Howard Marks' Oaktree Capital (NYSE:OAK) earned billions by investing heavily at the depths of the financial crisis. It may not surprise you to learn that Marks and his team made out huge by investing at a time when everyone else in the market was terrified. It might surprise you much more to know that these are no robots. They were actually quite terrified, too.

Marks' memos, which he has written since 1990, have long been priority reading for some of the best investors in the world -- Warren Buffett has famously said that whenever he sees one in his inbox, that's what he reads first. In 2011, Marks released his first book, The Most Important Thing, which, in direct contradiction with the title, listed 20 things to which the successful investor ought to pay attention. His second book, out this month, is titled Mastering the Market Cycle: Getting the Odds on Your Side.

In this wide-ranging interview with Bill Mann, Marks discussed the words that ought to be banned from an investor's vocabulary, whether who sits in the president's chair matters to investors, how his team prepared and steeled themselves during the financial collapse, and where we currently sit in the market cycle.

A full transcript follows the video.

Bill Mann: Howard, thank you so much for spending time with us today. Your new book is called Mastering the Market Cycle: Getting the Odds on Your Side. You know, it contains very few numbers in it. It was one of the first things I noticed. Not too many graphs. No Greek symbols that I can recall. How do you think investors should become better at determining where we are in the market cycle?

Howard Marks: Well, I think you really have to understand what produces cycles. I go through examples of what led up to the tech bubble, the subprime bubble, and the unwinding of the subprime bubble. And I go through these progressions step by step to give appreciation.

As you say, it's not science. It's not numbers. It's not formulae. It's understanding developments in the real world, how they occur, and how the elements combine to produce those cycles. Only by having an appreciation for the workings of these things -- and not by expecting to be given a formula that you can plug and play -- can investors perfect this essential skill.

Mann: You know, when I read this book, I saw or thought of one word over and over, and you've used this also in your memos, and that is temperament. I once had a really fun conversation with Daniel Kahneman, who won a Nobel Prize for his work in behavioral finance. He spoke about how he actually panicked during the financial collapse and sold everything.

Marks: Right.

Mann: How do you think that one becomes more unemotional about investing?

Marks: Well, that's a great question. In my first book, The Most Important Thing, I talked about second-level thinking, the need to think different from others, and better. And people asked me, "Well, how do you become a second-level thinker?" And I would apply the same answer to how you become less emotional.

The first answer is, as they say in basketball, you can't coach height. No matter how good a basketball coach is, his players are not going to get any taller.

Mann: [laughs] That's right.

Marks: So the improvement has to be intentional, and the first thing you can learn is why it's important to be unemotional and why emotionality is the enemy of the investor. Why human emotion conspires to constantly make investors do the wrong thing.

Then the second step is to do it. And I think probably many more people can understand the need for it than can actually apply it, but you don't have to apply it perfectly. You only have to do a better job than you used to do.

Mann: [laughs]

Marks: And I think most people should be able to attain that skill.

Mann: I think the very interesting thing, when you think about market cycles, is that they're very real things, of course, but it's not like these things are naturally occurring. They are entirely driven by human behavior. Maybe a good piece of background would be for you to describe what you think actually causes market cycles.

Marks: Sure, and to reinforce what you just said, let me point out that starting at the University of Chicago in the 1960s, people, even before the computer age, figured out what the return on stocks had been. And since 1929 to 1962, I think, they did the work, 9.2%, and it's been extended since then. And so stocks return 9%-10% a year on average...

Mann: Right...

Marks: ...for long periods of time. We know that.

Mann: And I think they've never actually returned exactly 9.2%.

Marks: That's right, and the point I was going to make is that they rarely return between 8% and 12%. Many more observations are outside of the 8% to 12% range than inside it, so my first observation is that the average is not the norm. So why is it? If stocks return 10% a year on average, why don't they just return 10% every year? And the biggest answer is emotional excesses to the upside, which then require correction to the downside.

If you think about the value of a company and what it's going to be worth in 50 years, that does not change very much from day to day, week to week, month to month. Even year to year. It's pretty stable. And the changes in this year's or this quarter's earnings are not that important. But people react excessively to these things, and we want to be on the right side of those reactions and not the wrong.

