Howard Marks

“So so to look at at the at the max seven take out Tesla, they're selling at PE ratios in the thirties.”

“I'm told that there are roughly 700 direct lending managers. So the the the And the availability of that $1,700,000,000,000 put a lot of people into business and made a lot of people extremely successful along with a very favorable economy and with low or generally low or generally declining interest rates, which are salutary.”

“So the the the And the availability of that $1,700,000,000,000 put a lot of people into business and made a lot of people extremely successful along with a very favorable economy”

“I'm told that of the 700, roughly 3% were in business before the global financial crisis. So we don't know how many of them are have what it takes to deal with a harsh environment.”

“To make money in a salutary investment environment, you can do it on the basis of good judgment and hard work and skill, or you can do it on aggressiveness and getting lucky.”

“Warren Buffett, the most successful investor of all times, attributes his success to 12 investments over the last sixty, seventy years. Now he didn't have that many abject failures,”

“So the point is that that whereas, the underlying thing progresses gradually, the price fluctuates wildly around that trend line, and the main reason is, the fluctuation of psychology.”

“I wrote a memo in October of o eight, after the global financial after the bankruptcy of Lehman, with the title, the limits to negativism. And there is such a thing as being too negative.”

“I'm concerned that there could be nuclear war, and I'm concerned that there could be inflation at 20%. Mhmm. Well, can protect yourself against that.”

“So it writes me back, and it says, do you want me to be hypercritical or hypocritical? It's making a joke.”

“So it writes me back, and it says, do you want me to be hypercritical or hypocritical?”

“I think innovation, I think if you look at the Claude and all the coding models and the way they've progressed and the way and the way Anthropix revenues have progressed, I think you have to say that this is faster than anything we've ever seen before.”

“Mhmm. So you might say it'll catch up, but I think you could I think at minimum, you're talking about a significant period of dislocation.”

“AI, it's it's different. It's not just gonna do the job we used to do. It's gonna design new jobs. Mhmm. It's gonna assign new jobs.”

“It's gonna take on work we didn't think it could do, and it and and it's gonna operate, at some point in time without instruction.”

“And in the write up for the for the model, they said, basically, in English, AI, the model helped us design the model.”

“The scariest thing in the world, the riskiest thing in the world is the belief there's no risk.”

“So rather than thinking of cycles as ups and downs, which I think most people do, think of them as excesses and corrections, excesses and corrections. Fluctuations around the trend line.”

“So rather than thinking of cycles as ups and downs, which I think most people do, think of them as excesses and corrections, excesses and corrections.”

“And not only is that an interesting phenomenon to think about, but even more so, the fact that the return on the S and P, which averages 10, is almost never between eight and twelve.”

“if you bought those stocks the day I got to work in September of 'sixty nine, if you held them tenaciously for five years, you lost about 95% of your money.”

“So, it was a and so that was a real disaster for the people who invested in the Nifty Fifty, which was most of the money center banks.”

“in our experience, ninety nine percent of the bonds have paid interest in principle as promised. So I think I can say almost every time.”

“And so, over the last forty years, on average, something like 3.6 or 3.7% of all high yield bonds have gone into default every year, and our default rate has been roughly a third.”

“over the last forty years, on average, something like 3.6 or 3.7% of all high yield bonds have gone into default every year, and our default rate has been roughly a third.”

“Can AI sit down with five business plans and figure out which one is Amazon? Can AI sit down with five CEOs and figure out which one is Steve Jobs.”

“And there was a guy named Wally Deemer, was an old time trader, who had some great quotes and he turned them into”

“readily available quantitative information about the present cannot hold the key to success, because everybody has it. Success in investing is doing better than others.”

“Are some AI models smarter than others? Since they all have super IQs, computing power, and they all are trained on the same history, are some smarter than others?”

“cognitive dissonance is something that you should all familiarize yourself with. And it is basically the human brain's ability to reject information which is at odds with its predisposition.”

“And it is basically the human brain's ability to reject information which is at odds with its predisposition.”

“Because you have to be optimistic to be an investor. What is investing? You take your money, you give it to somebody else in the hope you'll get back more later.”

