Charlie Munger

Munger's whole thing is mental models. The idea is simple: instead of being an expert in one field, you learn the core concepts from as many different fields as possible — psychology, biology, physics, economics, history — and then use that whole toolkit to think about problems.

He calls it a latticework of mental models. It sounds like a self-help concept.

It's actually how he consistently made better decisions than almost everyone around him. On investing, he pushed Buffett away from his old mentor's approach — which was basically "find dirt-cheap companies and flip them fast" — toward something more durable: find the best businesses in the world and hold them forever.

The key word he uses is moat. A business so dominant that competitors can't touch it.

Think Coca-Cola. He was also deeply influenced by psychology, particularly the ways humans reliably fool themselves.

He gave a famous talk called "The Psychology of Human Misjudgment" listing 25 ways our brains get things wrong. Reading it once will change how you make decisions.

Howard Marks

Marks calls it second-level thinking. First-level thinking is: "This company has good prospects — I''ll buy the stock." Second-level thinking is: "This company has good prospects, but everyone already knows that.

The stock is priced for perfection. I''ll pass." Being right about fundamentals isn''t enough.

You also have to be right about what the market already knows and what the price already reflects.

His other major concept: risk is not volatility. Risk is the probability of permanent loss of capital.

A bond that drops 30% in price isn''t necessarily risky if the underlying company is sound and will pay the debt back. A bond that barely moves but is issued by a company about to default is extremely risky.

He thinks most investors confuse the two, constantly.

Charlie Munger

Invert. Always invert.

That's his most famous rule — borrowed from the mathematician Jacobi. Instead of asking "how do I succeed?" ask "what would guarantee failure, and then avoid those things." It sounds obvious.

Almost nobody actually does it. He believes the secret to a good life and good investing is the same: figure out what you want to avoid, avoid it relentlessly, and most good things follow.

On wealth: getting rich isn't the hard part — keeping it is. Most people blow up by using borrowed money, getting greedy at the top, or panicking at the bottom.

Don't do those things. On decisions: only make the big bet when you're very sure.

Be patient for a long time, then move fast when the opportunity is obvious.

Howard Marks

His core ideas, from The Most Important Thing: understand market cycles — everything is cyclical, including investor sentiment, credit availability, and valuations. Recognise where you are in a cycle and position accordingly.

Control risk obsessively — not because you''re afraid, but because avoiding the big losses is the primary driver of long-term returns. Practice second-level thinking — don''t just ask what''s true, ask what''s already priced in.

And be patient. The best opportunities come during crises, when forced sellers are creating discounts that wouldn''t exist in calmer markets.

Charlie Munger

Munger's approach to risk: don't take risks you don't understand, and don't take risks you don't need to. He kept things simple.

He concentrated into a small number of businesses he understood deeply. He never used borrowed money.

He kept large cash reserves. His view on diversification was almost the opposite of what most financial advisors tell you — he thought spreading money across 50 stocks was an admission that you hadn't done enough homework.

If you've done the work, you concentrate. If you haven't, maybe don't invest at all.

Howard Marks

Marks is deeply conservative about the downside. His framework: focus on risk control, not return maximisation.

Superior long-term returns come from avoiding the big losses, not from hitting the biggest wins. This sounds obvious.

Almost no one actually practises it. He has written extensively about how human psychology — overconfidence in good times, panic in bad times — makes sustained risk control incredibly hard.

He''s comfortable in distressed situations that most investors find too ugly to look at. The apparent ugliness is where the value is.

Charlie Munger

Munger lived in the same house in Los Angeles for most of his adult life. He was famously frugal — not in a miserable way, but in a "I genuinely don't care about most things money buys" way.

He flew commercial until fairly recently. He read obsessively.

He described himself as a book with legs. His children joked that he was more interesting to talk to than almost anyone alive, but would only engage on topics he found intellectually stimulating.

He donated massively to education — hundreds of millions to Harvard Law School, the University of Michigan, and other institutions, often with very specific conditions attached. He designed buildings as a hobby and funded their construction himself.

He died at 99 worth around $2.6 billion — extraordinary by any measure, and somehow modest given he sat next to one of the richest men in history for 45 years.

Howard Marks

He lives in Los Angeles, where Oaktree is based. He is still active as co-chairman and still writing memos — he''s written over 100 since 1990.

He donates meaningfully to Penn and other academic institutions. He gives speeches at conferences and academic events.

He is considerably more understated than many hedge fund managers of comparable success — he''s interested in ideas, not attention. His son Andrew Marks worked in the film industry, which Marks has described as a source of pride regardless of the career choice.

Charlie Munger

See's Candies. In 1972, Munger convinced a reluctant Buffett to pay what seemed like an expensive price — $25 million — for a California candy company.

Buffett thought it was too much. Munger held firm.

See's has since generated over $2 billion in profit for Berkshire, basically funding dozens of other acquisitions. It also taught Buffett the single most important lesson of his career: paying a fair price for a great business beats getting a cheap price for a mediocre one.

That one deal changed the entire direction of Berkshire Hathaway.

