Among the daily dross on investing that the internet serves up, there are also some gems. Howard Marks, Chairman of Oaktree Capital, has been posting his memos on his company’s website since 1990, and readers can subscribe to receive an email notification when a new memo is posted. In his first memo for 2013 just published, he identifies his key themes from the past 23 years:
- the importance of risk and risk control
- the repetitiveness of behaviour patterns and mistakes
- the role of cycles and pendulums
- the volatility of credit market conditions
- the brevity of financial memory
- the errors of the herd
- the importance of gauging investor psychology
- the desirability of contrarianism and counter-cyclicality
- the futility of macro forecasting.
Investors fail to learn from history and repeat patterns of behaviour and make the same mistakes.