Howard Marks - Oaktree

Marks and Oaktree follow six basic investment principles:

• The goal is to outperform the market with less risk. Their top priority is to prevent losses “if we avoid the losers, the winners will take care of themselves.”

• Focus on consistency: They want reasonable returns in all years, rather than a few spectacular years and very bad years. Or as they say: a “high batting average”.

• The importance of market inefficiencies. Skill and hard work can give investors a knowledge advantage, but this is typically only possible in less efficient markets. That’s the only place Oaktree invests.

• Specialization is the surest way to a good return. Oaktree’s portfolios therefore keep a sharp focus on a specific strategy (e.g. value) or asset class (e.g. junk bonds)

• Macro predictions are not necessary for outstanding investment performance. Their focus is on bottom-up investigations of companies and their respective industries.

• Denial of market timing. Oaktree can be more or less defensive in their investments, but they will never try to time the market by increasing their cash position.