“April 1, President Trump announced, second, announced some massive tariffs, more much more than had been expected, and put them on, and then a week later paused them, and then put some more on and took some off, and and the the market had a negative reaction.”

“Jamie Dimon of JPMorgan says a lot of things best. He said, you know, when you see one cockroach, there are probably more. So, people started to say, well, maybe there's something wrong here.”

“the bottom is the day before it starts going up. Right? And if that's true, then by definition, you never know when you're at the bottom because you can only tell the next day.”

“And so, the only basis for buying is that things are cheap. You can tell when things are cheap.”

“If the world melts down, it doesn't matter what we did today. But if it doesn't melt down and we didn't invest, then we didn't do our job.”

“we were buying the senior most debt of these companies at prices such that if these companies ended up being worth a third or a quarter or a fifth of what these great buyout firms had bought them for a year or two ago, we would be okay.”

“Nobody will give you money to invest during a crisis. We had pre raised it. And you have to have the nerve to spend it.”

“it's not what you buy, it's what you pay that counts. Good investing doesn't come from buying good things, it comes from buying things well.”

“And, you know, Buffet says made all his money on 12 ideas. Guy invested for seventy years. He says he made all his money on 12 ideas.”

“There's nothing wrong with lending money to companies. The question is, do you do it wisely?”

“Am I supposed to value these things at what they're worth? What I could sell them for? What I could sell half for?”

“I think it should be valued at what an intelligent, unemotional buyer would pay for it today.”

“The pessimist the optimists had basically been winning for the last, I think now it's, forty three months.”

“I happen to believe that the Mag seven, most of or all of them are the best companies I've ever seen.”

“When I was a kid and came into this business in '69, the Nifty Fifty were selling at PE ratios between sixty and ninety. So today's Mag seven in the thirties seem reasonable.”

“And and the government, in theory, can make up the paycheck, but they can't make up the sense of purpose and the reason to get out of bed and the structure for your day.”

“Emotion, what we call human nature, tends to get us excited when things go well. And as things go well, prices prices rise rise rise and people wanna buy more and more and more.”

“The the biggest I thought I've spent a lot of time thinking about the biggest mistake that investors make. It is the belief that something can go up more than something else forever.”

“And so so called nonbank lenders stepped in to make the loans that the banks weren't making.”

“I would say that as of a year or so, maybe two years ago, direct lending was, as you say, you use the term alpha, it was no longer special.”

“Direct lending was fine. It was fair. You got a 100 or a 125 basis points of incremental interest over public credit.”

“And I would say, let's talk about credit. Why do you skip all the way from zero to private credit, glossing over public credit,”

“Bob said, essentially, what we do is take advantage of the mistakes of others. And that caused me to write a memo shortly after entitled, it's all a big mistake.”

“We want to get returns that are more than commensurate with risk. And to do that, you have to buy assets not at fair prices, but are unfair prices.”

“There's only one catch. It requires cooperation for someone who's willing to sell something for less than it's worth. And who volunteers for that job?”

“It requires cooperation for someone who's willing to sell something for less than it's worth. And who volunteers for that job? We want to buy from sellers who are making mistakes.”

“And if you bought the stocks the day I got to work in '69 and you held them for five years, the greatest companies in America, you lost about 95% of your money.”

“But the lesson I learned from my experience with the nifty 50 in '69 was that it's not what you buy, it's what you pay that matters.”

“And from March of o nine until, let's say, January '26, there generally were not profound low points. And when good times roll on that long, people forget about the possibility of bad times.”

“Because picking the best managers requires an intuition and a subjective feel that I would be surprised to learn that AI can be very good at.”

“We actually haven't had many defaults yet, so we haven't had a chance yet to see who made bad loans. That's coming too. But I think that we were reserved in 2025.”

“I think it's 99% of the high yield bonds we bought paid off. So, you know, there's nothing wrong with it fundamentally, intrinsically.”

“the changes that are underway today, and in particular the introduction of AI, render the world much less predictable than at any time, probably any time ever, and certainly any time in my lifetime.”

