Howard Marks: Second-Level Thinking and Risk Pricing

Podcast: Commercial Real Estate Investment Conference Podcast (CREIC) · Commercial Real Estate Investment Conference

Opublikowano: 2026-10-20

Howard Marks 2008: The power of second-level thinking. Didn't predict the crisis. Saw that credit risk was being mispriced. Investors were being paid 10 cents to take on $1 of risk. First-level thinking: this bond pays 5%, buy it. Second-level thinking: why does it pay 5%? What could go wrong? Is 5% enough compensation if the risk materializes? While 2006-2007 crowd loaded up on mortgage-backed securities and credit instruments with abandon, Marks was being cautious. Not because he predicted a crash, but because he didn't understand the risk being taken and he thought it was being underpriced. His response: raised cash, reduced risky positions, positioned...