📖Howard Marks
Risk is Loss Probability
Focus on permanent loss, not volatility.
Risk means more things can happen than will happen. The possibility of permanent loss is the risk I worry about. Everything else is just price fluctuation.
🏠 Everyday Analogy
📖 Core Interpretation
Howard Marks treats survival as the first objective. Limiting permanent capital loss, controlling leverage, and avoiding single-point failure are prerequisites for long-term compounding.
💎 Key Insight：True risk is permanent capital loss, not temporary price decline.
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❓ Why It Matters
A single large drawdown can erase years of progress. Risk control is not timidity; it is the operating system that keeps compounding alive.
🎯 How to Practice
Define downside scenarios before entry, cap position size, avoid fragile leverage, and maintain liquidity so mistakes remain survivable.
⚠️ Common Pitfalls
Equating volatility with all forms of risk
Oversized positions without an exit plan
Using leverage to compensate for uncertainty
📚 Case Studies
1
Buying Distress in Global Financial Crisis (2008)
Panic selling hit high-quality credits and equities. First-level thinking saw ruin. Second-level analysis distinguished solvency from liquidity issues.
✨ Outcome：Bought discounted bonds and stocks, enduring short-term volatility and achieving strong multi-year returns as markets normalized.
2
Dot-Com Bubble Overvaluation (1999)
Tech stocks soared despite weak fundamentals, fueled by hype and momentum trading, suggesting markets were far from perfectly efficient.
✨ Outcome：Marks avoided overpriced tech, held higher-quality businesses, and preserved capital when the bubble burst in 2000-2002.
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