“in 2011, when the banks chastened and regulated because of the global financial crisis, pulled back from lending for buyouts, so called non bank lenders stepped in and started to engage in direct lending, lending for mid sized buyouts.”

“It struck me that 125 basis points for a liquidity premium was about fair. It was probably adequate, but certainly not lush, and so, in my opinion, the specialness had gone away.”

“one of the long standing sayings in the banking business is that the worst of loans are made in the best of times, and it's for this reason.”

“the stock market bottomed March 6, I think it was, of 2009, seventeen years ago, this month, and there hasn't really been a tough time in the financial market since then.”

“since roughly 09/30/2022, I would venture that the S and P has doubled. I mean, company values haven't doubled, intrinsic values, but prices have doubled, so it's been a great time,”

“I mean, company values haven't doubled, intrinsic values, but prices have doubled, so it's been a great time, and great times encourage the desire to put money to work and discourage analysis,”

“we've had seventeen years of low defaults, and the actions of the Fed made the global financial crisis, which was probably the most destructive environment I've ever lived through, have only one year of elevated defaults on high yield bonds rather than the normal two.”

“the global financial crisis, which was probably the most destructive environment I've ever lived through, have only one year of elevated defaults on high yield bonds rather than the normal two.”

“if the yield spreads are at the low end of normal range, you would have to say that the fear of elevated defaults is not present and compensation for an elevated default rate is not available.”

“I think you would have to say, optimism, not pessimism, credulousness, not skepticism, are in the ascendancy today, and when optimism and credulousness are in the ascendancy, it gets hard to make return investments that will produce what we call excess returns,”

“These were the 50 best and fastest growing companies in America, where nothing could go wrong and there was no price too high.”

“So if you bought the stocks the day I got there, I think it was 09/22/1969, if I'm not mistaken, and if you held them tenaciously for five years, the greatest company is America, you lost about 95% of your money.”

“40% of the workforce gone in one day because AI could do the work cheaper and faster. So how many people in the world understand the potential import of that?”

“OpenAI brought out a new model. And in the descriptive materials, they said that the that the model helped build the model, which is really eye opening.”

“Clearly, it can eliminate a a huge percentage of of knowledge work. And you we saw Friday block 10,000 employees, let 40%, 4,000 people let go”

“And you we saw Friday block 10,000 employees, let 40%, 4,000 people let go in one go, who who aren't needed anymore because AI can do it better and cheaper and faster.”

“So one of my concerns is that AI moves faster than the ability of society to adjust to it. And that and that is a formula for disruption.”

“one of my concerns is that AI moves faster than the ability of society to adjust to it. And that and that is a formula for disruption.”

“I think it was Walter Cronkite who said if you're not confused, you don't know what's going on. I would say if you think you know what's gonna happen,”

“I would say if you think you know what's gonna happen, you don't know understand what's going on. We're at the we're in the first inning of a very long unpredictable game.”

“I would say if you think you know what's gonna happen, you don't know understand what's going on.”

“We're at the we're in the first inning of a very long unpredictable game. We don't know what the rules are or or have any idea how many innings there are”

“We're at the we're in the first inning of a very long unpredictable game. We don't know what the rules are or or have any idea how many innings there are in the game.”

“And so that was very informative and it's very desirable to learn your lessons early and also preferable to learn your lessons when there's not a lot of money at stake, which I did.”

“And given the, if you think about it, from 1980 when the inflation was solved, essentially to date, generally speaking, the more optimistic you were, the more money you made.”

“it's not what you buy, it's what you pay. And good investing is not just a function of buying good things, but of buying things well.”

“Risk, in my opinion, and my view has evolved, risk is the probability negative outcome, of an undesirable outcome.”

“Risk, in my opinion, and my view has evolved, risk is the probability negative outcome, of an undesirable outcome. It is not the volatility of the stream.”

“And if you can survive long enough to enjoy the long term benefit of the lumpy 15, it beats the hell out of the smooth 12.”

“If a risky asset can be counted on to have a high return, then it's not risky. So it can't be true. It's incorrect on its face.”

“What the relationship means is that an asset that appears to be risky has to appear to offer a high return or else nobody will buy it.”

“And forty years later in 2020, I was able to borrow at two and a quarter fixed for fifteen years.”

