Howard Marks ('69) came to the Harper Center Friday, Feb. 22 for a Fireside Chat hosted by Dean Sunil Kumar. Marks is the founder of Oaktree Capital, an alternative asset management firm established in 1995 and based in Los Angeles with nearly $78 billion of assets under management.
In a series of Q&A led by Dean Kumar, Marks took the time to speak on the state of the industry and give advice to Booth students looking to enter the field of finance. When asked by Dean Kumar whether he thought the industry was overstaffed, Marks gave his sobering opinion: "There are a lot of people in this industry making a lot of money and adding very little value. Society could probably get by with fewer of them." The upshot, said Marks, is that "the industry is very slow to change; it's not going to happen in the next two years."
When asked how he thought Booth students would fare in a changing financial landscape, Marks thought this school uniquely prepares students for success.
"The foundation of efficient market theory you learn here teaches you that it's very difficult to beat the market," Marks said. "You have to be a second-level thinker to do that, and you guys realize that . . . to find where the consensus is wrong you have to have a different view."
Marks was also asked whether he still thinks investing is a good career choice for young MBAs. "This is still an intellectually challenging career where you can make a lot of money. But you have to like it," he responded. "We only get one life and none of us is getting out of it alive. Life is too short to be miserable to make a little bit more money."
Oaktree Capital, Mr. Marks' firm, went public last year, and Mr. Marks was asked whether the firm faced any conflicting interests between shareholders and clients. He acknowledged that there were potential conflicts in the short run, but that Oaktree has a long-term philosophy that prevents such conflicts. For example, in the mid-2000's Oaktree returned capital to investors, foregoing the fees that could be earned on the money, due to a lack of opportunities. While this hurt the firm's short-term revenues, it allowed them to return those revenues to investors later in the decade and raise a massive $11 billion fund.
Mr. Marks referred multiple times to his book The Most Important Thing: Uncommon Sense for the Thoughtful Investor. Published in May 2011, the book is a collection of Mr. Marks' thoughts on the most important things to succeed in investing. Marks touched on a number of topics from the book, including risk recognition and control, and adding value. At one point he even asked an audience member who had brought a copy to stand up and read aloud from the final chapter.