Great investors are often articulate writers who openly share their investment views and philosophy in open newsletters or annual reports. My own favorite reads from great investors in no particular order are: (1) Warren Buffett's Berkshire Hathaway's annual shareholder letters (2) GMO's co-founder and chief investment strategist Jeremy Grantham's quarterly newsletters and (3) Oaktree Capital Management's chairman Howard Marks' Memos.
Today I also had the pleasure of listening to Howard Marks' webcast at the CFA Institute about his latest book "The Most Important Thing: Uncommon Sense for the Thoughtful Investor" and how investment theories and practices diverge.
I not only share his philosophy of investment is first and foremost about protecting your downside, but also enjoy many of his favorite quotes about the human side of investing which is a great reminder for all investors:
"What the wise man does in the beginning, the fool does in the end" (also one of Warren Buffett's favorite quotes, essentially saying people generally rush in as prices are elevated and sell when prices have slumped).
"It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so" - Mark Twain. (It is better to know what you don't know).
"Never forget the six-foot-tall man who drowned crossing the stream that was five feet deep on average" (surviving the outlying events is what counts for funds).
"It is better to fail conventionally than to succeed unconventionally" - John Maynard Keynes (describing typical institutional investors' risk averse attitude for their career sake).
"Randomness alone can produce just about any outcome in the short run" (Howard Marks' interpretation of ideas in Fooled by Randomness by Nassim Nicholas Taleb - a favorite book of Howard's).
Howard Marks' conclusion particularly resonates with me as we both believe in "margin of safety" in investing and the abundance of "inefficiencies": "Smart investing doesn't consist of buying good things, but rather of buying things well. Price is what matters most for investment success. Only disciplined, objective, unemotional, expert investors can know the right price."
To supplement this conclusion, I also want to refer to something Malcolm Gladwell said in his profile on Nassim Nicholas Taleb on his website: "There is more courage and heroism in defying the human impulse, in taking the purposeful and painful steps to prepare for the unimaginable."
It was a very well-spent 45 minutes. Lots of things to contemplate about the human side of investing.
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