Growing Your Practice

Lessons on the Market and Entrepreneurship from Howard Marks

By :
Vise Staff
Legendary investor Howard Marks discusses how he built Oaktree Capital Management and his views on the market.

In the second Vise Evolve Event, our Head of Investment Strategy, Dave Twardowski, sat down with the inimitable Howard Marks, co-founder and co-chairman of Oaktree Capital Management, for an hour-long discussion about building a business and mastering the markets. 

Below are a few highlights from the conversation.

Growing from $0 to $150 Billion in AUM

The prospect of starting a business was daunting even for Howard Marks, but he and the founding members of Oaktree Capital Management believed their prior success working together would make the transition easier. “We knew how we would operate. We didn’t have to sit down and ask what we were going to do? The plan was more of the same,” Howard explained. And it worked incredibly well. Oaktree quickly eclipsed $5 billion in assets under management and turned into a profitable business. 

What he and his co-founders didn’t expect was the amount of non-investing work involved in their new roles. Their previous employer had handled all of the legal, operational, and administrative work in the past. All they did was work with clients and manage money. Now, as their own bosses, they were responsible for everything. “The good news is that our first employee was a Chief Administrative Officer who was up for the task,” says Howard. 

Independent advisors, or all entrepreneurs for that matter, who start a business feel this pressure that they should already know everything, but you can’t possibly know everything—nobody has the capacity to know it all. Surrounding yourself with motivated people, as Howard did in the early days of Oaktree, can help overcome the early challenges you may face as an independent advisor. 

The last, and perhaps most important, lesson Howard stressed is about company culture. Culture is about mission and values, and making your employees excited about how they can contribute to the whole. “The most important thing is to have a creed, or something you believe in. One of the first things I did [when starting Oaktree] was write down our investment philosophy and business principles,” notes Howard. Even as the company grew from 30 to 1000 employees, the written statements and Howard’s memos have remained a core part of the internal culture.

“The secret to solving a problem is to acknowledge it first of all and secondly, give it a high priority,” says Howard in regards to maintaining a company culture over the years.

Mastering the Markets

Are Stock Prices too High?: A lot of attention has been given to equity prices and valuations in recent years. “The P/E ratio, price-to-earnings ratio, on the S&P 500, which is one of the principal stock indices, is about 20 or 21. The historical average is about 15,” says Howard. The knee-jerk reaction among investors is to call it a bubble, but according to Howard, the current situation is more nuanced than the valuation suggests. 

Today, technology stocks make up a large portion of the S&P 500. These are household names like Facebook and Netflix, which offer more growth potential than what we’ve seen from market leaders in the past. That, in itself, may justify the historically high valuations of late. The other thing you have to consider is interest rates. When the Fed slashed rates to shore up the economy, it increased the value of all financial assets, including stocks. In other words, the higher prices we’ve seen in the market are commensurate with the current rate environment. 

“So if you adjust for the change in composition [of the S&P 500] and the [low] level of interest rates, I don’t think [stock prices] are too high,” says Howard, “But they are dependent on [interest rates] remaining the way they are.”

Building a Portfolio: Investing is about making tradeoffs between risk and reward. “When my friends come to me for financial advice, I always ask them: do you want to keep what you have or get more?” says Howard, “The more you try to earn more, the more you open yourself up to the possibility of having less, and vice versa.” 

This, of course, can mean different things in different environments. In a low rate, low yield environment—like the one we are in today—it may mean you have to give up some of the safety of bonds to better achieve your client's goals. “With cash yields at 0% and 10-year Treasuries near 1.5%, many of us will move further out on the risk curve to try and get a decent return,” says Howard. That, in his opinion, may come from stocks or alternatives rather than bonds.

Join the Vise Community‍

The insights you’ve read from Howard are a small sample of what we offer our advisors. 

Consider becoming a Vise Advisor to take part in future Vise community events where you can network and communicate with all types of business leaders.

Note: Howard Marks is an investor in Vise 

Sign up to keep up with new updates and content!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
1 World Trade Center, Suite 84A
New York, NY 10007
Legal / Privacy Policy
Copyright © 2020 Vise, Inc.. All Rights Reserved

Vise AI Advisors, LLC is an investment adviser in New York, New York. Vise AI Advisors, LLC is registered with the Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Vise AI Advisors, LLC only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Vise AI Advisors, LLC’s current written disclosure brochure filed with the SEC which discusses among other things, Vise AI Advisors, LLC’s business practices, services and fees, is available through the SEC’s website at:

Please note, the information provided on this website is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. Please refer to the disclosure and offering documents for further information concerning specific products or services.

Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

This site may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of Vise AI Advisors, LLC’s or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.

Certain hyperlinks or referenced websites on the Site, if any, are for your convenience and forward you to third parties’ websites, which generally are recognized by their top level domain name. Any descriptions of, references to, or links to other products, publications or services does not constitute an endorsement, authorization, sponsorship by or affiliation with Vise AI Advisors, LLC with respect to any linked site or its sponsor, unless expressly stated by Vise AI Advisors, LLC. Any such information, products or sites have not necessarily been reviewed by Vise AI Advisors, LLC and are provided or maintained by third parties over whom Vise AI Advisors, LLC exercises no control. Vise AI Advisors, LLC expressly disclaim any responsibility for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on these third-party sites.

Any reproduction or distribution of this website, as a whole or in part, or the disclosure of the contents hereof, without the prior written consent of Vise AI Advisors, LLC is prohibited.

Monte Carlo simulations have material limitations. Market movements may be more or less extreme and more or less frequent than those that occur in the model. Certain asset classes and investments have shorter histories than others and may not be as reliable. Market Events and other factors may influence the reliability of the potential outcomes.

All investment strategies have the potential or profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions, may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will either be suitable or profitable for a client’s portfolio. There are no assurances that the portfolio will match or outperform any particular benchmark.

Back-tested performance results have inherent limitations, particularly in the fact that these results do not represent actual trading and may not reflect the impact that material economic and market factors might have placed on the advisor’s decision-making if the advisor were actually managing the clients’ money.

Nothing provided herein constitutes tax advice. Individuals should seek the advise of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or any other jurisdiction.

You must be a US-Registered Investment Advisor to use the Vise Platform.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.