20VC: Oaktree Capital’s Howard Marks on The Most Important Skill An Investor Can Have, The Right Way To Think About Price Sensitivity & Where Are We At Today; Take More Risk or Less?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Twenty Minute VC
4.4 • 637 Ratings
🗓️ 20 January 2020
⏱️ 32 minutes
🧾️ Download transcript
Summary
Howard Marks is co-chairman and co-founder of Oaktree Capital Management, a leading investment firm with more than $120 billion in assets. Prior to founding Oaktree, Howard spent 10 years at The TCW Group, where he was responsible for investments in distressed debt, high yield bonds, and convertible securities. Previously, Howard was with Citicorp for 16 years, where he served as Vice President and senior portfolio manager in charge of convertible and high yield securities. Howard has also written two books, most recently Mastering the Market Cycle: Getting the Odds on Your Side, and it was Warren Buffet who said, “When I see memos from Howard Marks in my mail, they’re the first thing I open and read. I always learn something.”
In Today’s Episode You Will Learn:
1.) How Howard first made his way into the world of finance over 50 years ago? How did not getting an investment banking job change the course of Howard's life?
2.) Where does Howard think we are in the cycle today? What leads his thinking here? What is it crucial for all investors to remember at any point in the cycle? From a risk distribution and diversification perspective, does Howard believe now is a better or worse time to increase risk?
3.) Having worked through and been at the forefront of some of the most significant downturns of financial markets, what have been Howard's biggest learnings from seeing the booms and busts? How did it impact his investment mindset? At a point in 2008, Oaktree were deploying $600M per week for 15 weeks running, so how does Howard think about when is the right time to be aggressive vs when to pullback?
4.) How does Howard think about and assess his own price sensitivity? If there is one thing Howard wants to know to determine the right price, what is it? How does Howard believe we are seeing pro-risk mindsets alter investors attitude to price? How does Howard think about his right vs wrong and consensus vs non-consensus matrix?
5.) Howard and his Partner, Bruce have a very special relationship, what have they done to foster a relationship of radical intellectual honesty and that environment of safety? What are some things Howard will say to his team to encourage productive disagreement? What to Howard is the most important skill an investor can have is?
Items Mentioned In Today’s Show:
Howard’s Fave Book: Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
As always you can follow Harry, The Twenty Minute VC and Howard on Twitter here!
Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.
Transcript
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| 0:00.0 | So I'm often asked, Harry, how did you find your love of investing in financial markets so early in life? |
| 0:05.4 | And the truth is, my guest today is largely responsible for a lot of it. |
| 0:08.9 | I always remember reading his investment memos literally by torchlight in my dorm room at boarding school. |
| 0:13.8 | And it just inspired so much of my early thinking and just my passion for investing. |
| 0:17.9 | So I really couldn't be more honoured to welcome a guest. I've always wanted |
| 0:21.0 | to have on the show since I started it over five years ago, Howard Marks, co-chairman and co-founder of |
| 0:26.0 | Oatree Capital Management, a leading investment firm with more than $120 billion in assets. Prior to founding |
| 0:31.9 | Oatree, Howard spent 10 years at the TCW Group, responsible for investments in distressed debt, high-yield bonds, and |
| 0:38.6 | convertible securities. Previously, Howard was with Citicorp for 16 years, where he served as |
| 0:43.4 | vice president and senior portfolio manager in charge of convertible and high-yield securities. |
| 0:48.4 | Howard's also written two books, most recently, mastering the market cycle, getting the odds on |
| 0:53.0 | your side. And it was Warren Buffett, |
| 0:54.8 | who said, when I see memos from Howard Marks in my mail, they're the first thing I open and read. |
| 0:59.1 | I always learn something. I have to say, I'm totally with Warren there. They are my absolute |
| 1:02.9 | favourites, and the latest was just phenomenal. I'd also, though, want to say a huge thank you |
| 1:06.9 | to Howard's son, Andrew, who provided the fantastic intro and some amazing questions |
| 1:10.8 | suggestions today. So Andrew, I really do appreciate that. But before we dive into the show today, |
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| 1:20.4 | now we have Pilot and Pilot for bookkeeping, giving you back the freedom to focus on your |
| 1:24.9 | business. Every month, your dedicated account manager will send you an accurate, detailed financial report. Pilot does accrual basis bookkeeping in |
| 1:32.4 | QuickBooks online, so you're never locked into a proprietary platform, plus you'll work with the |
| 1:36.6 | same person each month, so you can really rely on them to become an expert in your business. With |
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