Howard Marks - Embracing the Psychology of Investing

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts and you can access all our podcasts, including edited transcripts, show notes and other resources to keep learning at joincolossus.com.

**SPEAKER_3** (2:49)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (3:14)
My guest today is Howard Marks, co-founder of Oaktree Capital, a leading investment manager and one of the world's largest distressed debt investors. In our conversation, we discussed takeaways from the market sell-off and rapid recovery in 2020, the importance of assessing both quantitative and qualitative factors in markets and the benefits Howard has realized from a career of writing. I hope you enjoyed this great conversation with Howard Marks.
So Howard, I'm toyed with where we might begin what will surely be a wide-ranging conversation. I'm going to start really broad, which is to ask you, if you think forward 50 or 100 years, what big ideas of yours that you've returned to over your career? Are you most confident will stand the test of time?

**Howard Marks** (3:58)
I actually think that in terms of specific contributions, the greatest one I've made is the modification of the capital market line through the imposition of some probability distributions to indicate that not only when risk increases does expected return increase, but so does uncertainty.
And you know, I indicate that by superimposing these bell shaped curves turned on their sides. And I think that it's an extremely good way to understand the meaning of risk, frankly, but not aware that anybody's picked it up and I'm not aware that anybody ever will. I think that's very important.