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.

Bill Gates

Gates invests through Cascade Investment LLC in established, cash-generative businesses — railroads, waste management, agricultural equipment, farmland. His biggest single Cascade holding for years was Canadian National Railway.

He has sold most of his Microsoft stock over time. His investment philosophy outside Microsoft mirrors Buffett's: durable businesses with pricing power, bought at reasonable prices.

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.

Bill Gates

His core framework: read obsessively, think long-term, and separate emotion from analysis. He takes annual Think Weeks — solo retreats to a lake cottage in the Pacific Northwest where he reads papers and books for two weeks with no interruptions.

He publishes a reading list twice a year at gatesnotes.com. He has said that the best investment he ever made was paying $100,000 to take Warren Buffett to dinner every year.

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.

Bill Gates

Gates's risk tolerance is intellectual and deliberate rather than impulsive. He takes genuinely large bets — TerraPower on nuclear fission, billions into climate technology, the Gates Foundation's campaigns to eradicate diseases that kill millions — but only after intense research.

His Think Weeks exist to force slow, rigorous thinking on big decisions. At Microsoft, he kept enough cash on hand to run the company for a full year with zero revenue because he never wanted short-term survival pressure to force a bad long-term decision.

That discipline carries into his personal finances.

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.

Bill Gates

He wakes up early, exercises on a treadmill while watching documentaries, and reportedly does the dishes every night. He has said dishes are meditative.

For a man worth $130 billion, the emphasis on routine is either deeply grounded or very good PR. He drove himself to work at Microsoft for years and lived in a normal house long after he could afford otherwise.

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.

Bill Gates

Microsoft Windows. The decision to license MS-DOS to IBM for the PC while retaining the right to sell it to other manufacturers was arguably the most lucrative business decision in tech history.

Every PC manufacturer then licensed Windows. Gates captured the entire PC market without building the hardware.

By 1999, Microsoft's market cap hit $616 billion.

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.

Bill Gates

Missing the internet. Microsoft was late and initially dismissive of the internet as a platform.

Gates eventually course-corrected and wrote the Internet Tidal Wave memo in 1995, redirecting the entire company toward internet strategy. But the delay allowed Netscape to establish footholds, and Microsoft's browser monopoly tactics led to the landmark antitrust case United States v.

Microsoft in 2000, which threatened to break up the company.

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.

Bill Gates

Bill Gates was born in Seattle in 1955. He taught himself to program on a PDP-10 at age 13.

He enrolled at Harvard in 1973, dropped out in 1975, and moved to Albuquerque with Paul Allen to found Microsoft. Their break came when they licensed an operating system to IBM for the original PC — and crucially, retained the rights to sell it to anyone else.

That decision made Microsoft. Windows became the standard operating system for the world.

Gates became the world's richest person in 1995 and held that title for much of the next 15 years. He transitioned out of Microsoft's day-to-day around 2000 and fully moved into philanthropy via the Gates Foundation.

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.

Bill Gates

Microsoft (co-founder, former CEO and chairman). Cascade Investment LLC (his personal investment vehicle).

Bill & Melinda Gates Foundation (co-chair). Major holdings through Cascade include Canadian National Railway, Deere & Company, and significant farmland.

Early Microsoft equity remains a massive portion of his net worth.

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.

Bill Gates

Harvard University — studied mathematics and computer science. Dropped out in 1975 after his sophomore year to found Microsoft.