“See, the lead up was that because we were worried in 'five and assets, we liquidated a lot of funds, if we raised funds, we raised only small funds, we increased our selectivity.”

“The S and P 500 stock index has been around for about a century. There have been ninety seven or ninety eight three year periods by definition.”

“And I say in the memo, for example, that some woman left OpenAI, started a company called Thinking Machine Labs, went out to raise money, and she said this company is going to engage in AI, but I can't tell you what we're going to do. It's a secret. And people gave her $2,000,000,000 for a sixth of the company.”

“some woman left OpenAI, started a company called Thinking Machine Labs, went out to raise money, and she said this company is going to engage in AI, but I can't tell you what we're going to do. It's a secret. And people gave her $2,000,000,000 for a sixth of the company.”

“Their incremental profitability is enormous. When your product is virtual and you're selling one, you're making some money, you want to sell two, there's almost no cost in the second one.”

“The period, twenty three four five is for the S and P 500 is, I think, the seventh best three year period out of the last 100. Seventh out of a 100.”

“Buffett says most things best. He says, the less prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own affairs.”

“In every other walk of life, we buy more when things go on sale. In the markets, we sell more when things go on sale.”

“Most people care a little about a dollar made and a lost. Exposing yourself to the risk of loss is integral in trying to have a good investment return.”

“Exposing yourself to the risk of loss is integral in trying to have a good investment return. So, you know, even though our investment philosophy, stresses, risk control, we're not talking about risk avoidance.”

“And I would say to people, if you'd rather have a smooth 12 than a lumpy 15, you have to ask yourself what's going on.”

“Dave Swenson used my favorite two word phrase that good investing requires the adoption of uncomfortably idiosyncratic positions.”

“I've never heard anybody tell me how AI is going to change the world. We know it's a powerful force. Can think, it can process data.”

“I always make this point that the bubbles are very, very around something new because the imagination is untrammed and it can go off in a flight of fancy.”

“You're never going to have a bubble in paper stocks or timber stocks. It's too prosaic. People can say, well, we can tell how many houses you're going to build.”

“There's no doubt that the internet will produce a great increase in productivity. It's not clear that it'll have a positive impact on profitability. And I think the same is true of AI.”

“There's no doubt that the internet will produce a great increase in productivity. It's not clear that it'll have a positive impact on profitability.”

“You say that AI has the ability to eliminate half of entry level jobs. That was the whole conversation because then they cut to something else. But the point is that may be true.”

“And obviously if you can produce The US GDP and eliminate half the entry level jobs, it could be more profitable or certainly more productive.”

“To whom will the savings accrue? If different companies are competing to provide the AI service, maybe they'll compete on price to the point where it's not profitable for them.”

“If different companies are competing to provide the AI service, maybe they'll compete on price to the point where it's not profitable for them.”

“Or do you want to invest in a great tech company, which is already existing and making a lot of money where AI could be incremental, but not life changing?”

“The future is not a set single thing that if you're smart enough, you can figure it out what it's going to be and it's going to materialize and make you right.”

“It's a probability distribution. It's a range of possibilities in each thing, whether it's GDP growth next year or inflation next year, or who's going to win the next election,”

“So solidly in the second quarter for fourteen years in a row. But interestingly, as a result, for the fourteen years overall, they were in the fourth percentile.”

“And the answer turns out to be that most investors, shoot for the stars and occasionally shoot themselves in the foot and wreck their record.”

“most investors, shoot for the stars and occasionally shoot themselves in the foot and wreck their record. And once you have a big loss, it takes a long time to get back to scratch.”

“And it happens to say in there, simply put what the pension funds record tells me is that in equities, if you can avoid the losers and losing years, the winners will take care of themselves.”

“in equities, if you can avoid the losers and losing years, the winners will take care of themselves.”

“And when we started Oaktree in 1995, I wrote that down, and that became our motto and still is.”

“if there are a 100 high yield bonds out there and they're all 8% bonds, and you know that 90 will pay and 10 will default, it doesn't matter which of the 90 that pay you buy because they're all 8% bonds, they all get the same return.”

