bust when equity appraisals sustained by extreme belief in the “the brand-new, brand-new thing” fell back to earth.

What’s All of it About, Alpha?

July 11, 2001

In this memo, I fix up the financial investment theory I was taught at the University of Chicago with the truth I experienced in the real life. I offer my handle alpha, beta, threat and return, and, most significantly, market effectiveness– and the crucial ramifications for financiers. If you swallow the effective market hypothesis, you should not be an active financier. However if you overlook it, you’re most likely to make important errors.

You Can’t Anticipate. You Can Prepare.

November 20, 2001

This is my very first memo concentrated on the value of financial and market cycles and the limitations on understanding of the macro future. It lays out an idea that penetrates all Oaktree financial investment activity: we might never ever understand where we’re going, however we should understand where we are, which understanding these days’s environment ought to identify our action.

The Realist’s Creed

Might 31, 2002

This memo acts as a recognition that “I do not understand” is frequently the only sensible refrain. It motivates financiers to avoid macro projections and rather focus their attention on assessing principles and establishing customized knowledge.

Returns and How They Get That Method

November 11, 2002

Here I reveal my deem to where equity returns originate from– either development in incomes or an updating of how financiers value those incomes– and my belief that counting on the latter may not operate in the long term. I likewise offer my ideas on a harder concern; how to evaluate whether a supervisor genuinely has ability provided the existence of substantial randomness in the financial investment world. You can think what I search for: a long record of constant however perhaps modest outperformance, instead of periodic flashes of radiance.

What’s Your Strategy?

September 5, 2003

This was my 2nd memo committed to the parallels in between investing and sports, using anecdotes from tennis and baseball and stressing Oaktree’s slogan from the start: “if we prevent the losers, the winners will look after themselves.”

United States and Them

Might 7, 2004

This memo highlights the contrast in between 2 designs of financiers: the “I understand” school– positive, aggressive, and forecast-driven, and the “I do not understand” school– constant, risk-conscious, and concentrated on principles. I look carefully at character types, mindsets towards the marketplace, and other elements of these financial investment designs.

Hedge Funds: A Case for Care

October 6, 2004

I set out my ideas on the hedge fund motion– the hot subject in the financial investment world at the time– taking a look at elements such as scalability and efficiency. Significantly, I state, no one must credit any possession class (consisting of hedge funds) with the bequest of a return. All of it boils down to whether mispriced financial investment chances are offered and whether the financier has actually the ability needed to determine them.

Danger

January 19, 2006

I discuss what threat truly indicates (not volatility!), why it matters, how to think of determining it, and a lot more. Eventually, it’s financiers’ task to bear threat in the pursuit of revenue. To do so carefully, they need to comprehend threat and, obviously, establish that they’re well compensated before choosing to bear it. However they can’t just prevent it and wish for fantastic returns.

Attempt to Be Great

September 7, 2006

Among the very first and most essential choices for financiers is with regard to the concern of how far out on a limb they’ll venture. This memo shows my ideas on how financial investment management customers may best pursue exceptional outcomes.

The New Paradigm

October 19, 2006

In this memo, I discuss what can occur to supervisors’ inspirations when huge amounts appear for management in a property class, with the accompanying ballooning of possible management charges. Taking a look at advancements in buyout funds, the property market, and credit investing, I conclude that it’s a great time for increased care.

Pigweed

December 7, 2006

A memo about the crisis of a hedge fund called Amaranth Advisors, in which I parse the occasions surrounding its collapse. The fund had actually been making aggressive bets, and its successes were misinterpreted for long-lasting ability rather of than the truth: short-term luck. As typical, the possibility of extraordinary revenue made with restricted threat ended up being a chimera.

The Race to the Bottom

February 14, 2007

This memo explains what takes place when financiers have excessive cash to invest and they’re too excited to put it to work. It represents a prompt caution about the capital market habits that eventually resulted in the subprime home mortgage crisis of 2007 and the occurring Global Financial Crisis.

It’s All Great

July 16, 2007

The “all-good trilogy” provides a tip that great times are not likely to last permanently. In It’s All Great, I highlight a couple of uneasy advancements I ‘d found in the market: extreme usage of utilize, untried securitization structures, and too-easy access to capital. All of us understand what took place next.

It’s All Great … Actually?

July 30, 2007

In this follow up, I explain how the occasions of July 2007 exhibit the aspects that generally serve to start the swing back of the marketplace pendulum. It is essential to study the method it took place, since while it’s recklessness to believe we can understand ahead of time what will trigger the marketplace to stop swinging in one instructions and begin in the other, it’s much more ill-advised to believe that time-honored pattern will not duplicate.

Now It’s All Bad?

