Thursday, June 21, 2012

Howard Marks / Oaktree June Memo - It Is All A Big Mistake

Mistakes are a frequent topic of discussion in our world.  It’s not unusual to see investors criticized for errors that resulted in poor performance.  But rarely do we hear about mistakes as an indispensible component of the investment process.  I’m writing now to point out that mistakes are all that superior investing is about.  In short, in order for one side of a transaction to turn out to be a major success, the other side has to have been a big mistake.
There’s an old saying in poker that there’s a “fish” (a sucker, or an unskilled player who’s likely to lose) in every game, and if you’ve played for an hour without having figured out who the fish is, then it’s you.  Likewise, in every investment transaction you’re part of, it’s likely that someone’s making a mistake.  The key to success is to not have it be you.

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