By AdvisorAnalyst.com Editorial | July 2026
Howard Marks does not waste words. The chairman and co-founder of Oaktree Capital, whose investor memos have become required reading across the global asset management industry, sat down with Shaan Puri and Sam Parr on the My First Million podcast for a conversation1 that ranged from the limits of artificial intelligence to the art of building lasting partnerships — and, most strikingly, to the personal reckoning of a man who admits he spent the first 25 years of his career drifting without intention.
The result was one of the more substantive exchanges between a legendary investor and a lay audience in recent memory. The key themes cut across investing, leadership, parenting, and the examined life. Each one is worth sitting with.
On AI: Unprecedented and Unpredictable
Marks opens with an intellectual evolution. Having written a cautious December memo questioning AI's trajectory, his son Andrew — a venture capitalist embedded in the AI ecosystem — pushed him to revisit his views. The updated memo was a meaningful upgrade.
What shifted? Marks points to two qualities he considers genuinely novel in the history of technology. The first is autonomy. "All the other technological innovations from the railroad to computers to the internet were all tools or things to speed up and increase productivity," he says. "There's never been anything with the quality of autonomy. The idea that you can give it a job and not tell it how to do it and it'll figure it out is really unique." The second is something less quantifiable: unpredictability. "I don't think anybody knows the shape of the future," he says. "I never thought that the internet was beyond comprehension or beyond prediction."
On whether AI threatens the investment profession, Marks draws a characteristically precise distinction. Indexation, he notes, already "put a lot of people out of the equity business because it disclosed that they couldn't do what they claimed to do." AI will do the same to another cohort. But human judgment — specifically the kind built through decades of pattern recognition and intuition — retains a defensible role. "Sometimes you talk to people and for undefinable reasons you just say, it doesn't feel right. The hair on your neck goes up. And if AI doesn't have hair on its neck, then maybe there's a role left for experienced investors with judgment."
The deeper question is whether AI can achieve genuine insight. Marks is agnostic, and deliberately so. "There will always be things for which there is no history to train on," he says. "There are just some people who have a better understanding of the probability distribution that defines future events."
Second-Level Thinking: You Either Have It or You Don't
When asked what separates good investors from great ones, Marks returns to the thesis of his first book. "The most important thing is second-level thinking," he says. "If you don't see anything different from everybody else, you can't possibly be superior." A variant perception, a willingness to bet against consensus, and the discipline to be right about it — these are the building blocks. But can they be taught?
Marks is skeptical, to the point of bluntness. "In basketball, there's a saying, you can't coach height. And I think there's something called insight, and I think some people have it." The analogy is apt and applies equally to AI: whether artificial general intelligence can ever develop the kind of insight that distinguishes truly exceptional investors remains, in his view, one of the genuine mysteries of our time.
The Lehman Bet: Confidence Is Not a Prerequisite
In 2007 and 2008, Oaktree raised $11 billion for a distressed debt fund, the largest of its kind in history. The timing was deliberate. "The best time to invest is in a crisis. You can't raise money during the crisis because the news is so terrible. When did Noah build the ark? Before the flood." But when Lehman Brothers collapsed in September 2008 and the question became whether to deploy the capital, Marks draws a counterintuitive admission.
"We were absolutely not confident." The framework that guided the decision was not certainty but logic: "If the financial world melts down and we invest, doesn't matter. But if we don't invest and the financial world doesn't melt down, then we didn't do our job. So we have to do it." Bruce Karsh deployed an average of $450 million a week for 15 weeks, buying distressed debt at prices that implied almost incomprehensible impairment — and the resulting returns were exceptional.
The broader lesson is one Marks applies to every major call he has made. "A battle hero is not somebody who's unafraid. It's somebody who's afraid but does it anyway." And crucially: "If you wait until you have nothing to be afraid about, probably the opportunity has passed."
