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“Do you hate being introduced as a billionaire?”

“I do,” he said.

“I apologize.”

But I couldn’t NOT mention it. Howard Marks is worth $1.9 billion. He’s #374 on the Forbes richest list. And co-founded Oaktree Capital.

He said it’s okay.  “On the one hand, people want to hear it. And it gets you more attention, but on the other hand they don’t say, ‘Here’s Howard Marks, tennis player’ or ‘Howard Marks, father of two.’ I don’t think how much money I have sums me up. And I don’t think it’s the greatest thing about me.”

So I dove into that. Because money is a cause of so many people’s stress. And suffering. Some people think money = wellbeing. And in some ways it does. But in a lot of ways, it doesn’t.

I told him about a theory I have…

Having multiple billions doesn’t make your life any easier or better than having ten million dollars. Or even less.

When I search for ways to make money, I’m searching for ways to create more freedom in my life.

And I’ve found that loving what you do and having contentment are much better ways to gain freedom than having a billion dollars.

Howard agreed.

“There’s no question.”

He told me his favorite quote. It’s from a guy named Christopher Morley (an English writer):

“There’s only one success… to be able to live your life your own way.”

I asked Howard how he did this…

How did he create life the way HE wants it to be?

Here’s what I learned:


Howard writes about something he calls, “second level thinking.”

Second level thinking is how he mastered:

A) market cycles

B) and personal cycles

He broke it down for me. He told me what he knows. And what he’ll never know.

I’ll explain.

He said, “In the investment business, we sometimes know what’s going to happen. But we never know when. We should never act with extreme conviction… The world is too uncertain to permit certainty.

Acting without “extreme conviction.” That’s key.

Meaning, rather than wondering, “Will it fail?”, “Will I fail?”, he thinks.

He takes a step back.


People always talk about failing fast. And risk.

Risk requires thought.

Howard doesn’t take blind risks.

He relies on universal facts…

  • You can’t predict the future.
  • No one can.
  • There’s always an element of the unknown in everything.

And then he evaluates the psychology of people. Because markets aren’t run by money. They’re run by people.

Howard puts this idea in his new book, “Mastering the Market Cycle: Getting the Odds on Your Side.”

People are often irrational.

And not just “other” people. You, too. I need to know I’m irrational.

This will help me from taking risks that hurt me. It will help me zoom out. And think in layers.


The market cycle can be described as a pendulum. So when the pendulum is moving in one direction, more and more energy is going in that direction. Until finally, there’s no energy left.

And then, just when it seems like things are going to go on forever… the energy runs out.

The pendulum goes back to the middle. And then all the way in the opposite direction.

And Howard uses the pendulum analogy to describe investor psychology. And then he uses that psychology to invest.

I’ll give you an example.

The crash of ‘07-’08 was a total devastation to millions of people. They didn’t see it coming.

And the people who did see it coming (like Howard) didn’t know a key factor…


And Howard has a lot of quotes about this in the book like this one:

History doesn’t repeat but it rhymes.” – Mark Twain

But he relied on the pendulum theory.

If everything was going great, eventually it’d have to go back the other way.

So he got to work. He raised ten billion dollars. Then, when the timing was right, he invested it in distressed assets.

And because the government intervened with bailouts, the pendulum swung back to the good side pretty fast.

It could’ve taken 100 years. It could’ve taken 20. But Howard got lucky. He couldn’t predict WHEN the market would rebound. But he could predict that it would eventually. And he invested in that.

And all of this (mastering market cycles) relates to mastering your personal cycles. If you know yourself as a pendulum, you can see which way you’re swinging.

You can see “Oh, I’m feeling depressed right now. Or anxious.” And then you can predict that you’ll swing back to the middle.

I like this idea of studying markets cycles as a way to understand people. And vice versa.

This way you’re not thinking in tunnel vision. This way you can think deeper. And connect dots.

Howard filled his book with brilliant ideas. And they’re all well-explained. He gives quote after quote from brilliant mathematicians, writers, economists and so on. And with each one, I kept thinking, “Oh, this quote sums up the book perfectly.”

And then I’d read another.

Then he came on the podcast. And gave me quotes of his own.

I like this one:

“Investing is a competitive game. You are in there trying to find the cheap assets.

And so is everybody else.

You are in there trying to hold more at the right time and less at the wrong time.

And so is everybody else.

So to some extent, you have to learn how to think different than everybody else and better. Thinking different isn’t enough if it’s worse. It has to be different and better…”