In a recent webcast with Investec Wealth & Investment, Oaktree Capital's Howard Marks highlighted three of his foundational books on markets: A Short History of Financial Euphoria, by John Kenneth Galbraith; Against the Gods: The Remarkable Story of Risk, by Peter Bernstein; and Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets, by Nassim Nicholas Taleb.

Interestingly, all three were written well before even the Great Financial Crisis of 2008, suggesting that their lessons about cycles, risk and asset prices transcend different market eras. In Marks’ words: “Books are full of eternal wisdom. They are not to be read for the answer to what to do at this minute.”

Here’s a brief summary of each book. If we can blow our own vuvuzela it, we should point out that two of the books – Against the Gods and Fooled by Randomness – were featured in a 2018 edition of Investec Wealth & Investment’s ONE magazine. We have simply replicated our review of these two books below.

Howard Marks
Howard Marks, Director and Co-Chairman of Oaktree Capital

Books are full of eternal wisdom. They are not to be read for the answer to what to do at this minute.

A Short History of Financial Euphoria, by John Kenneth Galbraith

rating on Goodreads

First published in 1994, it gives very readable accounts of the great manias, bubbles and crashes of the past, from the Tulip bubble to the October 1987 stock market crash.

Says Marks: “This book was extremely important for me because it told me about cycles, about euphoria and about the pendulum swing of human psychology. I recommend it to everybody – and it has the added virtue of being a thin book so you can get through it very easily.”

Read more reviews.

Against the Gods: The Remarkable Story of Risk, by Peter Bernstein

rating on Goodreads

If you have a little bit of a mathematical or statistical bent and appreciate good historical writing, then this book is right up your street. Bernstein tells the story of the great thinkers and events from the past that shaped modern mathematical thinking and the worlds of finance and business. Fibonacci, Fermat and Pascal are some of the characters covered, as are topics like chaos theory and game theory. It’s all told in a very conversational way, making even complex theorems accessible and interesting.

Says Marks: “Bernstein talks in this book about the development of the science of probability and how f the concepts of probability permitted us to get involved in transferring risk from those of us who want to avoid risk to those of us who are willing to take it – and I think that that is an essential concept.”

Read more reviews.

Howard Marks on investing: History rhymes

Howard Marks, Oaktree Capital

Watch the full webcast where Marks talks about understanding market cycles and how to get the odds on your side.

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets, by Nassim Nicholas Taleb

rating on Goodreads

Taleb is famous for coining the term “Black Swan”, a metaphor for events that have a very low probability of happening, but which have major, sometimes devastating effects on the world. He explores this concept as well as others such as luck, which is too often mistaken for skill by those who benefit from it. Although Taleb didn’t pioneer any of the concepts described, he has certainly contributed greatly to putting them into public discourse.

Marks: “I like to read books that in are indicative of investor psychology and so Fooled by Randomness talks about how important randomness is in the financial markets and how randomness is confused with things happening for a reason.”

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Howard Marks' lockdown read

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Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts, by Annie Duke

Written by a former World Series of Poker champion turned business consultant, "Thinking in Bets talks about how to systematise our thinking about making decisions under uncertainty because that's what we do as investors, just like poker players or gamblers," says Marks who was inspired by the book to pen one of his famous memos.

"We have to make decisions when there is hidden information and when random events will be very influential and how we do that I think is very important."

"My favourite quote from that book is that the expert only makes better guesses than anybody else. When you're dealing with the future, all your prognostications are guesses and the expert merely is a better guesser in the field of his expertise. I think that's a great thought for people to bear in mind."

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About the author

Patrick Lawlor

Patrick Lawlor


Patrick writes and edits content for Investec Wealth & Investment, and Corporate and Institutional Banking, including editing the Daily View, Monthly View, and One Magazine - an online publication for Investec's Wealth clients. Patrick was a financial journalist for many years for publications such as Financial Mail, Finweek, and Business Report. He holds a BA and a PDM (Bus.Admin.) both from Wits University.