The Most Important Thing Is An Important Book!

This week’s book was The Most Important Thing by Howard Marks which I think is a must-read for all MBAs and especially those who are interested in value investing.

In a nutshell, this is not an instruction guide but a book that tries to provide the reader with a new mindset when it comes to analyzing markets and investing.

What are the key things we need to know if we want to achieve consistent high performance in investing? Marks shares not one single important thing but twenty, organized in each in a separate chapter.

A large portion of the book is dedicated to risk, understanding it and the ways we can spot and control it. This is consistent with Mark’s own defensive style of investing.

…a great pick for those interested in value investing.

There are too many memorable quotes and paragraphs in this book to share in a single post, so I share just one (and paraphrasing…):

There is no such thing as good stock, only good buys…and a good buy is determined by price and value levels.

Ehsan’s commentary: A case in point for illustrating this view is Shopify:

This is a really high quality company that’s enabling the accelerated global transition to E-commerce. But its P/E multiple is around 928.25 and its forward P/E multiple is 395.73 (Just to put things in perspective, P/E multiple for Microsoft is 36.49).

So I suspect, based on his views illustrated in the book, Marks would say: “Yes…it’s a good company, but it’s not a good buy.”

Overall, I think those who are interested in value investing will highly enjoy this title.

*****

Although I read the original title, you might also want to check out a newer edition of the book titled: The Most Important Thing Illuminated. In this edition, Marks’s original text is joined by the comments, insights, and counterpoints of four renowned investors and investment educators: Christopher C. Davis (Davis Funds), Joel Greenblatt (Gotham Capital), Paul Johnson (Nicusa Capital), and Seth A. Klarman (Baupost Group).