“What if I said, every four days I got either say buy or sell? I think that my record would be fifty fifty at best.”

“When Lehman Brothers went bankrupt in mid September of o eight, we had raised the biggest distressed debt fund in history by a factor of about three. We had $10,000,000,000 sitting on the shelf.”

“When Lehman Brothers went bankrupt in mid September of o eight, we had raised the biggest distressed debt fund in history by a factor of about three.”

“We had $10,000,000,000 sitting on the shelf. Lehman goes under. Most people think the financial world is gonna melt down. Question is whether you spend the money.”

“Bruce and I figured out that we should spend the money. He ran the fund in question and he bravely invested an average of $450,000,000 a week for the next fifteen weeks.”

“He ran the fund in question and he bravely invested an average of $450,000,000 a week for the next fifteen weeks. That's $7,000,000,000 in one quarter.”

“There's no doubt that the Internet will produce a great increase in productivity. It's not clear that it'll have a positive impact on profitability. And I think the same is true of AI.”

“if you can produce The US GDP and eliminate half the entry level jobs, it could be more profitable or certainly more productive. But the question is, will it be more profitable?”

“And if you bought the S and P at the same time, you've had a 12.7% rate of return.”

“And the question is, will the implementation prove to have been excessive in scope and in in the way it's financed?”

“You certainly shouldn't do that in in in activities that have a high probability of not paying off at all because then you have unlimited downside and limited upside.”

“Buffett says, the less prudence with which others conduct our affairs, the greater the prudence with which we must conduct our own affairs.”

“And the Fed manipulations are a form of price controls. You know, they control the price of money. And if Fed puts money artificially cheap, then it induces behavior like risk taking.”

“And the Fed manipulations are a form of price controls. You know, they control the price of money.”

“And if Fed puts money artificially cheap, then it induces behavior like risk taking. It forces people into riskier activities because the returns on safe activities are so low.”

“Historically, if you bought at this PE ratio, your return over the next ten years averaged in the very low single digits.”

“And as I said in the addendum, When we lost jobs to automation and offshoring, I think that that coincided with the opiate epidemic and not only in amount but also in location.”

“When we lost jobs to automation and offshoring, I think that that coincided with the opiate epidemic and not only in amount but also in location.”

“And I think it's a natural consequence of people sitting around all day. And even if we if we can find a way to replace their income I worry about purposelessness and you know we get so much job so much from our jobs other than a paycheck and you can't replace that stuff.”

“And even if we if we can find a way to replace their income I worry about purposelessness and you know we get so much job so much from our jobs other than a paycheck and you can't replace that stuff.”

“To me, the main ingredient in bubbles is psychological excess. There's no such thing as a price too high.”

“And I don't detect that level of mania at this time, so I have not put the bubble label Right.”

“And I don't detect that level of mania at this time, so I have not put the bubble label Right. On this on this incident.”

“I think there's relatively little doubt that AI will change the world. And AI has been successful as an investment, and people are piling in,”

“I think there's relatively little doubt that AI will change the world. And AI has been successful as an investment, and people are piling in, and there's some fear about being left out.”

“But to me, it just hasn't this is a judgment call. And to me, it just hasn't reached that critical mass of mania.”

“the efficient market hypothesis posits that because of the concerted action of investors, prices converge with fair value, everything is priced right, and you can't beat the market.”

“the efficient market hypothesis says you can't beat the market. And what I would say is it's not that you can't beat the market, but it's hard. And rather few people can do it.”

“if you look at equity mutual funds, most equity mutual funds don't even do as well as the S and P five hundred before fees,”

“One of the biggest mistakes you can make in life, but especially in investing, is to assume that you're smart and everybody else is dumb.”

“if riskier investments could be counted on to produce higher returns, then by definition, they're not risky. So that can't be right.”

“if it were true that taking more risk is the surefire path to a higher return, then it wouldn't be risky. Can't be right. So I was always unsatisfied with that.”

“assets that are expected to be riskier have to appear to offer a higher return or nobody will make those investments. That makes a 100% sense, doesn't it?”

