Quote · My First Million
Howard Marks: how I make money while you worry about a market crash
Where this was said
The Key to a Successful Partnership
At 22:18 · chapter starts 20:22
Shaan Puri prompts Marks to share the secret of his 39-year partnership with Bruce Karsh, framing it as a question for himself and Sam Parr about how to build a lasting business relationship. Marks says their foundation is mutual respect, which he's never experienced without. He wrote a memo in 2002 laying out the formula: shared values and complementary skills. On values, he tells the story of his friend who used to carry around the list of investment banks from an AT&T IPO tombstone ad and mark off each one as it went out of business — almost all of them eventually collapsed because they had 'cowboys and chickens' who undermined each other in alternating market conditions. On complementary skills: if you can do everything your partner can do, you'll eventually decide you don't need them. The beauty of the Karsh-Marks relationship is that each genuinely cannot do what the other does. [1] — Howard Marks "Most investment firm partnerships collapse because cowboys and chickens end up together and tear each other apart in different market condi…" 20:58 Marks adds a third, often-neglected element: appreciation — genuinely being grateful that your partner handles the things you don't want to do.
After Lehman Brothers collapsed, Oaktree's Bruce Karsh invested an average of $450 million per week for 15 weeks — $7 billion in a single quarter.
Howard Marks and Bruce Karsh have been partners at Oaktree for 39 years as of the episode, and Marks says they have never had a fight.
Most investment firm partnerships collapse because cowboys and chickens end up together and tear each other apart in different market conditions. Howard Marks and Bruce Karsh have been partners 39 years because they share values, have complementary skills, and genuinely appreciate what the other does.
In a memo titled 'Taking the Temperature,' Howard Marks reviewed his five major macro investment calls over 26 years and found every single one was made with some level of doubt.
You can't raise money during a crisis because the news is too terrible. Oaktree raised $11B before the 2008 crash by pointing to real flaws in the market, twenty years of track record, and a counterintuitive habit: shrinking their next fund after a great return.
