"The Most Important thing" by Howard Marks

Hi Friend,

We have been working hard to get rid of the traditional way of thinking to shape ourselves in to better investors.

But, our inability to "stop looking around for confidence" has been a major stumbling block in our growth to be a "better investor".

“The Most Important thing” by Howard Marks (Columbia Business school Publishing) is a great book that helps us get over this hurdle and encourages us to be efficient thinkers. 

He divides thinkers into two categories

• First Level thinkers
• Second Level thinkers

First level thinking is simplistic and superficial and just about everyone can do it. All the first level thinker needs is an opinion about the future, "As in the outlook for the company is favorable, the stock will go up".

The second level thinking is deep, complex and convoluted”.

“First level thinkers look for simple formulas and easy answers. Second level thinkers know that success in investing is the antithesis of simple”.

“Different and better: that is a pretty good description of second-level thinking”.

“Those who consider investment process simple generally aren’t aware of the need for – or even the existence of – second-level thinking. 

Thus, many people are misled into believing that everyone can be a successful investor. Not everyone can. 

But the good news is that the prevalence of first-level thinkers increases the returns available to second-level thinkers. 

To consistently achieve superior investment returns, you must be one of them”.

“All investors can’t beat the market since, collectively, they are the market”.

To summarize, our lack of confidence in ourselves, to take advantage of an opportunity that lay there right in front of us begging for our attention, Mr.Howard Marks uses the following example,

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A professor takes a walk with a student.

“Isn’t that a $10 bill that is lying on the ground?” asks the student.

“No,it can’t be a $10 bill”, answers the professor. ”If it were, someone would have picked it up by now”.

The professor walks away and the student picks it up and has a beer.

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Buy and read the book for our own good.

Happy Investing.