Howard Marks: how I make money while you worry about a market crash

Howard Marks returns to My First Million after his last appearance drew over a million listens, and Sam Parr and Shaan Puri open with the memo he rewrote: after warning of a possible AI bubble in December, his VC son Andrew pushed him in February to update it, and Marks upgraded his view. He argues AI is unprecedented on two counts — autonomy, since no prior technology from the railroad to the internet could be given a job and figure out how to do it, and sheer unpredictability of its future shape. He expects AI to 'defrock' investors whose talents are less than they purport, the way indexation exposed underperforming active managers, but suspects a role survives for judgment — the hair-on-your-neck feeling about bad people, and decisions for which no training history exists.

The centerpiece is his account of the global financial crisis. Oaktree raised an $11 billion distressed-debt fund before the crash — over four times the largest such fund ever raised — by pointing at flaws in the environment and a market that had stopped saying no to dumb ideas. When Lehman went under and people were predicting the end of the financial world, there was no data and no precedent, only supposition. The logic that unlocked it: if the world melts down, nothing matters anyway; if it doesn't and they failed to invest, they failed their job. Bruce Karsh deployed an average of $450 million a week for 15 weeks. Marks is emphatic that he felt no certainty — every macro call in 26 years came with doubt, and anyone investing into a crash without trepidation has something wrong with them.

The back half is about partnership and self-knowledge. Marks and Karsh have gone 39 years without a fight, which he credits to shared values plus complementary skills — the formula from his 2002 memo — and to neither being a financial maximizer. He tells the story of meeting Warren Buffett through the Osprey restructuring after Enron's collapse, the note from Buffett that prompted him to write The Most Important Thing, and what people miss about Buffett: the depth of his love for Charlie Munger, whose great contribution was talking Buffett out of cigar-butt investing and into great companies at good prices. On his own path, Marks is disarmingly harsh — he calls his first 50 years of decisions unconscious and haphazard, credits the 1978 call that put him into high-yield bonds to pure luck, and passes on Christopher Morley's line that there is only one success: to live your life your own way.