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I'm 80 and I wasted 25 years of my life. Don't make my mistake. - Howard Marks

2026-07-15 - 45 min - source - Read full transcript

Sam Parr (host)Shaan Puri (host)Howard Marks

Key insights

Marks upgraded his view of AI after his venture-capitalist son forced him to rewrite his memo, concluding AI has two unprecedented qualities: autonomy (it can be given a goal and figure out the method itself) and total unpredictability about where it leads.

Marks says no prior technology, including the internet, ever felt genuinely beyond prediction to him. He is careful to frame the upgrade as evidence-driven rather than emotional, though he concedes the line is blurry.

ai-and-investing

AI will likely 'unfrock' mediocre active investors the same way indexation already exposed underperforming stock pickers, but Marks argues real second-level thinking may stay a durable human edge.

He reasons that a large share of what AI does is pattern-match against history, so situations with no precedent (a Lehman-style meltdown, a truly novel crisis) may remain a domain where experienced human judgment has no historical data for AI to train on.

ai-and-investing

Second-level thinking, having a variant perception from the consensus and being right about it, cannot be taught, only its importance can be explained.

Marks says he can teach people why disagreeing correctly with the market matters, as he does in The Most Important Thing, but he cannot teach someone how to actually form correct contrarian views. He compares it to 'you can't coach height' in basketball.

second-level-thinking

In a genuine crisis there is no historical pattern to draw on, only supposition, and the decision to invest anyway has to be made on downside asymmetry, not confidence.

When Lehman collapsed in September 2008, Marks says Oaktree had 'no data and no prior experience,' only the judgment that if they didn't invest and the system survived, they would have failed their job, while investing and being wrong cost less. They deployed $7 billion in one quarter on that basis.

risk-and-uncertainty

Oaktree raised its record $11 billion distressed-debt fund in 2007-08 by combining 20 years of trust, a strategy built for crises, and a willingness to publicly point out flaws in the market.

Marks says the market's core job is to act as a disciplinarian by refusing bad deals, and in the run-up to the global financial crisis it was failing to do that. He also notes Oaktree historically shrank its funds after strong results rather than growing them, which built long-term credibility with investors.

risk-and-uncertainty

Real conviction always carries doubt; claiming 100% certainty is the actual danger sign in investing.

Marks says the sentences that get investors into trouble start with 'I'm 100% convinced,' while sentences that start with 'I could be wrong, but' rarely do. Betting as if an 80/20 probability is a certainty is how large losses happen.

risk-and-uncertainty

A durable long-term partnership requires shared values plus complementary skills, not just talent.

Marks says his 39-year partnership with Bruce Karsh has never had a real fight because they share values (neither is a pure financial maximizer) and their skills don't overlap: he does the external relationship-building, Karsh manages the money. He extends the same framework to Buffett and Munger.

business-partnerships

Charlie Munger's biggest contribution to Buffett was talking him out of 'cigar butt investing,' cheap mediocre companies, toward buying great companies at a fair price.

Marks frames this as the clearest example of complementary skills changing an outcome: Munger and Buffett had, in his view, one of the highest combined IQs of any partnership in history, but different kinds of intelligence, with Munger as the classicist and humanist.

business-partnerships

Marks says he effectively wasted about 25 years of his life making career and life decisions passively, without intention, until he was around 49.

He describes drifting into jobs (Citibank, the bond department, moving to California) based on circumstance rather than deliberate choice, and only became conscious and intentional about his decisions around 1995, when he left to co-found Oaktree with Karsh.

living-with-intention

His advice for young people is to find work that plays to their strengths, avoids their weaknesses, and makes them happy, without letting friends, parents, or society choose for them.

He calls this 'the hard part' because it requires knowing yourself at an age when you will predictably become a different person in 20 years, and he admits this is advice he did not follow himself when he was young.

living-with-intention

Marks' parenting approach is to give his children full support for their own choices as long as the choice isn't harmful, even if he privately disagrees with it.

He cites letting his daughter choose her own upper school between two good options as an example, reasoning that his own judgment could be wrong and that kids need direct experience making decisions, including bad ones, to develop judgment.

living-with-intention

Books referenced

A Short History of Financial Euphoria - John Kenneth Galbraith - Marks' closing book recommendation; shaped his thinking on the mental weaknesses behind booms and busts and his objective view of market cycles.
Fooled by Randomness - Nassim Nicholas Taleb - Marks' second closing recommendation; shaped his belief that much of investing outcome is randomness, informing his views on risk, portfolio construction, and reading published track records skeptically.
The Most Important Thing - Howard Marks - Marks' own first book, written at Columbia's request; source of the second-level-thinking framework and the shared-values-plus-complementary-skills partnership framework discussed in the episode.

