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The Most Important Thing: Uncommon Sense for the Thoughtful Investor (Columbia Business School Publishing) Hardcover – May 1, 2011
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Everyone knows about the anticipation leading up to Warren Buffett's annual shareholder letters. But for a certain Wall Street set, there are equally high expectations for the writings of Howard Marks.(Peter Lattman Wall Street Journal)
Regular recipients of Howard Marks's investment memos eagerly await their arrival for the essential truths and unique insights they contain. Now the wisdom and experience of this great investor are available to all. The Most Important Thing, Marks's insightful investment philosophy and time-tested approach, is a must read for every investor.(Seth A. Klarman, president, The Baupost Group)
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.(Warren Buffett, Chairman and CEO, Berkshire Hathaway)
Few books on investing match the high standards set by Howard Marks in The Most Important Thing. It is wise, witty, and laced with historical perspective. If you seek to avoid the pitfalls of investing, you must read this book!(John C. Bogle, Founder and former CEO, The Vanguard Group)
If you take an exceptional talent and have them obsess about value investing for several decades, including deep thinking about its very essence with written analysis along the way, you may come up with a book as useful to value investors as this onebut don't count on it.(Jeremy Grantham, cofounder and chief investment strategist, Grantham Mayo Van Otterloo)
The Most Important Thing is destined to become an investment classic-it should easily earn its place on every thinking investor's bookshelf. Howard Marks has distilled years of investment wisdom into a short book that is lucid, entertaining, and ultimately profound.(Joel Greenblatt, Columbia Business School, founder and managing partner of Gotham Capital)
A clear and expert resource for all investors.(Kirkus Reviews)
Veteran value-investing manager Howard Marks draws on pithy memos he wrote to clients over the years to dispense insightful advice on everything from risk taking to the role of luck.(Money Magazine)
There is, quite simply, an incredible amount of wisdom between the covers of his book and an investor is doing them a disservice if they don't read, and re-read, this book.(FocusInvestor.com)
The book is written in a way that both seasoned investors and novices should appreciate.(Brenda Jubin Seeking Alpha)
If Benjamin Graham's and David Dodd's Securities Analysis was the essential, must have investment book of the end of the 20th century, then Howard Marks's The Most Important Thing is a serious contender for parallel status in the 21st century.(Stephen E. Roulac New York Journal of Books)
...many valuable insights into the psychological roots of investors' habitual errors.(Martin Fridson Barron's)
All investors should read it.(Alex Dumortier The Motley Fool)
"The Most Important Thing"... offers readers an overview of how to think when considering an investment opportunity, which is quite valuable indeed, considering studies have shown most people tend to make impulsive, indiscriminate investment decisions.(Syracuse Post-Standard)
An exceptional value investor shares an approach to investing usually reserved for professional insiders.
More About the Author
Los Angeles-based investment firm with $80 billion under management. He
holds a Bachelor's Degree in finance from the Wharton School and an MBA
in accounting and marketing from the University of Chicago.
Top Customer Reviews
I set out reading the thing, and even took notes. However, I soon realized that what I was reading wasn't worth noting down. I am writing this to provide fair warning to experienced readers, in full knowledge that this runs counter to the personal endorsements of Buffett and co. So I will be as specific as I can in my criticisms, and by all means buy it if you think I'm way off point. Caveat emptor.
First, the organization isn't great. Marks chooses to simply reprint a lot of his past stuff. This results in the book not being as crisp as it could be. I am not talking about a "magic formula for investing" in equations or sentences, which he explicitly says he is not providing and anyway I am not seeking. I am just asking for the basic, minimally repetitive, coherent flow of thought any investment author ought to provide to his readers in a single book.
Second, he even sort of tricks you in the title. I don't think you'll mind me spoiling this for you because it is so... lame: There is No One Important Thing. In fact, there are 18. And oh, yeah, a lot of them are minor variations of each other (Chapter 2 is on Understanding Market Efficiency. Chapter 19 is on Adding Value.Read more ›
I highly recommend buying this book if you are unfamiliar with Howard. His views on investing are invaluable.
If you are like me, however, you may find this book to be a bit of a let down as it relies heavily on his old memos (all of which are free on the Oaktree website). The book literally rewrites important segments of his memos and then adds a bit of color here and there. I find it convenient to have the most important points of his memos in one place and nicely summarized, but that's about it.
Being a teensy part of the investment fraternity that calls itself value investors, I do have some perspective on this book. The joke of sorts is that there are many things that are "the most important thing." But I think the point of the author is that what is most important shifts, depending on the market environment.
But all of "the most important things" can be boiled down to four main concepts:
Margin of Safety
Buy it Cheap; Valuation
Think beyond the initial effects to secondary effects. Think holistically.
By margin of safety, there are many things implied -- a strong balance sheet, strong cash flows, conservative accounting, and/or protected market position. The important thing is to prevent a large loss. If you can prevent large losses, the gains will come eventually.
Buying it cheap is also a simple concept, though hard to implement well. What metric to use? Price to Earnings, Cash Flow, Book, Free Cash Flow, EBITDA? Where to look in the capital structure for value? The equity may be too risky, but maybe the preferred stock or bonds might be interesting.
Contrarianism means looking for what others rely on that may not work, and investing against it, whether positively or negatively. It can't be mere opinion; the other side has to be invested, and relying on their hypothesis to succeed. That is the situation where investing contrary to the consensus can succeed.Read more ›
This new book expands upon the ideas he covered in that original memo. Topics that are covered include: market efficiency, value, risk, investment cycles, contrarianism, finding bargains, patient opportunism, circle of competence, luck, avoiding pitfalls, etc... In short all the topics that a focus investor needs to understand and be able to place, and use, in their own mental models.
What does Mr. Marks want his readers to gain from his book? Here are his own words from the introduction of the book:
"I didn't set out to write a manual for investing. Rather, this book is a statement of my own investment philosophy. I consider it my creed, and in the course of my investment career it has served like a religion. These are the things I believe in, the guideposts that keep me on track. The messages I deliver are the ones I consider the most lasting. I'm confident their relevance will extend beyond today.
You won't find a how-to book here. There's no surefire recipe for investment success. No step-by-step instructions. No valuation formulas containing mathematical constants or fixed ratios - in fact, very few numbers. Just a way to think that might help you make good decisions and, perhaps more important, avoid the pitfalls that ensnare so many.
It's not my goal to simplify investing.Read more ›
Most Recent Customer Reviews
Love this book great for newbie investors trying to learn what a bargain price means and how to know when to buy.Published 21 days ago by Amazon Customer
Great insights. It challenges me to re-evaluate my investment perceptions.Published 1 month ago by Amazon Customer
Useful book to help investors develop a flexible thinking process to apply to investing.
Not a formula driven book about evaluating companies --for that check out... Read more
loved the book. The book that really focus and teaches us about the right mindset for value investingPublished 3 months ago by Andre Nunes
Overrate - read Thinking Fast & Slow & you will see the folly of this bookPublished 4 months ago by Brandon
Lacking in depthness....there are other more books which gives you better understanding on the subject...would advice to read....your money and your brain...jason seeing....Published 4 months ago by rayha patel
A must for every new and old investor. Succinctly and clearly points out that the price of the asset is the key to the risk/reward calculation of any investment. Read morePublished 5 months ago by mark macaluso
Very thoughtful book on value investing and risk management. Also touches on key aspects of behavioral finance.Published 6 months ago by Lucas Ramirez