The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor

Howard Marks’s The Most Important Thing distilled the investing insight of his celebrated client memos into a single volume and, for the first time, made his time-tested philosophy available to general readers. In this edition, Marks’s wisdom is joined by the comments, insights, and counterpoints of four renowned investors and investment educators: Christopher C. Davis (Davis Funds), Joel Greenblatt (Gotham Capital), Paul Johnson (Nicusa Capital), and Seth A. Klarman (Baupost Group).

Introduction:

For twenty years Howard Marks has been educating investors with his “Memos from the Chairman,” and in writing The Most Important Thing, Marks drew from these memos to compile the most important lessons he has learned as an investor. That he is an outstanding investor goes without saying; he is also a great teacher and a thoughtful author, and The Most Important Thing is a generous gift to all investors.

In The Most Important Thing Illuminated, readers will benefit not only from Marks’s hard-earned wisdom, but also from the insights of three seasoned investors—Christopher Davis, Joel Greenblatt, and Seth Klarman—and a Columbia Business School adjunct professor, Paul Johnson. Each annotator in this impressive group brings a unique perspective to Marks’s work, and an investment style that colors their reaction to Marks’s text. For Davis, superior investment ability seems to be innate, and his success is amplified by his commitment to a value approach and his disciplined industry focus.

Greenblatt—himself the author of the bestselling investment book The Little Book That Beats the Market—has gained tremendous success through his keen eye for irrational institutional behavior. His initial insight into corporate spin-offs has been followed up by his more recent focus on overall market anomalies. Klarman has produced almost three decades of extraordinary results while being aggressively risk adverse—and his performance is even more remarkable when one learns of his near obsession with down-side protection. Finally, Johnson brings his almost thirty years as an investment professional and twenty years as an adjunct professor to reveal how he has begun to incorporate Marks’s wisdom into his courses on security analysis and value investing.

Their annotations on the original text add depth and dimension to Marks’s argument, as these four thinkers discuss how Marks’s philosophy resonates with, refines, or occasionally differs from their own. Marks even adds his own commentary throughout the text, bringing to light some of the underlying themes that run through the book and articulating the top priorities among his recommended actions. In addition, he offers one extra lesson not covered in the original book, on the importance of reasonable expectations. I like to think of The Most Important Thing Illuminated as a surrogate book group with five of the best investment thinkers alive.

Contents:

• Second-Level Thinking
• Understanding Market Efficiency (and Its Limitations)
• Value
• The Relationship Between Price and Value
• Understanding Risk
• Recognizing Risk
• Controlling Risk
• Being Attentive to Cycles
• Awareness of the Pendulum
• Combating Negative Influences
• Contrarianism
• Finding Bargains
• Patient Opportunism
• Knowing What You Don’t Know
• Having a Sense for Where We Stand
• Appreciating the Role of Luck
• Investing Defensively
• Avoiding Pitfalls
• Adding Value
• Reasonable Expectations
• Pulling It All Together

The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor By Howard Marks pdf