Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups

Howard Marks graduated from Wharton in 1967 and spent his early career at Citicorp, first as an equity research analyst and eventually as the director of research. He transitioned into high-yield bonds and convertible securities in the late 1970s, and by the mid-1980s had moved to TCW Group to build a distressed debt business that he ran for a decade. In 1995, he co-founded Oaktree Capital Management. Howard Marks investments at Oaktree have compounded into one of the most consistent track records in alternative asset management: $150 billion in assets under management, a five-year public equity portfolio return of 75.47%, and a reputation for generating strong returns in market environments that damage most other funds. But Marks is not primarily known for his returns. He is known for how he thinks about risk, and that thinking, documented across decades of investor memos and three widely read books, is what distinguishes him from almost every other figure in modern finance.

The Memo Tradition

Marks began writing investor memos in 1990. The memos analyze market psychology, credit cycles, valuation, and risk management with a clarity and intellectual honesty unusual in institutional investment communications. Warren Buffett has said that when he sees a new Marks memo in his inbox, he reads it immediately. That endorsement from the most scrutinized investor in the world is the clearest available signal of the memos' quality.

The memos are not predictions. Marks has been explicit that he does not believe in forecasting specific market outcomes. They are frameworks for thinking about where we are in a cycle, how investor behavior is departing from rational expectations, and what that implies for appropriate portfolio positioning. His November 2025 memo, "Bubble Watch," examined whether current AI-related market enthusiasm constitutes a bubble, and his conclusion was characteristically precise: there is near-100% probability that AI will change the world, and much less than 100% probability that investing in any given AI company or sector today will be profitable.

That distinction matters. The temptation in technology investing is to conflate belief in a technology's transformative potential with belief in the valuations assigned to companies building it. Marks has been pointing out this error for thirty years.

The Oaktree Philosophy

The core principle Marks established at Oaktree was captured in a single phrase: "If we avoid the losers, the winners will take care of themselves." Oaktree is organized around distressed debt, credit markets, and other alternative strategies where protecting against permanent capital loss is more important than maximizing upside. The firm's equity positions, reflected in its 13F filings, tend toward value-oriented positions, commodity plays, and shipping companies, categories where the margin of safety is visible and the downside is bounded.

As of Q2 2025, Oaktree's reported 13F portfolio was valued at $5.8 billion across 178 stocks. The portfolio had added significant put options on SPY and IWM in that quarter, signaling a focus on downside protection during a period of elevated valuations. Five-year performance stands at 75.47%, achieved with considerably lower volatility than market indices, reflecting the defensive posture that defines the firm's approach.

Elizabeth Yin, Hustle Fund GP, has talked about how the most consistent early-stage investors are the ones who focus as much on avoiding catastrophic losses as on maximizing returns. Marks has been making this argument at the institutional level for decades: the highest return over time comes from avoiding the really bad outcomes, not from taking the most risk.

His concept of "second-level thinking" is particularly applicable to early-stage investing. First-level thinking asks: is this a good company? Second-level thinking asks: is this a good company that the market has not yet priced correctly, and am I being compensated for the risk of being wrong? The distinction separates investors who generate superior returns from those who merely invest in good companies at good prices.

The Publishing Record

Marks has published three major books: The Most Important Thing: Uncommon Sense for the Thoughtful Investor (2011), Mastering the Market Cycle (2018), and a third on big debt crises. His 2025 book, How Countries Go Broke: The Big Cycle, became a New York Times bestseller and extended his macroeconomic framework to the question of sovereign debt sustainability. He was named co-chairman of Oaktree in 2019 and received the Museum of American Finance's Lifetime Achievement Award in 2024.

Eric Bahn, Hustle Fund GP, has noted that investors who publish their frameworks invite the kind of scrutiny that forces intellectual rigor. Marks has been submitting his thinking to public testing for thirty years. The consistency between what he has written and how Oaktree has invested is one of the most credible demonstrations in finance that the investment process is actually driven by the principles rather than by post-hoc rationalization.

Angel Squad and the Risk-First Framework

Howard Marks investments demonstrate the most important principle in long-term investing: superior returns are the product of superior risk management, not of superior prediction. Angel Squad builds investors who understand this distinction. With 2,500 members across 50 countries, the community trains investors to ask harder questions about downside scenarios in early-stage deals, not because they are pessimistic about startups but because the investors who survive long enough to benefit from the winners are the ones who avoided the catastrophic losers. Shiyan Koh, Hustle Fund managing partner, has described this as the most underappreciated edge in early-stage investing. Visit hustlefund.vc/squad.

The Takeaway

Howard Marks built one of the most respected investment records in finance by spending thirty years thinking carefully about one question: what is the risk I am taking, and am I being adequately compensated for it? The memos are the public documentation of that thinking. The Oaktree track record is the result of applying it consistently through every market cycle since 1995. For early-stage investors, the specific strategies don't transfer. The risk-first orientation does.