The Most Important Thing Book by Howard Marks — 25 incredible investing quotes from The Most Important Thing Book by Howard Marks. Quotes about risk management, defensive investing, and market psychology. I am not a licensed investment advisor and this post is not investment advice. All opinions are my own. Please note this post contains ads by Monumetric.
I recently finished reading The Most Important Thing by Howard Marks. It is immediately one of the best investing books I’ve ever read.
Although it’s a different style of book, I’d even put it up there with The Intelligent Investor by Benjamin Graham as a cornerstone for aspiring investors to learn about investing.
Simply put, it’s a fantastic book about risk management, defensive investing, and market psychology.
Since I enjoyed it so much, and because I want to document the most important points to improve as an investor, I wanted to share my favourite quotes I discovered while reading it.
Here are the best quotes by Howard Marks from The Most Important Thing Book.
The Most Important Thing Book By Howard Marks (Top 25 Quotes)
“Too much capital availability makes money flow to the wrong places.”
“There aren’t always great things to do, and sometimes we maximize our contribution by being discerning and relatively inactive. Patient opportunism—waiting for bargains—is often your best strategy.”
On Defensive Investing
“We have to practice defensive investing, since many of the outcomes are likely to go against us. It’s more important to ensure survival under negative outcomes than it is to guarantee maximum returns under favorable ones.”
“Simply put, we must strive to understand the implications of what’s going on around us. When others are recklessly confident and buying aggressively, we should be highly cautious; when others are frightened into inaction of panic selling, we should become aggressive.”
“Acknowledging the boundaries of what you can know—and working within those limits rather than venturing beyond—can give you a great advantage.”
“When prices are high, it’s inescapable that prospective returns are low (and risks are high).”
On Investing Skill
“Short-term gains and short-term losses are potential imposters, as neither is necessarily indicative of real investment ability (or the lack thereof).”
“In the long run, there’s no reasonable alternative to believing good decisions will lead to investment profits. In the short run, however, we must be stoic when they don’t.”
“The keys to profit are aggressiveness, timing, and skill, and someone who has enough aggressiveness at the right time doesn’t need much skill.”
“Every once in a while, someone makes a risky bet on an improbable or uncertain outcome and ends up looking like a genius. But we should recognize that it happened because of luck and boldness, not skill.”
On Contrarianism
“The best opportunities are usually found among things that others won’t do. After all, if everyone feels good about something and is glad to join in, it won’t be bargain-priced.”
“The ultimately most profitable investment actions are by definition contrarian: you’re buying when everyone else is selling (and the price is thus low) or you’re selling when everyone else is buying (and the price is high).”
On Market Psychology
“There’s only one way to describe most investors: trend followers. Superior investors are the exact opposite.”
“To avoid losing money in bubbles, the key lies in refusing to join in when greed and human error cause positives to be wildly overrated and negatives to be ignored.”
“As an overpriced stock goes even higher or an underpriced stock continues to cheapen, it should get easier to do the right thing: sell the former and buy the latter.”
“Thoughtful investors can toil in obscurity, achieving solid gains in the good years and losing less than others in the bad. They avoid sharing in the riskiest behavior because they’re so aware of how much they don’t know and because they have their egos in check.”
“In the world of investing, most people find it terribly hard to sit by and watch others make more money than they do.”
“Why do mistakes occur? Because investing is an action undertaken by human beings, most of whom are at the mercy of their psyches and emotions. Most people possess the intellect needed to analyze data, but far fewer are able to look more deeply into things and withstand the powerful influence of psychology.”
On The Efficient Market Hypothesis
“Cycles will never stop occurring. If there were such a thing as a completely efficient market, and if people really made decisions in a calculating and unemotional manner, perhaps cycles (or at least their extremes) would be banished. But that’ll never be the case.”
On Risk
“The road to long-term investment success runs through risk control more than through aggressiveness. Over a full career, most investors’ results will be determined by how many losers they have, and how bad they are, than by the greatness of their winners. Skillful risk control is the mark of a superior investor.”
“Likewise, an excellent investor may be one who—rather than reporting higher returns than others—achieves the same return but does so with less risk.”
“Outstanding investors, in my opinion, are distinguished at least as much for their ability to control risk as they are for generating return.”
“When everyone believes something is risky, their unwillingness to buy usually reduces its price to the point where it’s not risky at all. Broadly negative opinion can make it the least risky thing, since all optimism has been driven out of its price.”
“Dull, ignored, possibly tarnished and beaten-down securities—often bargains exactly because they haven’t been performing well—are often the ones value investors favor for high returns. Their returns in bull markets are rarely at the top of the heap, but their performance is generally excellent on average, more consistent than that of “hot” stocks and characterized by low variability, low fundamental risk and smaller losses when markets do badly. Much of the time, the greatest risk in these low-luster bargains lies in the possibility of underperforming in heated bull markets. That’s something the risk-conscious value investor is willing to live with.”
“Of all the possible routes to investment profit, buying cheap is clearly the most reliable.”
The Most Important Thing Book By Howard Marks (Top 25 Quotes) — Final Thoughts
In summary, this blog post featured my personal favourite quotes from The Most Important Thing book by Howard Marks.
The book also has a fantastic summary in the last chapter, which is filled with more powerful, valuable quotes for investors.
The Most Important Thing was the first book I finished this year. I mentioned that I wanted to read it this year as part of my financial goals. I’m glad I started off with such an excellent book. In fact, I enjoyed it so much I already bought Mastering The Market Cycle by Howard Marks as well.
I hope sharing and documenting these quotes helps you become a better investor. I would highly recommend adding this book to your collection if you are interested in becoming a better investor.
Related Posts To Check Out
Financial Quotes 2021: 46 Top Inspirational Quotes for a Wealthier Year
Quotes About Time: 15 Powerful Quotes To Understand Time Better
Connect With Dividend Income Investor
Instagram: @dividendincomeinvestor_
Threads: @dividendincomeinvestor_
Pinterest: @dividendincomeinvestor
Facebook: @Reversethecrushblog
Personal Finance Review 2023
