Howard Marks is regarded as the one of the best investors of the modern world. Having first graduated from Wharton and then did his Post Graduation from Chicago Booth, he actually got to learn two different investment philosophies. After securing tons of experience in the investment field, he came up with a book titled " The Most Important Thing". The book straight away got praise from the greatest investor of all time "Mr. Buffett". His comment on the book cover " This is that rarity, a useful book. " sums up everything.
The first concept Howard mentions in the book is "Second Level Thinking". In order to consistently outperform the market an investor needs to be unconventional , stay away from the popular views, be able to forecast and the most important thing he should be correct at the above mentioned things."Market Efficiency", the second concept has been explained brilliantly by Marks since till now there were two opinions on the subject. One view said the markets are efficient while the other said they are not. Marks is of the opinion that there lies degree of efficiency or inefficiency in the market.He slams "technical analysis" giving an apt illustration stating that T.A. buys share at 10 then sell at 12 , again buys at 39 and sells at 40.T.A. made just 3 bucks instead he should have waited for the stock to reach 40 in that case he would have made 30. He personally likes " Value Investing " more than " Growth Investing". He gives the explanation that value investing is not completely dependent on future while "Growth Investing" is. This is so because value investing means buying stock at the prices lower than its intrinsic value.
Another important point which Marks talks about is risk. Risk is defined as more things can happen than will happen. Whenever he assesses investment opportunity the most important thing he broods over is what is the probability of permanent loss of capital. According to him, although this can be an improbable event but that needs to be still factored in. It can't be neglected on the basis of its probability. To justify this point, he gives an illustration from the story his father once told him about a gambler. The gambler always used to lose his money on the bet but one fine day he heard the race with one horse. He decided to place his bet thinking that he cannot lose. On the contrary, the horse jumped off the fence and left the race track in the midway. This way he proves his point that " There is no sure thing in this world ".
"History" is the thing which any best in class investor would recommend tyro in the investment field to refer to and so does Marks. There is one famous quotation on history which Howard has used in his book which is " History does not repeat itself but rhymes". Therefore it is very essential to aware about the major financial events that happened around the world so that cue can be taken from them when any such event might recur in the future. For this one also needs to be aware about the cycle theory. Marks points out that any human activity is governed by cycles. It is very tough to know what is the present state of the cycle meaning thereby if we talk about markets whether they are in bull phase or bear phase.
This again leads us to one of Buffett's principles "Being Contrary to the market". It simply means always do opposite of what the market is doing. If market is too greedy be fearful or vice versa.
This book basically contains the thoughts of greatest investors around the globe which Marks has imbibed in him very successfully. Also it contains different perspective of investors to what Marks has mentioned.
Lastly I would like to conclude by saying " A must read book for every person in the investment field".
The first concept Howard mentions in the book is "Second Level Thinking". In order to consistently outperform the market an investor needs to be unconventional , stay away from the popular views, be able to forecast and the most important thing he should be correct at the above mentioned things."Market Efficiency", the second concept has been explained brilliantly by Marks since till now there were two opinions on the subject. One view said the markets are efficient while the other said they are not. Marks is of the opinion that there lies degree of efficiency or inefficiency in the market.He slams "technical analysis" giving an apt illustration stating that T.A. buys share at 10 then sell at 12 , again buys at 39 and sells at 40.T.A. made just 3 bucks instead he should have waited for the stock to reach 40 in that case he would have made 30. He personally likes " Value Investing " more than " Growth Investing". He gives the explanation that value investing is not completely dependent on future while "Growth Investing" is. This is so because value investing means buying stock at the prices lower than its intrinsic value.
"History" is the thing which any best in class investor would recommend tyro in the investment field to refer to and so does Marks. There is one famous quotation on history which Howard has used in his book which is " History does not repeat itself but rhymes". Therefore it is very essential to aware about the major financial events that happened around the world so that cue can be taken from them when any such event might recur in the future. For this one also needs to be aware about the cycle theory. Marks points out that any human activity is governed by cycles. It is very tough to know what is the present state of the cycle meaning thereby if we talk about markets whether they are in bull phase or bear phase.
This again leads us to one of Buffett's principles "Being Contrary to the market". It simply means always do opposite of what the market is doing. If market is too greedy be fearful or vice versa.
This book basically contains the thoughts of greatest investors around the globe which Marks has imbibed in him very successfully. Also it contains different perspective of investors to what Marks has mentioned.
Lastly I would like to conclude by saying " A must read book for every person in the investment field".
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