Weekend reading

Good reads from around the Web.

I don’t think it’s fair that Howard Marks, the CEO of Oaktree Capital, is an excellent writer as well as an excellent investor. Not to mention a billionaire for his trouble, with a net worth of $1.9 billion.

Then again, neither does he.

The latest of his must-read memos [PDF] is all about the role of luck in life, and in investing.

After listing a long chain of chance events that led to the establishment of his lucrative business, Marks comments:

You make your own luck? Success is never accidental? Bull!! I contributed to some of the positive developments described above, but many of them were pure luck.

Pull out a few of the steps on this progression, and where would I be today?

Most relevant for Monevator though is his subsequent discussion of luck, skill, and efficient markets.

Given he’s a billionaire on the back of active fund management, you might think Marks would highlight the role his genius played in making outsized returns for 30-odd years.

And while he doesn’t deny that, he stresses that starting decades ago in less efficient markets was the big key to his success.

Marks also believes markets become more efficient over time, which bodes poorly for us strivers trying to follow his trail to riches:

People often ask me about the inefficient markets of tomorrow. Think about it: that’s an oxymoron. It’s like asking, “What is there that hasn’t been discovered yet?”

The markets are greatly changed from 25, 35 or 45 years ago.

The bottom line today is that there’s little that people don’t know about, understand and embrace.

The insanity of human beings holds out some hope – Marks believes that efficiency is cyclical, because in the bad times people throw out their investing babies with the bathwater.

But all told, from Marks’ perspective it doesn’t seem likely we’ll be reading the musings of a billionaire who beat the market in 30 years time.

How to be lucky on Wall Street

Of course, none of this means we won’t be reading the musings of a man or woman who made billions from managing money.

Making a fortune in The City and on Wall Street is really about gathering assets, not growing them.

Even Warren ‘Beat the Market’ Buffett got his start running a hedge fund with other people’s money.

Do you ever get the feeling you’re in the wrong business?

From the blogs

Making good use of the things that we find…

Passive investing

Active investing

Other articles

Product of the week: Paragon has launched a new retail bond paying 6.125%. The Telegraph has a colourful take on it, as do the reliable gurus at Fixed Income Investor.

Mainstream media money

Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1

Passive investing

Active investing

  • Why do small caps deliver such a big return? – FT
  • Emerging markets could be a contrarian buy – iii/Money Observer
  • 10 reasons Barry Ritholz is wrong about gold – Reuters
  • What’s really important about gold – AlphaBaskets

Other stuff worth reading

  • HMRC is to roll out online personal tax accounts – Guardian
  • “No problem” with high house prices? – Telegraph
  • The coming ‘gamification’ of the office – Wall Street Journal
  • How Japan stood up to old age [Search result]FT
  • Turn off your smartphone after 9pm – HBR

Deal of the week: Amazon has knocked £25 off the price of its Kindle Fire tablets for a limited period, to celebrate winning a customer satisfaction award. Perhaps it’s trying to tip the balance for next year, too?

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  1. Reader Ken notes that: “FT articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”.”

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