Howard Marks "The Most Important Thing" [REVIEW]

If Warren Buffett himself recommends the book on investing, it is worth reading it, if only to check what intrigued the undisputed master of Wall Street. Virtually everyone will find something for themselves in "The Most Important Thing".

So what is the title of the most important thing? How do you recognize the Holy Forex Grall? In this case, you will not be surprised: Holy Grail is gone. And even if it is, Howard Marx did not find him. He has many thoughts for this, which for many should be inspiring, and for some even revealing. Certainly they are not a ready recipe for regular earning in financial markets, but it can improve trading.

Check it out: Mark Douglas - "In a trance of investing" [Review]

The most important thing, or what?

The author immediately admits that he caught himself abusing the word "the most important thing" in describing investment strategies. Therefore, he collected many letters that he sent to his clients and added extensive comments to them. It turned out that after many years, most of them are still valid. These are universal truths that every trader should remember.

These are the most important things in the 20 book. Each of them is a separate chapter. This information is not only theoretical, but also practical. Among other things, memories of conversations between traders who want to earn above average. Their conversations reveal a picture of people who know well that playing with the trend may bring slightly better results than the purchase of an investment fund based on the stock exchange index. Of course, investing with the trend is tempting and the percentage of successful transactions is usually larger, but the potential profit will rarely be effective.

Howard Marks argues that in this case you need to include the so-called second-level thinking and, above all, before opening a position based on the information obtained, ask yourself: who does not know it? Because if it is not limited knowledge, resulting from, for example, penetrating deduction, then it probably has been in the price for a long time.

Risk control, risk control and… risk control

The author also stresses ad nauseam how important risk control is. However, it is not included in the textbook calculations assuming investing a maximum of 2-5%. capital held for one transaction. However, he warns against emotions that always get in the way of trading. Both the positive ones, after a series of successful transactions, and the negative ones - after losses that many want to make up for too quickly.

However, risk control does not mean a lack of courage. It is needed when the market is both in euphoria, but also in a state of depression, which some people even call agonal. This is when the most investment opportunities appear. How to find them, how to choose the best and how to assess the potential profit range to maximize the effects while minimizing the risk? This you will learn from almost a 250-book, which is worth recommending to both beginners and more experienced traders.

Who is Howard Marks

He is not only a writer and theorist, but above all a practitioner - an investor with specific achievements, as evidenced by hard numbers. In 2017, Forbes magazine estimated his fortune at $ 1,91 billion. This gave him the 371st place among the richest Americans. He is not a naturalist at the same time, he has excellent professional background: a bachelor's degree in finance from the Wharton School in Philadelphia and a master's degree in accounting and marketing from the University of Chicago. He has worked in management positions at Citibank and TCW Group. In 1995, he founded Oaktree Capital Management with associates, an investment firm that manages $ 122 billion. The book "The most important thing" is based on the so-called Oaktree memos, i.e. letters in which he describes in detail investment strategies and explains the intricacies of the functioning of the economy. They are regularly sent to the company's customers who can count not only on profits, but also a solid dose of knowledge.