The Most Important Thing

I was getting really bored reading investing books because they were all saying more or less the same thing. I wanted to read an investing book that advance my investing knowledge beyond the basic stuff. This book did it. The amount of knowledge packed in it is worth gold. It really showed me just how wrong was I and many I know are in our investing strategy. Reading about the market cycles was an eye opener.

Mr. Marks states that when he was attending client meetings over the years he noticed a pattern. He would say in one meeting that that such and such was the most important thing about investing and in later meetings he found himself referencing other items that he titled the most important thing to understand. Upon reflection about this pattern he decided to write a memo in July of 2003 that covered all these critical areas in his investing philosophy.This new book expands upon the ideas he covered in that original memo. Topics that are covered include: market efficiency, value, risk, investment cycles, contrarianism, finding bargains, patient opportunism, circle of competence, luck, avoiding pitfalls, etc... In short all the topics that a focus investor needs to understand and be able to place, and use, in their own mental models.What does Mr. Marks want his readers to gain from his book? Here are his own words from the introduction of the book:"I didn't set out to write a manual for investing. Rather, this book is a statement of my own investment philosophy. I consider it my creed, and in the course of my investment career it has served like a religion. These are the things I believe in, the guideposts that keep me on track. The messages I deliver are the ones I consider the most lasting. I'm confident their relevance will extend beyond today.You won't find a how-to book here. There's no surefire recipe for investment success. No step-by-step instructions. No valuation formulas containing mathematical constants or fixed ratios - in fact, very few numbers. Just a way to think that might help you make good decisions and, perhaps more important, avoid the pitfalls that ensnare so many.It's not my goal to simplify investing. In fact, the thing I most want to make clear is just how complex it is. Those who try to simplify investing do their audience a great disservice. I'm going to stick to general thoughts on return, risk and process..."Mr. Marks has succeeded in his goals in a brilliant manner. There is, quite simply, an incredible amount of wisdom between the covers of his book and an investor is doing them a disservice if they don't read, and re-read, this book. I will be placing it on my shelf right next to the great investments classics of Security Analysis, The Intelligent Investor, the Berkshire Hathaway annual reports, and Margin of Safety. Quite simply I can't recommend it highly enough.

As a fan of Howard Marks, this was an enjoyable glimpse into the philosophy of investing the legend has developed over the previous decades. Marks provides an easy overview of common mistakes of unsuccessful investors and guiding principals to be successful in the field. A reader should not pick this book up in search of investing tactics or mechanics; it is not meant to teach you how to invest. Marks sets out to help you think about value in conceptual terms, and does it well.My only knock is that (as other reviews also mention) because the book is a compendium of quotes from Marks's excellent Oaktree Memos, it can at times read as somewhat disjointed or repetitive. Still well worth the read!

This was an excellent book on core principles and ideas underlying investing. It is not a book on any particular investing strategy, but rather a book on his philosophy of investing, learned over the years from experience, from books, from experts he knows, and through supporting clients.It is structured as 18 chapters, each reflecting on a different aspect of investing … each of which is the next “most important thing.” Because, he says, ALL the “things” in the book are important.It covers topics such as what risk really is (his notion of risk a much more perceptive and useful idea than the unhelpful nonsense from finance theory, where risk is defined as market volatility), or how to identify value.The book is targeted more towards active investors who want to deliver superior performance than market indexes (i.e. significantly beat market averages), which is of course is hard to do. To achieve this, he says, investors need to have uncommon insight or “second level thinking,” and to form a clear understanding of value (so that one can understand the relationship of price to value in the context of any risks).If you don’t want to pursue above average performances, he points out, you’d be better off investing in an index fund (or, nowadays, its ETF equivalent) - which out-performs around 90% of active fund managers anyway.Outperforming the market index is a “big freaking deal,” which few investors do successfully or consistently. He offers a philosophy for key things to understand and reflect on if you want to go down that path … or if you want to be a better investor in general.I recommend the book.

A great book about risk control. A must read for all investors.

I was half expecting this book to be a technical description of Value Investing, with plenty of references to Warren Buffet and Benjamin Graham. Although the book started that way; I found that Howard shared many insights about investor psychology. This book is a wonderful guide on how to combine value investing with an understanding of market cycles and investor behaviour. For anyone who has read and enjoyed “The Psychology of Money”, you should definitely read “The Most Important Thing” as well.