Howard Marks' Investment Strategy: Navigating Uncertain Markets
Getting to Know Howard Marks: The Man Behind Oaktree Capital
Howard Marks’ Core Investment Principles
- Second-Level Thinking
- Risk: More Things Can Happen Than Will Happen
- You Can Predict and Prepare
- Recognize the Power of Market Cycles
Smart Investing in Uncertain Times
In the world of finance, there are many investment strategies you can learn from—one of which is Howard Marks' approach.
He is a prominent investor and co-founder of Oaktree Capital Management, which manages approximately US$172 billion in assets.
In his recently released memo titled “No One Knows,” Marks emphasized the importance of investing when asset prices decline—because no one can truly predict the outcome of economic trends.
Let’s dive deeper into Marks’ principles so you can be better prepared to navigate uncertain markets.
Getting to Know Howard Marks: The Man Behind Oaktree Capital
Howard Marks is the Co-Founder and Co-Chairman of Oaktree Capital Management, a global investment firm known for its focus on distressed and high-risk assets.
He is also the author of “The Most Important Thing”, a book that explores investment principles and second-level thinking.
Marks is regarded as one of the world’s most influential investors. His thoughts on investing and risk management are widely respected and often serve as a reference for other investors.
He consistently stresses the importance of learning from mistakes, understanding market cycles, and staying aware of investment risks.
Before founding Oaktree Capital Management in 1995, Marks worked at Citicorp Investment Management, eventually becoming Director of Research and Vice President.
He later joined Trust Company of the West (TCW), where he expanded their high-yield bond operations.
Marks is known for his calm demeanor, deep understanding of financial markets, and ability to share broad insights that help investors achieve long-term success.
Howard Marks’ Core Investment Principles
Marks is renowned globally for his distinctive investment thinking. Behind Oaktree Capital’s success in managing high-risk, distressed assets are the out-of-the-box strategies and insights developed by Marks.
He is especially known for his second-level thinking approach. Here are several core principles that have become a guide for investors worldwide:
- Second-Level Thinking
Marks’ second-level thinking stresses the importance of thinking beyond the surface when making investment decisions.
Investors should not rely solely on mainstream opinions, but instead conduct in-depth analysis and consider various scenarios before making decisions.
This approach requires a solid understanding of how markets and economic cycles operate.
It also emphasizes knowing how those factors affect investments. First-level investors tend to make decisions based on general assumptions.
Meanwhile, second-level investors consider various factors and potential outcomes, conducting deeper risk-return analysis.
For example, when markets are rising, first-level investors may rush to buy due to euphoria. In contrast, second-level investors will question whether prices are already too high or whether a correction may follow.
- Risk: More Things Can Happen Than Will Happen
According to Marks, risk and return are not always directly proportional. A higher-risk investment does not guarantee higher returns—and vice versa.
His investment strategy places greater emphasis on avoiding losses. That’s because losses can be more damaging than any gains an investor might make.
Marks believes that by avoiding losses, investors are more likely to achieve better long-term results.
This principle also highlights the importance of diversification to reduce potential risks.
By spreading investments across various instruments, investors can protect themselves from losses caused by the poor performance of a single asset class.
Also read: Mengenal Investasi Reksadana Saham ESG dan Berkelanjutan
- You Can Predict and Prepare
Marks emphasizes the cyclical nature of markets—they move and shift constantly.
Therefore, investors must learn how to anticipate market movements and prepare appropriate strategies and action plans.
According to Marks, financial markets are complex due to various internal and external influences.
Thus, investors should focus on preparation: portfolio diversification, understanding risk, and applying a value-based approach.
Mutual Fund investors, in particular, must remain disciplined and patient, avoiding emotional reactions to market changes and instead staying focused on long-term goals.
- Recognize the Power of Market Cycles
Marks believes every investor should recognize market sentiment trends and asset price movements. He follows a contrarian philosophy: “Be cautious when others are greedy, and be greedy when others are cautious.”
He believes markets move in cycles, and investors must understand these cycles to make sound investment decisions.
Investors should be able to recognize the different phases of a market cycle—optimism, pessimism, and others—and adjust their strategies accordingly.
Marks warns that the more excessive a market becomes during its optimistic phase, the greater the risk of a steep fall.
This is why investors should stay cautious during market euphoria and always consider associated risks.
Smart Investing in Uncertain Times
Amid growing financial needs and rising uncertainty, investing can be a smart way to secure your finances.
By applying Howard Marks’ strategy to Mutual Fund investing, you’ll be better equipped to make wise decisions—thereby increasing your chances of achieving strong returns.
Marks emphasizes the importance of understanding the market context and remaining calm when making decisions.
This principle aligns with the DBS Treasures priority banking approach—a trusted partner offering research-based wealth management and well-planned risk management to help you reach your financial goals with confidence.
Leading Investment Managers will help manage your portfolio professionally, while diversification will be implemented to minimize risk.
You’ll also benefit from curated market insights delivered by financial experts, aligned with your risk profile and portfolio needs—powered by Artificial Intelligence and Machine Learning (AI-ML). These insights are paired with personalized investment (Grow) and insurance (Protect) solutions, allowing you to invest confidently and quickly through your preferred channel.
You can also enjoy the convenience of the DBS digibank Application for transactions—buying, selling, switching funds, or registering your Single Investor Identification (SID)—with simple procedures.
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With DBS Treasures priority banking, let’s achieve safe and profitable investing together. Don’t wait—start your investment journey now by clicking here!