September 10, 2007

Simply 6 weeks later on, I went over how quickly market belief had actually moved. In this case, a waterfall of unfavorable occasions– beginning top of excessive utilize and insufficient liquidity– resulted in a total turnaround of financier psychology. Before the collapse, some market individuals thought they ‘d tamed threat. Well, threat bit back.

The Limitations to Negativism

October 15, 2008

This record of the fickleness of financier psychology was composed really near the outright bottom in financier belief. It explains the violent collapse of financier psychology that followed the insolvency of Lehman Brothers, inducing the Global Financial Crisis. The environment from 2003-07 had actually been among extreme positivity, however in 2008 I discovered it difficult to make presumptions unfavorable enough to please some observers. This extreme negativeness indicated to me that there were huge chances for the stalwart contrarian.

Volatility + Utilize = Dynamite

December 17, 2008

It was levered mortgage-backed securities that were primarily accountable for the Global Financial Crisis, and I composed this memo to discuss that the quantity of utilize it’s sensible to utilize is mostly a function of the riskiness and volatility of the possessions it’s utilized to buy and the remaining power of the possession holder. The mix of dangerous possessions and extreme utilize under the incorrect situations can show deadly.

All That Flashes

December 17, 2010

This memo included all my ideas about purchasing gold. I described its benefits and drawbacks however wound up revealing the view that there’s no chance to measure the intrinsic worth of possessions like gold that do not produce capital, and therefore no chance to purchase them analytically. Gold has actually worked as a shop of worth exclusively since individuals concurred it would. That’s very little of a structure for a sensible financial investment.

Déjà Vu All Over Again

March 19, 2012

An expedition of the value of historic awareness in sensible investing. The lessons of history are frequently forgotten when market belief ends up being exceedingly positive or downhearted. As these are the very best times for using a contrarian method, neglecting historic patterns can be unsafe.

It’s All a Huge Error

June 20, 2012

It’s seldom comprehended that for a purchaser to make a deal purchase, the seller needs to offer too low-cost. This memo describes that purchasing a reasonable cost does not create alpha– it’s purchasing an unreasonably low one that does. Therefore, accessing a deal needs cooperation from somebody who’ll cost a cost that’s crazily low … however do not anguish; often they do. We need to attempt to be the one who makes money from these errors instead of the one who devotes them!

The Outlook for Equities

March 13, 2013

The specifying distinction in between bonds and stocks is that you can’t calculate potential returns for the latter. Among the couple of trusted signs I discover for potential equity returns is that the much better returns have actually remained in the current past, the less excellent they’re most likely to be in the future.

Getting Fortunate

January 16, 2014

In this memo, the most popular through that time, I highlight how huge a part luck plays in both life and investing. This challenges the concept that success is constantly the outcome of effort and ability and highlights the value of acknowledging aspects beyond one’s control.

Attempt to Be Great II

April 8, 2014

Structure on Attempt to Be Great, composed 8 years previously, this memo repeats that non-traditional habits is the only path to exceptional financial investment outcomes, although it’s far from sure to work. To take part in it, you need to attempt to be various, attempt to be incorrect, and attempt to look incorrect for a while even when you’re right. This isn’t simple, which’s why not everybody can take the actions required for financial investment supremacy.

Danger Revisited Again

June 8, 2015

A writing on the essence of financial investment threat, this memo worries that whereas in our world threat is frequently specified as volatility, it truly takes place from the reality that there is a series of possible results from every financial investment, and it can consist of some that may be undesirable. Significantly, threat can’t be decreased to a number and handled by algorithm. Doing an exceptional task of it needs exceptional insight.

It’s Hard

September 9, 2015

In 2011, Charlie Munger informed me, “none of this is simple.” I utilized that expression as the title for a memo worrying that exceptional investing needs exceptional insight, plus the determination to differ the herd, the capability to manage one’s feelings, and a relentless focus on the specifying function of cost in financial investment choices.

On the Sofa

January 14, 2016

This memo was my effort to send out the marketplaces for a see to the physiatrist and explore what may be found out there, examining financiers’ impracticality and talking about why a lot of the important things that appear apparent to a lot of financiers so frequently end up being incorrect.

What Does the marketplace Know?

January 19, 2016

When individuals reacted to On the Sofa by asking whether I made certain the marketplace wasn’t sending out a sell signal, I resolved the mistake of listening from the marketplace. The majority of the time, the marketplace’s short-term habits comes from unreasonable swings of financier understanding “from helpless to perfect,” instead of a dispassionate weighing of benefit.