So when things are going well, and the economy is humming, and corporations are doing well, they're reporting earnings which exceed on the upside, and the media are issuing only positive reports and interpreting the news positively. The prices are going up every day. People feel terrific. They love the things they hold. They want to go out and buy more. The only people who are unhappy are the people who don't hold. They want to buy for the first time. All of these things together produce rising optimism, rising euphoria, and greater self-satisfaction, and, consequently, higher prices.

So as the prices rise, the emotion turns more positive until you reach a top when the price is at its maximum and the emotion is at its maximum. Now that's when you want to be selling, when the price is high, and by definition very few people do because they are feeling so positive.

And, of course, the reverse is true in the opposite direction. And I will not belabor it, but at the bottom the price reaches its minimum at the same day that the investors are the most depressed and the most unlikely to buy.

We must do the opposite. We must stand against the herd. We must stand against mass psychology. We must sell when fundamentals are at their peak and emotions are the most positive, and we must buy when fundamentals are at the trough and people are most depressed.

And so the goal is to buy low and sell high. More people buy high than buy low. We want to be different from most people. We have to understand what's going on, and we have to understand why people are doing what they're doing. You have to understand what's wrong about it, and you must be able to stand against it.

Mann: I think we would maybe best describe the market as being one part psychology and the other part path dependency.

Marks: Probably right. The psychology part is very important, and the people who learn financial analysis in school don't learn much about psychology. But this is the thing that's really going to determine whether you have good days or bad days.

Mann: I love that you said that. I've looked through your background. I've read your memos for decades now, and they are an absolute gift to me. As I was reading this book, I'm reminded of the fact that you have a fairly formal, traditional finance education, having gone to Wharton and the University of Chicago, but when I read this book and when I read your memos, I feel like I'm reading the works of a history major, and, in particular, with your focus of tendencies over predictions.

Marks: Yes. Well, I started 50 years ago this summer, and I've seen a lot. I've seen a lot of mistakes made. And if you have your eyes open and you're conscious of what's going on, you learn from mistakes and you put together a view of the world which can be helpful.

I started in 1968 at Citibank. And Citibank, and most of the banks, were what we called Nifty Fifty buyers. They bought the stocks of the 50 greatest, fastest-growing companies in America to which nothing bad could happen.

Well, No. 1, a lot of the companies to which nothing bad could happen had bad things happen. So much for predicting the future. But No. 2, because the companies were so highly rated, they were extremely highly priced, and if you joined when I did in 1968, and you bought those 50 stocks, and you held them diligently for five years, you lost almost all your money.

Not because in every case the companies were troubled, but because in every case they had been overrated and psychology had been too positive, leading to excessive pricing. And then the air went out of the balloon.

So it's not what you buy that makes you a successful investor. It's what you pay for it. And what matters most is not the quality of the asset, but the relationship between the price and the intrinsic value. And you get bargains. You get easy, safe profits by buying things for less than they're worth, and if you pay more than they're worth, you're going to have trouble wringing out a profit. So a relationship between price and value. What determines that? Emotion.

Mann: Yeah.

Marks: Not what's going on, but how people are reacting to what's going on. How much are they paying for the fundamentals that are present in that situation? And so I think it's extremely important to understand what I sum up with the word "emotion," but that's an oversimplification. You want to understand what's going on in people's minds and emotions when they price assets, and you want to buy the ones they're underpricing and sell the ones they're overpricing. You want to buy the market when it is underpriced, and you want to sell it when it's overpriced.

Mann: I love that you've made this point, and I do want to challenge something, because a lot of people who will be reading and listening to this will think that what you are talking about is market timing. But you're not. You're not talking about getting in and out of the market at the right time. You're not talking about reading the tea leaves and thinking about the trade sanctions in China and pulling out of certain parts of the market. You are talking about focusing on the areas where there is opportunity based on what is out there and where the market sits at any given point in time.

Marks: Exactly. Nothing in the book -- nothing that we do at Oaktree -- is based on forecasts. I am strongly opposed to basing investing on forecasting. And what I say is we never know where we're going, but we sure as hell ought to know where we are.

Mann: Yeah.