Howard Marks

2008–2009. When the financial crisis hit, high-yield bond markets froze.

Perfectly sound debt was trading at catastrophic discounts because panic selling created forced sellers. Oaktree, which had been raising a distressed debt fund precisely for this type of environment, deployed capital aggressively through the crisis.

Fund VI, raised in 2008, became one of the most successful distressed debt funds in history. The returns were exceptional because the panic-induced discounts were exceptional.

Marks had been writing about exactly this type of opportunity for years. When it arrived, he was ready for it.

Charlie Munger

Munger is famous for avoiding mistakes more than for making spectacular wins — his whole philosophy is about not doing stupid things. But he's admitted to a few.

He said Berkshire was too slow to move into BYD, China's electric vehicle company, despite knowing it was exceptional for years before they finally bought in. He also held too much Wesco Financial for too long when the money could have been put to better use elsewhere.

His most honest self-criticism: he wished he had moved faster when the evidence was already clear. For a man who spent his career warning others about psychological biases, he wasn't immune to them.

Howard Marks

By his own account, he''s avoided most of the disasters. His framework is explicitly designed to prevent catastrophic errors.

The closest thing to a meaningful mistake: being too early warning about the dot-com bubble — he published a memo in January 2000 laying out why tech valuations were unsustainable. He was right, but the bubble ran for another three months before collapsing.

Being early is expensive. He''s also honest that avoiding spectacular losses sometimes means missing spectacular gains — that''s the trade-off he''s consciously made.

Charlie Munger

Charlie Munger grew up in Omaha — same city as Buffett, but they didn't know each other yet. His father was a lawyer.

So was his grandfather. Charlie became one too, but he was clearly more interested in figuring out how the world worked than in courtrooms.

He studied math at the University of Michigan, got drafted into World War II, trained as a meteorologist, and somehow ended up at Harvard Law School without ever finishing an undergraduate degree. Harvard took him anyway.

He graduated in 1948 and moved to California to practice law. He was good at it.

He was also quietly building a real estate business on the side that made him more money than law ever did. He and Buffett met at a dinner in Omaha in 1959.

Munger was 35. Buffett was 28.

By the end of the night, Buffett was trying to convince Munger to go into investing full time. It took about a decade.

Munger ran his own investment partnership from 1962 to 1975 — returned 24% annually while the market did 6.4%. Then he fully merged his career with Buffett's at Berkshire, where he stayed until his death in 2023.

Howard Marks

Howard Marks grew up in Flushing, Queens. He studied finance at the Wharton School of the University of Pennsylvania and got his MBA from the University of Chicago Booth School of Business.

He started his career at Citibank, where he ran their bond department and later their convertible securities and high-yield debt portfolios. He moved to TCW Group in Los Angeles in 1985 to manage distressed debt and high-yield bonds.

In 1995, he co-founded Oaktree Capital Management with six colleagues from TCW. The idea: focus specifically on alternative and distressed investments — high-yield bonds, distressed debt, convertible securities, private credit.

Oaktree went public in 2012 and was acquired by Brookfield Asset Management in 2019 for $4.7 billion. Marks stayed on as co-chairman.

Through all of it — from 1990 to today — he was writing the memos.

Charlie Munger

Munger's main stage was Berkshire Hathaway, where he served as Vice Chairman from 1978 until he died. His role was hard to define on paper — he didn't run a fund or manage a portfolio.

What he actually did was talk to Buffett. That was worth a trillion dollars.

Before Berkshire, he ran his own investment partnership from 1962 to 1975 that crushed the market. He also controlled Wesco Financial, a small insurance and financial company he ran as a personal Berkshire subsidiary from 1973 to 2011, until Berkshire fully absorbed it.

Outside finance, he was obsessed with architecture — he personally designed several buildings, including a dormitory at the University of Michigan that his own architecture school rejected for violating design principles. He funded it anyway.

Howard Marks

Oaktree Capital Management, co-founded in 1995, manages roughly $170 billion across credit strategies. The firm specialises in high-yield bonds, distressed debt, senior loans, convertible securities, and real estate credit.

Distressed debt, in plain English, works like this: when a company gets into trouble, its bonds get cheap. If the company recovers — or even partially recovers — those bonds can multiply in value.

The skill is telling the difference between a company that''s temporarily distressed and one that''s actually going bankrupt. Marks has been making that call for 50 years.

Oaktree was acquired by Brookfield in 2019 for $4.7 billion — a reasonable indicator that the track record speaks for itself.

Charlie Munger

University of Michigan, mathematics — left for World War II without graduating. US Army Air Corps, meteorology training.

Harvard Law School, JD 1948 — admitted without an undergraduate degree, which Harvard is apparently capable of when it wants to be.

Howard Marks

Wharton School of the University of Pennsylvania, BS in Finance summa cum laude, Phi Beta Kappa, 1967. University of Chicago Booth School of Business, MBA, 1969.

He has said that Chicago — where the efficient market hypothesis was gospel — taught him exactly what the prevailing wisdom was, which made it easier to know when to disagree with it.