“assets that are expected to be riskier have to appear to offer a higher return or nobody will make those investments. That makes a 100% sense, doesn't it? So that's what this relationship means”

“something like probably 99% of all startups fail, probably something like 90% of all the investments that venture capital funds make fail.”

“I can have more of the things that go up a lot than you do or less of the things that go down a lot than you do.”

“in real life things fluctuate between pretty good and not so hot but in the minds of investors, they go from flawless to hopeless.”

“The way to think of of a pattern of of cycle is excesses and corrections. So so for example, let's look here. What's happening here?”

“you watch the shows on TV and you get somebody on who says, you should buy and some people buy and then the next guest says you should sell and things go like this.”

“Can you imagine the world today without the internet? And yet I imagine that 99% of the internet stocks that came out are worthless today.”

“And it was a negative correlation, which means the higher the PE ratio you pay, the lower the return you should expect.”

“And it showed that historically, you bought the S and P when the PE ratio was 23, in every case, there were no exceptions.”

“So today you can buy high yield bonds, whether it be The US or Europe or variations on that theme, what we call low grade credit.”

“I came across a great quote within the last year from a guy who's a retired trader, When the time comes to buy, you won't want to.”

“The only thing I'm sure of is if you zig when they zig, you're not gonna outperform.”

“I'd say, look at this piece of junk that got issued yesterday. There's something wrong. If a deal like this can get done, the world is exercising inadequate prudence.”

“But we would like to have the remainder of your interest in a standby fund that will implement if the stuff hits the fan.”

“But if I don't invest it and the world doesn't melt down, then we didn't do our job. QED, you have to move forward.”

“So as you say, we invested $450,000,000 a week for the next fifteen weeks in that fund, which was 7,000,000,000 and Oaktree overall invested an average of $650,000,000 a week for the next fifteen weeks.”

“The academics developing investment theory, largely at the University of Chicago in the early sixties, just a couple years before I got there, adopted volatility as their measure of risk.”

“I think that volatility can be an indicator of the presence of risk, a symptom if you will, but it's not risk itself.”

“So if risk is not volatility, then what is it? And in my opinion, and in the real world sense, risk is the probability of loss.”

“The fact that you experienced a downward fluctuation might have been uncomfortable for a little while. But by the time the new high is achieved, you're you're you're back to to your cost and more.”

“My friend Rick Kane once said that 96% of financial history has occurred within two standard deviations, but everything interesting has happened outside of two standard deviations.”

“One of the most important things for every investor to learn is that risk is not a function of asset quality. This too sounds counterintuitive.”

“My conclusion was it's not what you buy, it's what you pay. And investment success doesn't come from buying good things, but from buying things well.”

“There are no assets that are so good that they can't become overpriced and dangerous. There are very few assets that are so bad that they can't be cheap enough to be attractive as investments.”

“Very simply, if it were true that riskier assets produce higher returns, then they wouldn't be riskier, would they? So that can't be the right explanation.”

“What the upward sloping line, the positive correlation, means is that investments that are perceived as being risky have to be perceived as offering higher returns to induce people to make those investments.”

“I believe imprecise qualitative expert opinion about the probability of loss is far more useful than precise but largely irrelevant numbers concerning past and projected volatility.”

“I think the right model for thinking about whether we need risk control isn't American football, it's soccer. In American football, the team with the ball has the offense on the field.”

“One thing within your control is the quality of your output. Amen. You should have a simple goal to put out a product which is the highest quality you can.”

“Well, I really believe that I can tell people what's important, but most of them are still not gonna be able to do it.”

“So I'm not putting myself at risk, because some people are gonna say, well, that's what he says. I'm not into that.”

“I'll never forget the time in the late nineties when I put out a memo, and within an hour or two, I had a, response back from somebody in Russia.”

“So, you know, from probably a 100 or so in 1990, I think now we're up to 300,000 subscribers and hopefully they pass it around.”

“I think now we're up to 300,000 subscribers and hopefully they pass it around. And and so it's it's a lot of fun now and I get great responses and I enjoy it.”

“And if if they ever kept a scorecard on the things that they wrote about what's gonna happen tomorrow, they would see that on average they get it right half the time”

“To me, the real accomplishment is making money with the risk under control. And that's what thinking about risk, I think, helps you do.”