Marks: Where is the market in its cycle? Is it depressed or elevated? When it's depressed, the odds are in the buyer's favor, and when it's elevated, the odds are against him. And it's really as simple as that. And your listeners should distinguish between markets that are high in their cycle and markets that are low. They should vary their behavior on that basis. They should take more risk when the market is low in its cycle and less risk when the market is high in its cycle.

This is not saying who's going to win the election. What will the earnings be? When will rates be increased? So many people asked me for so many years, "What month is the interest rate increase going to take place?" And I would say, "Why do you care?"

Mann: [laughs]

Marks: That's not what matters. What matters is whether interest rates are going up or down. Whether it's going to go up a lot or a little.

And people don't understand how money is made. They think that knowing which month the interest rate increase is going to take place is going to make them money. And that's not what it's about. It's about investing more, and more aggressively, when the market is propitious and less, and more conservatively, when the market is precarious.

Mann: To me there is so much voodoo that gets thrown about when it comes to the markets. I'm going to take a little bit of a risk here, as I believe that we are perhaps kindred spirits. But it drives me to the point of insanity when pundits who ought to know better either credit or blame the performance of the stock market or the credit markets based on who happens to be sitting in the Oval Office.

Marks: Right. Absolutely.

Mann: How do you think that people should put either political conditions or macroeconomic events into the context of market cycles themselves?

Marks: Well, it's obviously complex. By the way, let's go back two years ago, to October of 2016. Most people in America believed two things: No. 1, that Hillary Clinton would win the presidency...

Mann: Yes.

Marks: ...and No. 2, if Donald Trump did, the market would collapse. So instead, Hillary lost, Donald won, and the market soared. So I think that mere fact should be enough to convince most people that they don't know what events are going to happen, and they don't know how the market is going to react to the events that happen.

Mann: You would think.

Marks: You would think. But having said that, how do you factor in politics? All things being equal, it is more favorable for the market that we have a president who is extremely pro-business. And I think clearly Donald Trump is, and his administration, and Hillary would not have been to the same extent, and Hillary would have been under pressure from the progressive wing of her party to actually be somewhat hostile to business. And so this is going to continue with the Trump administration. All things being equal, that will be a positive.

Now, that doesn't mean it's all good. Among other things...

Mann: Or that it's not already in the market, correct?

Marks: Exactly. I was just going to say that, but you're absolutely right. One of the biggest mistakes that most people make, and you and I were talking a minute ago about the voodoo, is they sit here and they say, "I think there will be positive events, which means I think the market will go up." And that identity is not dependable, because maybe there will be positive events, but maybe they're already priced into securities in which case they'll be a big yawn. Or maybe there will be positive events, but not as positive as were factored in when stocks were priced, which means you'll get a positive event and the stocks will go down. As I say, predicting these events and predicting the market's reaction to them is very thorny.

Mann: I wanted to talk a little bit about a point in time where you, as a practitioner and your group at Oaktree, were absolutely counter to the market, which was in 2008, in which throughout the markets -- the stock market; the credit markets -- there was a great deal of unrest and uncertainty, and Oaktree was aggressively buying. What was it that led you to commit capital at that time?

Marks: Well, No. 1, we had prepared for the global financial crisis. Ironically, we didn't really hang it on subprime mortgages, but we had a feeling that the world was becoming a risky place characterized by risky behavior. And I wrote a memo called "The Race to the Bottom," in February 2007, which catalogued and discussed some of that behavior and proved to be right.

We sold a lot of assets. We wound down large funds and raised small funds, but then we also raised an $11 billion fund for distressed debt investing that we put on the shelf. We said, "That's not for now. That's for later. We think there's going to be an opportunity, and that's when we'll put that to work." So we were ready with firing power. We didn't have to raise money at the bottom. We had a lot of money to start spending at the bottom. And that's extremely important logistically.

And then we had the Lehman Brothers bankruptcy on Sept. 15 of 2008. I put out a memo a couple of days later, and I think it was called "Now What?" And that's what I was talking about. And I said, "Look, there are two states of nature. Either the world is going to end or it's not!" And people were assuming that it would, and pricing assets as if it would. You could not prove -- believe me, Bill -- that the world was not going to end.

Mann: Right.

Marks: There was a movie called The China Syndrome, with Jane Fonda, in which they release a nuclear reaction and it's going to go right through the core of the earth. It felt that way in the financial world. But I said in the memo, "Either the world's going to end or it's not, and if it ends, it won't matter whether we bought or sold today."

