‘This is that rarity – a useful book‘ is the blurb Warren Buffett uses for this remarkable book by Howard Marks,the legendary fund manager of Oaktree Capital.
In this book, Howard Marks shares his wisdom and explains the most important things an investor should focus on
The things he feels investors should focus on are:
- They should have second level thinking-ability to go beyond superficialities and think differently from the crowd
- Investors should focus on relatively inefficient markets where hard work and skill can pay off.
- Be able to accurately estimate the intrinsic value of the asset
- Understand “well bought is half sold”. A weak/fundamentally poor asset can be a great investment if bought at the right price.
- Understand risk.Returns alone tell very little of the quality of investment decisions without evaluating the risk taken to achieve it.
- Recognize high risks primarily comes with high prices
- Control risks.Loss is what happens when risk meets adversity.Remember great investors are considered great not just because of their high returns but because of absence of disasters
- Remember that some of the greatest opportunities for gain and loss will come when people forget that most things are cyclical.
- Be aware of the mood swings of the investment markets-between euphoria and depression,between overpriced and underpriced….rarely stable.
- Protect yourself from the emotions thar will make you lose money-fear,greed,delusions,social proof , envy,ego and capitulation
- Do the opposite of what others do – be contrarian
- Find bargains that provide value at unreasonably low prices
- Be a patient opportunist-wait for investments to come to you,don’t go chasing investments
- Ignore forecasts,ignore forecasters and ignore people who think knowledge of the future is essesntial for investment success
- Have a sense of where you are in the market cycle
- Appreciate the role of luck…its possible most “skilled investors” are “lucky idiots”
- Invest “scared”.Worry about loss.If you avoid the losers,the winners will take care of themselves
All in all,a fantastic book.The kind of book you will read again and again to draw water from its well of investment wisdom.