Published about six times a year, his memos to Oaktree clients have become required reading in certain investment circles. The dispatches have been praised by everyone from Warren E. Buffett to “Tyler Durden,” the anonymous blogger for Zero Hedge, the popular finance Web site. Mr. Durden recently called Mr. Marks “one of the most thoughtful observers on the markets” and described his recent memo on gold as a “must read.”
After 20 years of churning out the letters, Mr. Marks is now a published author. His book, “The Most Important Thing,” was released last week by Columbia Unversity Press. In 192-pages, he weaves excerpts from two decades’ worth of the missives into a single volume, dispensing gobs of investing insights obtained in his 42-year career.
Oaktree, based in Los Angeles, manages $82 billion for clients, mostly in fixed-income strategies. Mr. Marks and four co-founders started the firm in 1995 after spinning out from the asset manager TCW. Before TCW, Mr. Marks, a native New Yorker, spent 16 years at Citibank, where he began as a stock analyst and later managed convertible and high-yield bond portfolios.
DealBook’s Peter Lattman recently caught up with Mr. Marks, who was back at work in London after returning from his 65th birthday celebration in Spain.
I’ll give you one brief example. Think about gold. We tend to think that what’s been happening with the price of gold is that it is now worth more dollars than it used to be. But outside the United States when you talk to people, you see people think that it’s not an increase in the price of gold in terms of dollars but a decrease in the price of dollars in terms of gold. And seeing it reflectively like that I think is very helpful.
Then I met Mike Milken in ‘78, and he said if you buy the bonds of B-rated companies and they survive, all the surprises will be on the upside, and a little light bulb went on. I realized that you could invest in the debt of the worst companies in America and make a lot of money if you were paid an appropriate risk premium. That’s really a big part of the philosophy, that quality investing is not about buying good things, it’s about buying things well. The most important thing is the relationship between price and value. If you can figure out the fair value of an asset and buy it for less, that is the best, most dependable way to invest.