The Most Important Thing: Uncommon Sense for the Thoughtful Investor (Columbia Business School Publishing)

by Howard Marks

“The higher return is explained by hidden risk.” (The fallback position is to say, “You don’t have enough years of data.”)

If the return appears so generous in proportion to the risk, might you be overlooking some hidden risk?

In general, the upside potential for being right about growth is more dramatic, and the upside potential for being right about value is more consistent. Value is my approach. In my book, consistency trumps drama.

Investing is a popularity contest, and the most dangerous thing is to buy something at the peak of its popularity.

John Maynard Keynes pointed out, “The market can remain irrational longer than you can remain solvent.”

“There’s a big difference between probability and outcome. Probable things fail to happen—and improbable things happen—all the time.”

Here’s the key to understanding risk: it’s largely a matter of opinion.

Invariably things can get worse than people expect.

You must do things not just because they’re the opposite of what the crowd is doing, but because you know why the crowd is wrong.

“investment is the discipline of relative selection.”

It’s more important to ensure survival under negative outcomes than it is to guarantee maximum returns under favorable ones.

you must learn things others don’t, see things differently or do a better job of analyzing them—ideally, all three.