Mann: [laughs]

Marks: "But if it doesn't end and we didn't buy, then we didn't do our job."

Now that's all kind of philosophical. But the truth of the matter is, we were able to buy the debt of companies, the senior debt of companies, at prices which implied that those companies were worth a quarter, or a fifth, or a third of what some very astute buyout funds had paid for them one and two years earlier. And they usually don't get it wrong by a factor of four or five.

So we swung into action. We had the money, we had the will, and we had the bargains, and we spent about $600 million a week over the last 19 weeks of 2015, and that's all you had to do. And the technical term is everybody else was puking.

Mann: [laughs]

Marks: And stuff was coming out every day at ridiculously low prices. There were a lot of leveraged entities that were getting margin calls and being sold out, en masse, and there were sellers, and there were forced sellers, and there were no buyers. And that is nirvana. And we were the buyer with the money, and we bought diligently.

Now, I want to point one thing out for your listeners, which is very important. We were terrified. This is not easy. To have a position and to act in opposition to everybody else in the world -- you have to have enormous hubris to do that with confidence. So some days we said, "I think we're going too fast," and some days, "I think we're going too slow." We did it because in our hearts we thought it was right, but I never want to give people the impression that it's easy.

Mann: I love that. You're not robots.

Marks: Right.

Mann: You are still humans with human emotions, and it was probably the right thing to do because it was not easy.

Marks: Exactly. You know, Dave Swensen, who runs the endowment at Yale and has done the greatest job in the endowment world for 30 years, wrote a book 20 years ago called Pioneering Portfolio Management...

Mann: A fabulous book.

Marks: ...and in that book he says that investment management, by which he means good investment management, requires the adoption of uncomfortably idiosyncratic decisions. In other words, "idiosyncratic" means you have to do different from what other people are doing or you're not going to perform different, and uncomfortable because for you to do something different from what everybody else is doing by definition will be uncomfortable.

Mann: Rich Pzena, of Pzena Investment Management (NYSE:PZN), who's another great investor, once said that he felt like his portfolio was in good stead if he looked at the positions and felt like he was going to throw up.

Marks: A good one.

Mann: So perhaps a harder question, and this is something that Warren Buffett said a long time ago, and it has always stuck with me. It's that companies get the shareholders that they deserve. And that's certainly true for asset managers also. You were not robots, but also your investors, the people who put the $11 billion with you waiting for this opportunity, were terrified, too. How did you manage these shareholders and their emotions at this time?

Marks: Most of these were long-term investors of ours who had been with us a long time. Who had seen our ability to perform. Who understood that we were not the greatest investors for the happy times, but we are very good at wringing profits out of bad times.

Mann: That's right. You did say you are distressed investing and distressed credit experts.

Marks: Well, I think it's safe to say that. You said it, but I'll agree.

Mann: [laughs]

Marks: And the other thing is that our clients are mostly institutional investors, and most of them know that no institution, and certainly no investment committee, will approve an investment at the depths of the market. The market is cascading down. The world looks like it's collapsing. It looks like there will never be another up day. Very, very hard for any bureaucratic institution or committee to approve an investment.

The beautiful thing is that they precommitted to our fund. We raised that fund between January 2007 and March 2008, so early enough for institutions to be able to commit. And once they had, they were in our hands.

Mann: So the frog wasn't boiling just yet at the time you traded the money.

Marks: Exactly. But having money and the ability to call... we didn't have cash. We called the money as we spent it, and having cash we could call during the crisis is really the greatest luxury.

Mann: That's absolutely true. One of the passages in Mastering the Market Cycle that I gravitated to immediately was this one, and it's pretty brief. "In addition to an opinion regarding what's going to happen, people should have a view on the likelihood that their opinion will prove correct." I love this passage, and it also reminds me of something that I think Jamie Dimon once said, and that is that some people are more confident about everything than I am about anything.

Marks: Well, it's absolutely the same sentiment. I hadn't heard that from Jamie, but it's right, and I've never seen anything else on that subject. The point is that some people are sure of everything and some people are sure of nothing. And Jamie is more sure than he lets on.

