"When others are unconcerned, one should be afraid": three pieces of advice from Howard Marks to students
Famous investor and billionaire about which stocks he chooses, why sometimes you need to take risks and what you need to remember in your work
Marks says he couldn't have succeeded if he hadn't taken risks / Photo: pepperdine.edu
Howard Marks, founder of the investment company Oaktree Capital Management, whose fortune Forbes estimates at $2.2 billion, spoke to students and graduates of Pepperdine University in California in mid-January. In his speech he talked a lot about risk and a little about life values. Oninvest selected three tips from his speech that investors should keep in mind:
- Volatility does not equal risk. According to Marks, the concept of volatility sometimes tries to replace the concept of risk, but it is not always correct. He himself defines volatility as the range of possible outcomes and risk as the probability of an undesirable outcome. The balance between conservatism and risk-taking is the key to successful investing, Marks says.
"Experience is what you get when you don't get what you want. It's important to learn lessons like this early on when there's not a lot of money at stake"
- High returns are impossible without risk. Marks said he would rather invest in stocks with high volatility and an average return of 15% than in stable but less profitable securities.
"If you can hang on long enough to reap the long-term benefits of that 'bumpy' 15%, the result will far surpass the 'smooth' 12%."
The founder of Oaktree Capital considers himself a relatively cautious investor, but admits that he could not have succeeded without taking risks. As an example, he cited the market crash due to the 2008 financial crisis. At the time, Oaktree Capital Management invested about $650 million in various distressed assets every week for 15 weeks. Despite the high risk of loss, the company realized good returns over the long term.
"Warren Buffett says, 'The less circumspection others show, the more circumspection we should show.' When others are carefree and unconcerned, it distorts the market, and you should be afraid. Only when people are scared should you act aggressively."
- It is important to work not only for yourself, but also for the well-being of others.
"A smart rabbi once said: "If you are not for others - who are you? If you are not for yourself - who is for you? If not now, when?" I was raised on these ideas. You can't become complacent until you start giving to others."
Sources: pepperdine.edu, pepperdine-graphic.com
This article was AI-translated and verified by a human editor
