Oaktree Capital Management

Marks started the memos for fun, not to win business. In October 1990 each memo was typed, Xeroxed, folded, addressed and stamped for about a hundred clients, and he never heard back.

He compares it to throwing them in the sewer. He wrote the first one because he had a story he wanted to share, after 21 years in the business.

How I Write

Electronic distribution let the memos spread on their own. When Oaktree began in 1995, the memos went out electronically as well as on paper. The audience grew from about 100 clients in 1990 to 300,000 subscribers, and Marks now manages more than $190 billion.

In the late 1990s a stranger in Russia replied within hours of a memo going out. Marks had sent it to nobody in Russia, so he realized it had gone viral.

How I Write

Giving ideas away costs little, because few people can act on them. Some readers reject the ideas and others accept them but can't carry them out. In his words: "I'm not giving that much away, and I get so much out of it."

For 35 years a memo has gone out each September and January, written over the summer and over Christmas. With no pressure to publish, he treats the writing as recreation and a creative outlet.

How I Write

Quality of output is the one thing you control amid luck. Marks believes randomness shapes outcomes and that able, hardworking people still go unlucky, so a high standard is what sets you apart.

He told his son that when everyone else dumbs things down, keeping a high standard makes you shine.

How I Write

Write when an idea is ready, not on a schedule. He clips articles, videos and thoughts onto a pile and writes when the pile is substantial in content, pairing pieces on different topics. His only goal is no less than quarterly.

He calls much of the process serendipity. Three months of silence brings emails asking "Are you dead?"

How I Write

Draft fast, then polish repeatedly and hand it to trusted readers. He keeps lists rather than an outline, writes a rapid first draft, then edits about five times: the first pass improves it about 20%, the second 10%, the third 5%.

A handful of readers then check it, the most detailed going first and finding about 200 nits. He borrows William Safire's term "irregulars" and aims to move the memo from B to A to A+.

How I Write

Plain words and vivid images beat jargon. Marks writes the way he speaks, with contractions and common words, and thinks in pictures, such as a ball held up by a water spout to show Fed stimulus is not permanent.

He sees jargon as protecting insecure professionals, citing Mark Twain's "a profession is a conspiracy against the laity," and points to Buffett's success with the same plain approach. He waits for the clarifying phrases before writing much.

How I Write

Aim for readers to say "I never thought of it that way.". Writing that confirms what people already believe adds little, because confirmation bias already supplies that. Marks wants to make readers question what they thought they knew.

His Getting Lucky memo began in a Riyadh hotel with a Jack Dorsey quote, "You make your own luck," to which he wrote, "I couldn't disagree more."

How I Write

Have a creed before writing for an audience. Each memo rests on lasting principles: what you believe, what you will do and what you refuse to do. Writing about yesterday's news or daily predictions rarely makes good output.

He notes forecasters who kept score would find they are right about half the time.

How I Write

The best ideas reconcile two things that seem to conflict. Wharton taught qualitative investing and Chicago taught quantitative theory, and real markets fit neither cleanly. Testing school theory against practice yields the useful observations.

Analogies help too: each decade he writes a memo linking sports and investing, and often one on gambling.

How I Write