Mann: [laughs]

Marks: But the truth is that it is obviously a mistake to be equally sure or equally unsure of everything, because there are some things that absolutely will happen tomorrow, there are some things that have a high probability of being predictable, and there are some things that are absolutely unpredictable. If you make predictions about all three with equal certainty, then there's something wrong with you, and you can't expect to be a successful risk bearer if you don't differentiate between the different levels of predictability.

Mann: I think that's exactly right. Do you think that there are opinions or beliefs in the market that you find to be particularly unhealthy for investors?

Marks: These days or in general?

Mann: Answer it as you wish. If someone wanted to improve his understanding of market cycles, what are some dearly held beliefs that you think ought to be discarded?

Marks: The first thing -- and I try to make this clear in the book, and it's essential if people are going to be able to deal with cycles -- is everybody wants an easy answer. Everyone wants to know how long an upswing lasts. And the first step is you must dispense with any concept of regularity.

The whole book is based around Mark Twain's statement that history does not repeat but it does rhyme. When he says it doesn't repeat, in our case he wasn't talking about the market. He was talking about history. But the truth is, market cycles vary one to the next in terms of their amplitude, their speed, their violence, their duration. It's all different. And so people want to know how long an upswing is, and the answer is we absolutely can't tell them. So expecting regularity and, thus, predictability is wrong.

And then you can go from there to the whole concept of predictions. What makes the market go up and down? To a small extent it is what I call fundamental developments in the economy and the companies. But to a large extent it's psychology, or, let's say, popularity.

Mann: Yeah.

Marks: And it should be clear by now to everyone that the swings in popularity are unpredictable. And if they are, then most forecasts are not going to work.

So the next concept is that people say to me, "OK, when will the market turn down?" And I never answer a question that starts with the word "when." In the investment business, sometimes we know what's going to happen. We never know when. So I would dispense with that immediately.

You must accept the ambiguity in the situation and accept the need to live with uncertainty. And that's why in the book I say there are certain words that every good investor should drive out of his vocabulary. Things like never, always, must, can't, has to. These words are out.

We can talk about likely events. We can talk about probabilities. More and less likely. But we can never say has to or won't.

Mann: I do need to ask this question, and I know that these are somewhat more painful questions for you. Where is it that you think we are presently in the market cycle in this country, and how might you suggest the average investor be positioned today?

Marks: Well, in my book there is a graph that identifies various stages of a normal up-and-down cycle. Bottom rising. Midpoint. Rising past the midpoint on the way to its top. At the top. Declining back toward midpoint and so forth. And where are we? We're not at the bottom. That was 10 years ago.

Mann: Yeah.

Marks: We're not rising from the bottom to the midpoint. We passed that several years ago. We're not at the midpoint. We have exceeded the midpoint and we're rising in the direction of a top. And there's no reason to think we're at a top. Of course, we never know when we're at a top. We know a few days later when we say, "Hey..."

Mann: That's right.

Marks: "...it reached an acme and it went down." But the point is we are past the midpoint. There are virtually no assets that I'm aware of that are available for less than their intrinsic value.

Everything is somewhat overpriced. The question is the degree of overpricing and what that means. I divide the world into cheap, fair, and rich, and I would say today that most assets are on the high side of fair or into rich territory, and I think that's where we are. Now, to say that things are highly priced is very different from saying they're going to go down tomorrow.

Mann: Yeah.

Marks: Things have been highly priced for a good period of time, and they have continued to rise. I am not saying that people shouldn't be in the market. I'm not saying there's going to be a downturn that starts tomorrow. I'm merely saying that when you are in the elevated portion of the cycle, as I believe we are, then the odds are not so much in your favor. They're more against you.

For me, I like the subtitle of the book: Getting the Odds on Your Side.

Mann: Right.

Marks: And knowing where we are in the cycle tells you whether the odds are favorable or unfavorable. I think we're in the elevated portion of the cycle, which means the odds are not as good as usual. And yet the outlook is not so bad, and prices are not so high that this is the time to go to cash.

At Oaktree we've had this mantra: "move forward, but with caution." And we still do. We're investing every day. We're trying to be fully invested, but with caution. We're a cautious firm. "With caution" means even more caution than usual.

Most investors would benefit if they could think of the world the way I do, which is to say that investors face, every day, two twin risks. The first is obvious -- it's the risk of losing money. Nobody wants to do that. The second is more subtle. It's the risk of missing opportunities.

