#1
Risk is Loss Probability
"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."
Focus on permanent loss, not volatility.
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Howard Marks🛡 Risk Management
Howard Marks's Risk Management Rules
Howard Stanley Marks (born April 23, 1946) is an American investor and writer. He is the co-founder and co-chairman of Oaktree Capital Management, one of the world's largest investors in distressed securities with over $150 billion in assets under management. Marks is renowned for his insightful memos to clients, which have been published since 1990 and are widely read in...
3 principles·Risk Management
3 Key Risk Management Principles
#2
Risk Control
"Skillful risk control is the mark of a superior investor. Great returns don't tell you much about risk - you need to know what risks were taken."
Superior investing requires managing risk, not just chasing returns
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Understanding Risk
"Risk means more things can happen than will happen. The possibility of permanent loss is the risk that matters most."
Permanent capital loss is the only risk that truly matters
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What are Howard Marks's key risk management principles?
Howard Marks has 3 key principles on risk management. The most important one is "Risk is Loss Probability" — Risk means more things can happen than will happen.
How does Howard Marks apply risk management in practice?
Howard Marks applies risk management through several key principles including "Risk is Loss Probability" and "Risk Control". These principles guide practical investment decisions and have been tested across decades of market cycles.
What makes Howard Marks's approach to risk management unique?
Howard Marks's approach to risk management is distinguished by a focus on long-term thinking and fundamental analysis. With 3 specific principles in this area, Howard Marks provides a comprehensive framework that investors at any level can study and apply to improve their decision-making.