“Forty years later, the Fed funds rate was zero, and I had a loan outstanding from bank at two and a quarter.”

“So the decline of interest rates by 20 percentage points over that period was a dominant factor in the financial world.”

“what I said in the memo is that rates are likely to be between two and four, not between zero and two, the Fed funds rate.”

“If inflation's two, then the Fed funds rate should be higher than that so that there's a positive real Fed funds rate.”

“Some people come up to me and say, yes. You're right. Interest rates are are low. Nobody has said this is a major change as you say it is.”

“Today, you can get equity type returns from what we call credit instruments, loans, corporate corporate loans, loans for buyouts.”

“You went to the bank. They said we'll lend you 800,000,000 at 5%. Now the loan is up for renewal. You go in. They say, fine. We'll lend you 500,000,000 at 8%.”

“The great investors are right 60%, 70%, maybe 80% of the time. If you're the kind of person who has to be right all the time, you shouldn't be in in investing.”

“it's not just whether the event was positive, it's how people reacted to the event that determines the impact on the security prices.”

“I'd hold up an article from the news, I said, Look at this piece of crap that got issued yesterday. If a company can raise money on this basis, there's something wrong in the market.”

“If a company can raise money on this basis, there's something wrong in the market. It's as simple as that, you know?”

“Either the financial system is going to melt down or it's not. If it melts down, it doesn't matter whether we bought or not, because it's, you know, it's game over for everything.”

“The first closing was March o seven. We didn't start investing it until June o eight.”

“And when prices are at absurd extremes, the case, the logic for a market call is very strong, and the probability of being right is very high.”

“And if it were true that every overpriced markets reverts and becomes fairly priced, then we would never get a bubble because they would stop going up here.”

“successful investing requires the adoption of uncomfortably idiosyncratic positions. Everybody has the same influences, everybody thinks pretty much the same,”

“Everybody has the same influences, everybody thinks pretty much the same, everybody anoints the same winners and criticizes the same losers, and obviously tomorrow's winners are usually found on the pile of today's losers,”

“Approach is very simple, cut off the bottom tail. That's what this guy in the Midwest did.”

“Or was it a really clever thing that nobody else had figured out where you were sure to double your money? And the answer is you can't tell.”

“readily available quantitative information about the present can't help you be superior as an investor, or it's not sufficient to be superior.”

“You have to understand that and process it, but it's not enough because everybody else has it readily available and it's quantitative, so everybody can process it.”

“I don't think it can look at five business plans and figure out which is the next Amazon. These are subjective judgments about the future, not based on past data.”

“I don't think it can look at five business plans and figure out which is the next Amazon. These are subjective judgments about the future,”

“I believe that achieving an average return with below average risk is an equally significant accomplish, but easily overlooked because only the risk is evident, only the return is evident.”

“achieving an average return with below average risk is an equally significant accomplish, but easily overlooked because only the risk is evident, only the return is evident.”

“I think that one of the things you're taught here is that volatility is a measure of risk. Volatility is risk.”

“Einstein, there's a great quote from Einstein, who said that not everything that counts can be counted, and not everything that can be counted counts.”

“risk is unquantifiable in advance. You can make reference to the historical volatility, the historical standard deviation, but number one, that's not a very good indicator of risk.”

“You buy something for 100. A year later, sell it for 200. Was it risky? You can't tell. Even when it's over, you can't tell.”

“Even when it's over, you can't tell. Was that a safe investment that it was sure to produce a double? Or was it a risky investment where you got lucky?”

“I believe that the riskiest thing in the world is the belief that there's no risk.”

“the riskiest thing in the world is the belief that there's no risk. Because when police when people believe there's no risk, they act in very risky ways, which makes the world a risky place.”

“I also believe that risk is hidden and deceptive. This is really important. Loss is what happens when risk, the potential for loss collides with negative events.”

“A high quality asset can be priced so high that it's risky. I started work at Citibank in September 1969, when I got out of Chicago Booth.”

“And if you bought those stocks, the day I got there in '69, and you held them firmly for five years, you lost almost all your money.”