Humility as Risk Management
Marks returns repeatedly to the danger of conviction. Mark Twain's observation sits at the center of his philosophy: "It ain't what you don't know that gets you into trouble. It's what you know for certain that just ain't true." The implication for portfolio management is practical and direct. "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."
This is not performative modesty. It is embedded in how Oaktree manages money across cycles — including deliberately shrinking fund sizes after strong performance, against every commercial incentive. "Most people in the investment business, if they have a fund that does great, the next fund is bigger. But we make it smaller because we think those results mean that things have appreciated and are not so attractive." That willingness to speak against commercial self-interest, Marks argues, is precisely what builds lasting credibility with sophisticated investors.
Partnership: Shared Values, Complementary Skills
Marks has been in a professional partnership with Bruce Karsh for 39 years. What makes it last? "The bedrock of our relationship is mutual respect." But he goes further with a framework applicable well beyond asset management. Successful partnerships, he wrote in a 2002 memo, require two things: shared values and complementary skills. On values, the point is non-negotiable. Partners with different risk tolerances or ethical standards will fracture precisely when it matters most — "in bad times, the chickens say the cowboys are getting us killed, and in good times, the cowboys say the chickens are holding us back." On skills, the logic is equally clear. "If I can do everything you can do, eventually I'm going to say you're overpaid." The value of a partner is what they do that you cannot — or will not.
The Wasted 25 Years
Perhaps the most personal thread in the conversation is also the most unexpected. Asked about career intentionality, Marks delivers a frank self-indictment. His first 25 years of professional life — from graduating the University of Chicago in 1969 to co-founding Oaktree with Karsh in 1995 — were marked not by conscious direction but by drift. "I did not apply intention. I let other people make the decision. I made decisions haphazardly." His move to bond research was involuntary. His California relocation was motivated by sunshine. His entry into high-yield bonds came from a midday phone call he happened to be at his desk to receive. "That was just luck. Right time, right place."
The quote he returns to as the corrective is from writer Christopher Morley: "There is only one success — to live your life your own way." The corollary for the next generation is demanding. "You can't let your friends decide what you should do. You can't let society decide. You can't let your parents decide. You have to think it out for yourself." Try to find, he says, something that plays to your strengths, avoids your weaknesses, and makes you happy. That sounds obvious. The problem, as Marks acknowledges, is that most people never do it.
5 Key Takeaways for Advisors and Investors
1 Trepidation is a feature, not a bug. The best investment decisions are rarely made with full confidence. Acting despite uncertainty — with clear logic about what each scenario implies — is the discipline that separates capable investors from the rest.
2 Variant perception is the only path to outperformance. Consensus thinking produces consensus results. To deliver superior outcomes, advisors must help clients understand why the crowd may be wrong — and have the conviction to position against it, with appropriate humility about the possibility of error.
3 AI will defrock, not eliminate, human judgment. Artificial intelligence will expose investors whose skills are thinner than their track records suggest. The defensible edge remaining for human professionals lies in genuine insight, pattern recognition built through hard experience, and the kind of qualitative judgment — including character assessment — that has no training data.
4 Building the ark before the flood is a repeatable process. The $11 billion distressed fund was not an act of genius or luck. It was the product of 20 years of consistent, disciplined cycle-reading, credibility built by saying difficult truths, and commercial restraint. Advisors who model this patient, counter-cyclical approach — positioning clients before opportunity peaks — compound trust the same way good portfolios compound capital.
5 Shared values in a partnership are non-negotiable. Whether advising on business partnerships or family governance, the Marks-Karsh framework applies: misaligned values will surface under stress and tear apart what shared returns built up. Complementary skills are a bonus. Aligned values are the foundation.
Footnote:
1 Puri, Shaan, and Sam Parr. "I'm 80 and I Wasted 25 Years of My Life. Don't Make My Mistake — Howard Marks." My First Million, hosted by Shaan Puri and Sam Parr, YouTube, uploaded by My First Million, www.youtube.com/watch?v=Kp__G0eUyIc. July 15, 2026.