This Time It’s Various

June 12, 2019

In excellent times, the concept that “this time it’s various” frequently works its method into the market as financiers utilize it to validate skyrocketing costs for popular possessions. This belief can be revealed in contexts varying from questioning the possibility of an economic downturn to supporting the high appraisals of unverified business handling the current wonder. This memo goes over the outlook for 9 such theories and how things would genuinely need to be various for them to show out.

You Wager!

January 13, 2020

Here I construct on the counterproductive concept that you can’t inform the quality of a choice from its result, which the existence of randomness indicates well-thought-out choices might stop working and bad choices might be successful. In investing, exceptional ability will conquer the effect of luck in the long term, however in the brief run, luck can overload ability, and the 2 can be identical.

Unpredictability

Might 11, 2020

Versus the confounding background of the Covid-19 pandemic, a tip that forecasting is useless and we need to confess the restrictions on our understanding. The important things we understand about the macro environment normally are of no usage in getting an edge– since everybody else understands them too!

Unpredictability II

Might 28, 2020

This memo constructs on Unpredictability as the pandemic continues to rage, however with a crucial addition: not just do many people do not have adequate knowledge to attain supremacy, however they likewise do not have the knowledge required to determine which “specialists” do have it. While people frequently look for convenience in the output of trusted forecasters, they generally wind up dissatisfied however seldom acknowledge the core issue: that macro projections are hardly ever useful.

Something of Worth

January 11, 2021

In Something of Worth, I state how important it was to have my boy Andrew and his household relocation in with us throughout the pandemic, and I highlight the appearing divide in between “worth” and “development” investing as a possibly incorrect dichotomy. In a financial investment environment marked by less deals and higher effectiveness than the one I matured in, worth financiers should not restrict themselves to bottom-fishing and rather ought to broaden their tool kit and think of” winners” too.

I Plead to Vary

July 26, 2022

This memo go back to the concept that financiers looking for exceptional efficiency needs to have the nerve to leave from the pack. Believing in a different way and much better than others is necessary, since to surpass in investing, it’s insufficient to be right. You need to be more best than a lot of.

The Impression of Understanding

September 8, 2022

A substantial variety of aspects need to be properly anticipated in order for a macro projection to be precise. As no projection can be much better than the capability of its algorithm to catch the operations of an exceptionally complicated world, why would anybody anticipate their projection to be more precise than the rest?

What Actually Matters?

November 22, 2022

This memo argues that short-term efficiency, hyperactivity, and volatility do not matter; rather, what I call “asymmetry” is the foundation of investing quality. Superior financiers attain success by providing returns that are more than commensurate with the threat they bear. This needs exceptional ability and insight, associates that just the very best have.

Transformation

December 13, 2022

Ideally a critical memo, Transformation evaluates the effect of 40 years of decreasing rate of interest, gave a stop by the requirement to eliminate post-pandemic inflation. This results in a crucial observation: when the investing environment goes through essential modification, one’s technique needs to go through a comprehensive evaluation.

Taking the Temperature Level

July 10, 2023

An appearance back at my 5 primary market calls. Making such calls isn’t typical practice for me, however I made each of the 5 since I discovered the marketplace wildly raised or depressed. They weren’t based upon crunching monetary information or on knowledge concerning the particular financial investments in concern, however on the clear-eyed evaluation of financier psychology. Having actually recognized these extremes, I felt comfy requiring a modification of Oaktree’s threat posture.

Less Losers, or More Winners?

September 12, 2023

In the pursuit of exceptional risk-adjusted returns (or winning tennis), an individual’s tactical plan needs picking in between the 2 primary courses: either experiencing less losers or discovering more winners. I argue that in credit, having less losers will normally serve best, however wise credit investing ought to be based upon threat control, not run the risk of avoidance.

The Indispensability of Danger

April 17, 2024

With financiers dealing with smart rivals, as we do every day, nobody must anticipate to attain substantial returns without bearing threat. However they likewise should not anticipate to attain them just for bearing threat. It needs to be done knowingly and masterfully.

Pondering on Possession Allowance

October 22, 2024

This memo provides my expression of the essential distinction in between equity and financial obligation: a generous however unsure anticipated return with both advantage and drawback capacity from the previous, versus a more modest legal return accompanied by much less unpredictability from the latter. This distinction is the necessary factor to consider in portfolio building, in which financiers need to identify their suitable threat posture and integrate ownership and providing possessions in a portfolio that gets them there.

The Calculus of Worth

August 13, 2025

An evaluation of the essence of worth and cost and the important relationship in between the 2. I argue that in the long run, increases in worth– generally coming from development in incomes– offer the majority of the incentive for financial investment returns, and worth puts in a magnetic impact on cost. That indicates the present relationship of cost to worth ought to be anticipated to highly affect future financial investment efficiency, with high appraisals presaging low subsequent returns, and vice versa.

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