Media referenced

AI Hurtles Ahead - article - Howard Marks' Oaktree memo (revised after his son Andrew pushed him to update it) explaining why he upgraded his view of AI's potential.
Something of Value - podcast - The January 2021 podcast episode Marks recorded with his son Andrew Marks about value investing while Andrew lived with him during the pandemic; Marks says it got the second-best reception of anything he's done, after the AI memo.
Spy Game - movie - Marks and his wife's favorite movie; he cites Robert Redford's line 'when did Noah build the ark, before the flood' as a metaphor for investing ahead of a crisis.
Outliers - other - Malcolm Gladwell's book, referenced in passing as the frame for how much of Marks' early career (like the lucky phone call that got him into high-yield bonds) came down to being in the right place at the right time.

Companies

Oaktree Capital - The distressed-debt firm Marks co-founded with Bruce Karsh in 1995; raised a record $11 billion crisis fund in 2007-08 and deployed roughly $450 million a week for 15 weeks after Lehman collapsed.
Citibank - Marks' first employer out of University of Chicago in 1969; a lucky internal phone call in 1978 routed him into high-yield bonds, the accident that shaped his entire career.
Berkshire Hathaway - Warren Buffett's company; Oaktree became the largest holder of Enron-linked Osprey debt with Buffett as second-largest holder, which led to their friendship.
Enron - Its off-balance-sheet entity Osprey was restructured by Bruce Karsh; the deal is how Marks and Buffett's relationship began.
Long-Term Capital Management - Its 1998 collapse, alongside the Russian ruble crisis, is the example Marks uses for how he pushed a spooked young portfolio manager to keep working through fear.

Summary

Howard Marks returns to My First Million to explain why he revised his own memo on AI and to reflect on 80 years of decision-making, several of which he now considers wasted. He opens on AI: after his venture-capitalist son Andrew pushed him to update a memo he'd written months earlier, Marks concluded AI has two qualities no prior technology had, autonomy (it can be given a goal and figure out how to reach it without instruction) and total unpredictability about where it leads. He is careful to frame this as an evidence-driven upgrade rather than an emotional one, while conceding the two can blur together.

The conversation turns to what AI can and cannot replace in investing. Marks argues AI will likely expose mediocre active investors the way indexation already did, but that genuine second-level thinking, holding a correct view that differs from consensus, may stay a durable human edge, because a lot of what makes someone a great investor is judgment applied to situations with no historical precedent for a model to train on. He is explicit that second-level thinking itself cannot be taught, only its importance can be explained, comparing it to "you can't coach height" in basketball.

Much of the middle of the episode revisits Oaktree's defining crisis calls. Marks describes deciding to invest through the 2008 Lehman collapse with "no data and no prior experience, only supposition," reasoning that failing to invest and being wrong about a recovery would be worse than investing and being wrong about a collapse. That judgment underpinned the $11 billion distressed-debt fund Oaktree raised in 2007-08, deployed at roughly $450 million a week for fifteen weeks. He credits the raise to two decades of trust, a strategy built specifically for crises, and Oaktree's willingness to point out that the market wasn't doing its job as a "disciplinarian" against bad deals. Throughout, he returns to a consistent theme: real conviction always carries doubt, and the investors who get into trouble are the ones who claim to be 100% certain.

Marks then talks at length about partnership, both his 39-year one with Bruce Karsh and Buffett and Munger's, landing on a framework from his first book: a lasting partnership needs shared values plus complementary skills. He tells the story of how he met Buffett (through the Enron-linked Osprey restructuring) and argues Munger's greatest contribution was talking Buffett out of "cigar butt investing," cheap mediocre companies, toward buying great companies at a fair price.

The episode closes on a more personal note. Marks says he effectively wasted about 25 years making career and life decisions passively, drifting into jobs at Citibank and later California by circumstance rather than intention, and that he only became deliberate around age 49, when he left to co-found Oaktree. His advice to young people: find work that plays to your strengths, avoids your weaknesses, and makes you happy, without outsourcing the choice to friends, parents, or society, even though that self-knowledge is genuinely hard to have at a young age. He applies the same philosophy to parenting, giving his children full support for their own choices as long as they aren't harmful, because he believes the experience of choosing, including choosing wrong, is itself valuable. He recommends two books that shaped his thinking on cycles and randomness: A Short History of Financial Euphoria and Fooled by Randomness.

Notable Quotes

"If you wait until you have nothing to be afraid about, probably the opportunity has passed." - Howard Marks

"No sentence that starts with, I could be wrong, but, or I don't know, but, ever got anybody into trouble. The sentences that get people into trouble are, I'm 100% convinced that." - Howard Marks

"There is only one success: to live your life your own way." - Howard Marks, quoting Christopher Morley

"A battle hero is not somebody who's unafraid. It's somebody who's afraid, but does it anyway." - Howard Marks

"The key to a successful partnership is shared values and complementary skills." - Howard Marks