Introduction: Why Howard Marks’ Investing Wisdom Still Matters in 2025
Howard Marks investing wisdom is a powerful guide for navigating volatile markets in 2025. As market dynamics shift due to inflation, geopolitical tensions, and emerging AI-driven strategies, investors are seeking grounded, time-tested principles. In this environment, few voices resonate as strongly as Howard Marks, co-founder and co-chairman of Oaktree Capital Management.
In his nearly three-hour masterclass on long-term investing, Marks delivers timeless insights built on decades of hands-on experience through recessions, crises, booms, and transformations in the financial world. This article explores key takeaways from his conversation, dissecting the philosophy that has guided one of the most successful asset managers of our time.
1. Embracing Uncertainty: “You Can’t Predict. You Can Prepare.”
One of the foundational themes of Marks’ philosophy is the rejection of precision forecasting. Rather than relying on economic models that are, at best, educated guesses, Marks advocates for recognizing the limits of our knowledge and focusing on preparation over prediction.
“You can’t predict. You can prepare.” — Howard Marks
This mindset is particularly powerful in 2025, where the aftershocks of inflation, geopolitical shifts, and the rise of AI investing tools are constantly shaking market assumptions. According to a 2024 Morningstar analysis, forecasts from major Wall Street firms correctly predicted quarterly GDP growth only 46% of the time over the past decade. This aligns with Marks’ view that overconfidence in market predictions leads to overexposure and dangerous bets.
What does preparation look like?
- Diversification: Not just across asset classes, but across geographies, industries, and even investment theses.
- Scenario planning: Constructing portfolios that can withstand both upside and downside macro events.
- Humility: Recognizing that even seasoned investors can be wrong more often than right.
In uncertain times, resilience wins over precision.
2. Risk Management First: Avoiding Big Mistakes Is More Important Than Finding Big Winners
Marks frequently emphasizes the idea that the avoidance of loss is the most critical component of long-term investment success. This philosophy runs counter to the glamorized pursuit of alpha at any cost seen in speculative markets.
Oaktree Capital, under his leadership, has become a benchmark for conservative yet high-performing investing. Their playbook? Defensive positioning, meticulous analysis, and strategic opportunism.
“If we avoid the losers, the winners will take care of themselves.”
Key risk management principles discussed:
- Margin of safety: Always buy below intrinsic value to create a buffer against downturns.
- Asymmetrical bets: Seek opportunities where potential upside is significantly higher than downside.
- Avoidance of leverage: Especially in rising rate environments, leverage multiplies risk.
A 2025 Harvard Business School case study on Oaktree highlighted that funds with strict loss-avoidance policies yielded higher risk-adjusted returns than aggressive growth funds during 2018–2023. In today’s climate of high interest rates and slow growth, these strategies are crucial.
3. Mastering Market Psychology: Be a Second-Level Thinker
In what is perhaps the most intellectually stimulating part of the discussion, Marks dives into behavioral economics and market psychology, drawing a clear line between average investors and what he calls “second-level thinkers.”
Where the average investor asks, “Is this a good company?”, the second-level thinker asks, “Is this a good company at this price, relative to what others believe?”
Key emotional biases Marks warns against:
- Herd mentality: Buying into euphoria and selling in panic.
- FOMO (Fear of Missing Out): Leads to overvaluation.
- Recency bias: Projecting recent trends into the future.
Marks advocates for contrarian thinking, especially in emotionally charged markets:
- When markets are euphoric, be skeptical.
- When markets are fearful, be greedy.
This is backed by a 2025 MIT Sloan study showing that investors who acted contrary to sentiment indicators outperformed by 2.3% annually.
4. Patience and Timing: Success Comes from Waiting for the Right Pitch
Marks likens investing to baseball: “There are no strikeouts in investing. You can wait for the fat pitch.” The key to outsized returns isn’t chasing every opportunity but knowing when not to act.
“It’s not about doing something all the time. It’s about doing the right thing at the right time.”
His concept of the barbell strategy involves holding both extremely safe and extremely opportunistic assets. This method preserves capital while keeping dry powder for rare but lucrative chances. For example:
- In 2020, Oaktree went heavily into distressed credit during the COVID panic.
- In 2023, they remained mostly idle, avoiding overpriced assets.
Practical implications:
- Avoid the trap of constant activity.
- Accept that sometimes, the best position is cash.
- Let others act irrationally while you wait for clarity and value.
5. Sector-Specific Insight: The Case for Energy, Bonds, and Emerging Markets
A particularly timely part of the discussion revolves around Marks’ views on energy, high-yield bonds, and emerging markets. In a world navigating both ESG pressures and traditional energy needs, Marks offers a balanced, realistic view.
Energy Investing in Transition:
- Don’t abandon fossil fuels prematurely.
- ESG should not mean abandoning value.
- Energy stocks today offer value, especially in a supply-constrained environment.
IEA’s 2025 forecast confirms this: fossil fuel demand is expected to peak only by 2032, not vanish. Until then, energy remains essential.
High-Yield Bonds:
- In today’s environment of 5-7% base interest rates, high-yield bonds offer over 9%.
- These debt instruments, if well-underwritten, outperform equities on a risk-adjusted basis.
Emerging Markets (e.g., South Korea):
- High industrial capacity
- Strong labor productivity
- Undervalued equities
Marks suggests that the combination of yield, growth, and lower valuations makes these geographies ripe for disciplined investors.
People Also Asked
What is Howard Marks’ investing wisdom?
Howard Marks investing wisdom centers on risk management, second-level thinking, patience, and embracing market cycles and uncertainty.
How does Howard Marks view economic forecasting?
He is critical of over-reliance on forecasts. Instead, he prefers scenario planning and risk preparedness.
What is second-level thinking?
Second-level thinking is considering not just what is true, but what is true relative to others’ expectations. It helps identify mispricings.
Why is risk more important than return according to Howard Marks?
Because avoiding major losses is what sustains long-term portfolio growth. Chasing high returns often leads to ruin.
Conclusion: The Enduring Relevance of Howard Marks in 2025
As we navigate 2025’s unpredictable markets, Howard Marks remains a guiding voice. His philosophy—that markets are cyclical, human psychology is flawed, and humility is a superpower—gives investors a robust mental framework.
“You don’t make money because you know the future. You make money because you prepared for it.”
His wisdom helps investors focus less on prediction and more on positioning, less on excitement and more on endurance.
In a time of rapid change, timeless principles matter more than ever. And few articulate those principles better than Howard Marks.
Sources:
World Economic Forum Global Risk Report (2025)
Morningstar Economic Accuracy Report (2024)
Harvard Business School Case Study on Oaktree Capital (2025)
MIT Sloan Behavioral Finance Study (2025)
IEA World Energy Outlook (2025)
Posts of interest:
5 Best Assets to Invest in 2025 to Build Long-Term Wealth
Blockchain Technology: How It Works & Why It Matters