“it's not what you buy, it's what you pay that determines whether your investment is risky or not. B, that good investing is not a matter of buying good things, but buying things well.”

“if you can count on higher returns from a risky asset, then by definition, it's not risky. So it's kind of an oxymoron. And I was never comfortable with this graphic.”

“after the global financial crisis, some people thought it represented an existential threat, we swung into action and we were able to invest $650,000,000 a week on average for fifteen weeks between Lehman's September 15 bankruptcy and the end of the year, that's $10,000,000,000”

“If you say to them, you know, well that happened twenty and forty years ago and it ended badly, what they say is they use the four worst words in the world.”

“And there's a really important lesson in that, that good investing is not a matter of buying good things, but buying things well.”

“Richard Feynman, the great physicist, said that, physics would be much harder if electrons had feelings. We walk in the room, we turn on the light switch, the lights go on every time.”

“I think that if you want to exist in the investment world and you want to, you can just buy and hold good things if you want to take that approach, But if you want to improve upon that, I think it's very important to understand the ebb and flow of psychology and act accordingly.”

“I think that an exceptional investor is someone who has a good return disproportionate to the risk born. A good return with the risk under control.”

“So at Oaktree, we invested $650,000,000 a week in the last fifteen weeks of 'eight, that's about $10,000,000,000 and that's really all you had to do.”

“you don't need conservatism, caution, risk control, discipline, patience or selectivity. You need money and the nerve to spend it.”

“the big realization of the last ten, forty years is that just about every asset can get cheap enough so that it's a good investment, and most investments can get so expensive that they're a bad investment. And the revolution of the high yield bond industry was really to say,”

“Now remember, the four worst words in the world were, it's different this time, the seven worst words in the world are too much money chasing too few deals.”

“you can't tell from an outcome whether a decision was good or bad. It's very important. Most people don't understand this. Totally counterintuitive.”

“good decisions fail to work all the time. Bad decisions work all the time. The investment business is full of people who are, quote, right for the wrong reason.”

“you should not act as if the things that should happen are the things that will happen. Again, in the world of the physical sciences, you can probably bet that that's true.”

“There's a professor at the London Business School who put it succinctly. He said risk means more things can happen than will happen. And again, this is profound in my opinion.”

“risk means more things can happen than will happen. And again, this is profound in my opinion. In the economic world, people generally make their decisions based on something called expected value,”

“So if you buy a high quality asset and I say in the book, there's a guy on the radio when I lived in LA,”

“if you bought the bonds of Hewlett Packard, PerkinElmer, Texas Instruments, Merck, Lilly, Xerox, IBM, Kodak, Polaroid, AIG, Coca Cola, and Procter and Gamble, and if you bought them all in 'sixty eight and you held them until 'seventy three, you lost 90% of your money. Why? Because they were overpriced.”

“if you bought the bonds of Hewlett Packard, PerkinElmer, Texas Instruments, Merck, Lilly, Xerox, IBM, Kodak, Polaroid, AIG, Coca Cola, and Procter and Gamble, and if you bought them all in 'sixty eight and you held them until 'seventy three, you lost 90% of your money.”

“Then you go to the high yield bond business, you invest in the worst companies in America, you make the most money.”

“You give me $100 and I promise to give you 5% interest every year and then give you a bonding back in twenty years. Fixed income, it's called, because all the events are fixed.”

“Fixed income, it's called, because all the events are fixed. The contract is fixed. The return is fixed, assuming the promise is kept.”

“What percentile do you think that fund was in for the whole fourteen years? Four. Four. And if you think about it, it's really almost mysterious. Why the fourth, not the thirty seventh?”

“in 'eighty eight, we brought out the first distressed debt fund. Now we're not investing in companies that have a risk of default.”

“we brought out the first distressed debt fund. Now we're not investing in companies that have a risk of default. We're investing in bonds that are either in default or sure to be.”

“And we've made about 23% a year for twenty eight years investing in distressed debt before fees without any leverage. So that's pretty astronomical. Why?”

“we've made about 23% a year for twenty eight years investing in distressed debt before fees without any leverage. So that's pretty astronomical. Why?”