Tuesday, May 24, 2011

The Most Important Thing - Uncommon Sense for the Thoughtful Investor (review)

Howard Marks' new book,The Most Important Thing: Uncommon Sense for the Thoughtful Investor , has been much anticipated, but is it worth the wait?

Howard Mark is one of the investors with such a reputation for rare wisdom that his memos and newsletters are considered "essential truths" of investing. With this book, Mr. Mark lets the everyday investor in on some of this wisdom.

This book is not a "how to" book of investing. It's not a method or a formula. It's quite simply an outline of Mark's investment philosophy - his religion(his word).

His writing is as witty as it is wise, and at times this book reads like a roadmap of past pitfalls presented in such a way as to serve as a warning for future perils.

Perhaps of most value to the regular investor is the historical perspective Mark brings to these stories. His is the kind of perspective that comes from 40 years of spent in the investment world and being the chairman and cofounder of none other than Oaktree Capital Management.

The Most Important Thing is one of those rare books that has something for everyone. Long time investors and amateur's alike will gain from Mark's unique perspective and wisdom on assessing market opportunity and risk.

At first glance, it seems like the book is inaccurately named. Instead of focusing on one, single thing he appears to explain several keys to success and warn of multiple pitfalls. It's only when the book is considered as a whole that the title becomes clear. The Most Important Thing may be interpreted to be having an investment philosophy and following it.

Alternatively, it can be interpreted as purposefully misleading and that there really is no single most important thing - they're all equally important.

This is something that is perhaps best left to the reader decide.


Howard Mark has hit the mark on his goal of distilling a lifetime of experience and practice into a concise and practical book. For the amateur investor, it's a book to teach you how to think about investing. Much like Benjamin Graham's epic book The Intelligent Investor: The Definitive Book on Value Investing., only much shorter (under 200 pgs to Graham's 640 pgs!).

For the seasoned investor, this book should serve as a reminder that investing is often much more than the technical factors like P/E ratios, Alpha, Beta and the like.
The Most Important Thing: Uncommon Sense for the Thoughtful Investor is an investment philosophy, and a reminder that many times an investor must beat himself to beat the market. Or at the very least, that it's his own tendencies toward fear and greed that should concern him most.

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