Part I — The story
The story
Howard Marks co-founded Oaktree Capital and became one of the most respected investors in the world, specialising in distressed debt — buying the debt of troubled companies cheaply when others are fearful. But he is best known for his memos: decades of widely-read letters distilling deep wisdom about risk, market cycles, and investor psychology, which Warren Buffett has said he reads the moment they arrive.
Marks's central teachings are about understanding where you are in the market cycle and about 'second-level thinking' — going beyond the obvious to consider what others are missing and what's already priced in. He preaches that controlling risk, not chasing return, is the key to lasting success, and that the most dangerous words in investing are 'this time it's different'. He is a study in risk-first thinking, in reading market cycles and psychology, and in the discipline of thinking one level deeper than the crowd.
Part II — The playbook
The playbook
Think at the second level
Marks goes beyond the obvious to what others miss and what's already priced in.
Know where you are in the cycle
He stresses understanding the market cycle's position above prediction.
Control risk, don't chase return
He teaches that managing risk, not return, drives lasting success.
In their words
The most dangerous words in investing are 'this time it's different.'
You can't predict. You can prepare.
Being too far ahead of your time is indistinguishable from being wrong.
What to read next
- The Most Important Thing — Howard Marks
- Mastering the Market Cycle — Howard Marks
Why this matters
The thinking behind these decisions connects to models you can study directly:
Frequently asked questions
Why are Howard Marks's memos famous?
For decades they have distilled deep wisdom about risk, market cycles and investor psychology — so valued that Warren Buffett has said he reads them the moment they arrive.
What is 'second-level thinking'?
Marks's idea of going beyond the obvious, first-level view to consider what others are missing and what's already priced in — thinking one level deeper than the crowd is where edge comes from.