Howard Marks wrote a book "The Most Important Thing". In it, he outlined what he viewed as the important things for success in investments. It is sort of "tongue in cheek" as Marks describes 19 items that are most important.
I have re-read the book multiple times to cement his ideas into my own investment style. The book is jam packed with outstanding information on how to think about investing. Each time I read it, I refresh his ideas in my mind and, I believe, improve my approach to investing.
Marks is a billionaire who built his wealth from literally nothing through decades of investing. When Marks speaks, I listen and listen closely.
Warren Buffett gives accolades to Marks with his comment, "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."
Marks first most important thing is second-level thinking. First-level thinking is very simplistic, such as the stock is down in price, I'll buy it. Second-level thinking is looking at potential investments from many vantages that are different from the crowd. The price is down. Is the stock in it's normal price earnings range? What is it's return on equity? What is the trend in its earnings? How leveraged (debt) is the company. Etc. etc., etc. The crowd is running for the hills. I need to double down.
This approach helps to develop unique insights that are very different from the crowd. These insights are essential to achieve returns above the averages.
"Few people have what it takes to be great investors. Some can be taught, but not everyone... and those who can be taught can't be taught everything. Valid approaches work some of the time but not all. And investing can't be reduced to an algorithm and turned over to a computer. Even the best investors don't get it right every time." page1
"For your performance to diverge from the norn, your expectations - and thus your portfolio - have to diverge from the norm, and you have to be more right than the consensus. Different and better: that's a pretty good description of second-level thinking." page 6.
If you want to be a successful investor, education is the first order. You must constantly and continually learn, grow and adapt. Those who just follow the crowd using first-level thinking are destined to mediocre or poor performance,
"It's not supposed to be easy. Anyone who finds it easy is stupid." Charlie Munger
Be smart, be well-read, be aware and be successful.
