Howard Marks (investor)

• 1. Introduction

  ›

  Howard Stanley Marks, born in 1946, has spent decades doing something most investors consider impossible: consistently making money while worrying more about what could go wrong than what could go right. Warren Buffett once said of Marks's investment memos, "When I see memos from Howard Marks in my mail, they're the first thing I open and read. I always learn something, and that goes double for his book." That is a remarkable endorsement from one of the world's most celebrated investors. What kind of thinking earns that kind of praise? And how did a kid from Queens, raised in an unusual religious household, build one of the most influential investment firms on the planet? The answers reveal a philosophy that turns conventional Wall Street instincts upside down.

• 2. Queens to Wharton

  ›

  Marks grew up in Queens, New York, in a family that was ethnically Jewish but chose to raise him as a Christian Scientist. That early encounter with a worldview that diverges from the mainstream may have primed him to think differently about received wisdom later in life. He studied finance at the Wharton School of the University of Pennsylvania, graduating cum laude with a Bachelor of Science in Economics and joining the Pi Kappa Alpha fraternity along the way. At twenty-three, in 1969, he completed a Master of Business Administration in Accounting and Marketing at the University of Chicago Booth School of Business, where he won the George Hay Brown Prize. Six years later, in 1975, he became a CFA charterholder. That combination of Wharton's finance rigor and Chicago's analytical discipline set the intellectual foundation for everything that followed.

• 3. Building a High-Yield Career

  ›

  Marks joined Citicorp in 1969, starting as an equity research analyst and rising to Director of Research before shifting into fixed income. From 1978 to 1985 he served as a vice president and senior portfolio manager handling convertible and high-yield debt. Citibank allowed him to relocate to Los Angeles in 1980 to manage a high-yield fund, a move that planted him on the West Coast permanently. It was during these years that he met Michael Milken, in 1979 at Century City, and came away thinking Milken's operation could serve as a Harvard Business School case study. That encounter deepened Marks's interest in the corners of the bond market that other investors were still avoiding. In 1985 he moved to TCW Group, where he led teams focused on high-yield and convertible securities. Three years later, in 1988, he and Bruce Karsh organized one of the first distressed debt funds ever launched by a major financial institution.

• 4. Founding Oaktree

  ›

  In 1995, Marks, Karsh, and three colleagues decided to leave TCW and start their own firm. They asked TCW to let them keep managing the same funds and proposed sharing a portion of the management fees in return. TCW refused. The five partners left together and founded Oaktree Capital Management in Los Angeles. The firm grew quickly, concentrating on high-yield debt, distressed debt, and private equity. Its defining moment came during the 2008 financial crisis, when Oaktree raised $10.9 billion, the largest distressed debt fund in history at that time, to acquire assets that had collapsed in value. That fund, as Marks has described it, paid off richly for his investors. In April 2012, Oaktree went public on the New York Stock Exchange, raising $380 million by selling roughly 8.84 million shares at $43 each. In March 2019, Brookfield Asset Management acquired 62% of Oaktree, while Marks and his partners retained the remaining 38% and kept full control of the firm's day-to-day operations. By 2022, Marks's net worth stood at $2.2 billion, placing him at No. 1365 on the Forbes billionaires list.

• 5. The Philosophy of Risk

  ›

  The investment strategy Marks built at Oaktree rests on a question he asks every investor to answer honestly: do you worry more about losing money or about missing an opportunity? His answer shapes everything. Marks aims for average returns during bull markets while minimizing losses during bear markets, because he believes losses cause more damage than equivalent gains produce benefit. He has described his target as a "high batting average" rather than "home runs." He is also skeptical that research alone can provide an investment edge, arguing that so many skilled analysts are already doing the same work that raw information barely moves the needle. The real advantages, in his view, come from better inferring what current company data implies about the future, managing the psychology of investing, and reading the present stage of the business and market cycle accurately. He does, however, favor using market timing strategies to keep cash available for deployment when markets turn down. The funds he has led have produced long-term returns, net of fees, of 19% per year, with pension funds and sovereign wealth funds as the primary investors.

• 6. The Memos and the Books

  ›

  Marks has posted his investment essays publicly on the Oaktree website for years. He calls them "memos," and they have attracted a following well beyond the institutional investors who are Oaktree's clients. The memos cover investment strategy, economic insight, and the psychology that leads markets astray. Between 2011 and 2018 he published three books: The Most Important Thing: Uncommon Sense for the Thoughtful Investor in 2011, a follow-up volume called The Most Important Thing Illuminated in 2012, and Mastering the Market Cycle: Getting the Odds on Your Side in 2018. One thread runs through all of them: the importance of admitting what you do not know rather than treating uncertainty as certainty. That insistence on intellectual humility sits at the core of how Marks teaches others to think about markets.

• 7. Philanthropy and Public Life

  ›

  In 1992, Marks created the Howard S. Marks Terms Scholarship, providing renewable scholarships to undergraduates at the University of Pennsylvania. In 2009 he endowed the Marks Family Writing Center at the same university. In March 2023, he and his wife Nancy made a $5 million gift to UCLA to endow a faculty chair held by the Vice Chair of Women's Health Research in the department of obstetrics and gynecology at the David Geffen School of Medicine. Beyond philanthropy, Marks has chaired the Trustees' Investment Board at the University of Pennsylvania from 2000 to 2010. He chairs the Investment Committees of the Metropolitan Museum of Art, where he is a trustee, and the Royal Drawing School in London. He is a Democrat who contributed over $200,000 to the Hillary Victory Fund in 2016, though he has also criticized tax proposals from Representative Alexandria Ocasio-Cortez, arguing that much of America's economic progress has come from people's aspiration to earn more and live better. His son Andrew became a General Partner at the venture capital firm TQ Ventures, while his daughter Jane Hait founded and chairs the non-profit Center for Art, Research and Alliances.