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Boy are we excited about today's show because we have the absolute honor and pleasure to talk to billionaire Howard Marx.

For many people in the investing community, they know Mr. Marx because of his superior performance for five decades.

In fact, Mr. Marx's performance in the distressed debt market has returned an average of 19% annually for the past 22 years.

Back in 2008, Mr. Marx's company Oak Tree Capital Management, they raised $10.9 billion during the financial crisis, making it the largest distressed debt fund in history.

Mr. Marx is the author of the most important thing, and he also wrote a new book titled Mastering the Market Cycle.

So, without further delay, here's our interview with the legendary billionaire, Mr. Howard Marx.

You are listening to the Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most.

We keep you informed and prepared for the unexpected.

All right, welcome to the Investors Podcast, I'm your host Preston Pish, and as usual, I'm accompanied by my co-host, Stig Broderson, and today we are joined with legendary investor, Mr. Howard Marx.

Mr. Marx, welcome to the show.

Thank you very much, it's a pleasure to be here with you.

Howard, you have a brand new book titled Mastering the Market Cycle, and in your book you start off with an excellent example that talks about the importance of understanding risk and probabilities.

To demonstrate this idea, you talk about a jar of black and white balls, and I just loved this example that you provided, and I was wondering if you could share this idea with our audience.

My first premise in investing is that we never know what's going to happen.

We don't know what events will unfold, we don't know how the market will react to those.

The future in all regards is a probability distribution.

The best investors don't know what's going to happen, but they understand the possible events, and they can reasonably assign them probabilities.

Your future as an investor in anything at any time is similarly a matter of a probability distribution.

Now that's not to say that the distribution is always the same.

One of the things that the book is about is that where we stand in the cycle dominate the shaping of the probability distribution.

If we're high in the cycle, if psychology and prices are elevated, then the probability distribution just to the left, it becomes harder to make money and easier to lose money, and the expected outcome is less good.

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