And if you say, "I don't want to lose any money," then you have to forgo all the opportunities. If you say, "I don't want to miss any opportunities," then you have to expose yourself to losing money.

Mann: That's right. Choose one.

Marks: Or balance the two.

Mann: Yeah.

Marks: And most people say, "Well, I don't want to lose a lot of money, but on the other hand I don't want to miss all the opportunities." And so they balance the two, and that leads to the next question.

How? How should you balance them for yourself given who you are, and your financial situation, and your age, and your emotions, and your dependents, and your needs? What should be your normal manner of balancing your twin risks?

And then, what about today? Should your balance of the twin risks emphasize risk loss avoidance or opportunity maximization today? More offense or more defense?

And that's really the key question, and I think that question has to be based on where the market is in its cycle. And I think that that's the key skill that investors should develop, and that's what the book aims to do.

Mann: Wonderful. You know, Warren Buffett paid you the compliment that whenever he sees your writing in his inbox, it's one of the first things that he picks up to read. And one of the things that I really appreciate about Buffett is that he articulates so well the fact that those who are at the pinnacle of the industry still have a lot to learn.

Marks: Yeah.

Mann: So I ask you, as someone who actually educates Warren Buffett and is also at the pinnacle of our profession, what is it that you are reading now? What are you getting a lot out of and learning from?

Marks: Well, I'm always reading my publications.

Mann: [laughs]

Marks: There are some credit market publications that I read on a continuous basis that are very helpful. As for books, I'm in the middle of two. One is called Factfulness.

Mann: Oh, wonderful book.

Marks: And basically it talks about how people misunderstand what's going on in the world because of the biases and filters through which they do it. And the other is called Thinking in Bets, by Annie Duke, who was the leading woman professional poker player and has a Ph.D. in decision-making and tries to teach us how to take day-to-day situations and think about them as you would placing a bet in a gambling situation.

And so most of the things I read are not about how to invest, but things in the world that have relevance to the world of investing.

Mann: The section in Factfulness on income and wealth was something that I understood on some levels, but when you stop and think that almost everyone in the United States of America is in the top 10% in terms of wealth, that reframing is really amazing.

Marks: Exactly. And between our biases of perception and, I would say, the biases introduced by media coverage, it's very hard for most people to see things realistically.

Mann: Wonderful. So Oaktree is a company that I and other analysts at The Motley Fool have recommended to our members. I'm not quite sure how to ask this question. How do you view your own company's stock? Given that Oaktree's stock in trade is credit and distressed debt, do you view your stock as being a derivative of those segments of the market?

Marks: Well, I think it clearly is, because our assets under management have been flat for about five years, at around $100 billion. This year we changed our accounting to bring in our share of the assets of DoubleLine, which is a company we own 20% of.

But fundamentally speaking, our assets have been essentially flat for five years. And with the market in the elevated stage that I describe, we have judged that it was not appropriate to add to assets under management, and we think we do our clients a favor when we try to dissuade them from piling in more.

Mann: Right.

Marks: And so that has kept a lid on our business, and in fact, we've been taking profits and rotating into assets which are less profitable for Oaktree, so our income has been a little soft. One of these days there will be a time when conditions are more appropriate for a distress investor and a bargain hunter.

I believe we'll be able to add to our assets at that time. I think that our clients credit us with good judgment and integrity. We're a firm that doesn't always say our asset class is perfect. There are times when we say don't invest, and as a consequence they credit us with integrity, so they listen to us when we say do invest. I think there will be a time when it's better for our asset classes. We will get more money, we will make more profit, and most people recognize us as a way to profit from bad times.

Mann: Yeah.

Marks: Not profit in bad times. People used to say Oaktree's great because it makes a lot of money in bad times. And the answer is when the market goes down, we don't make a lot of money.

Mann: You don't have magic beans, right?

Marks: Exactly. We are a prime way to capitalize on bad times and the exit therefrom.

And that's the way I look at it. I think that's the way most people look at it. You know, on the most bullish days in the market, usually our public peers, the private equity companies, their stocks rocket ahead and ours kind of limp ahead. On the bad days, maybe they go down and we go up.

When I was a kid, there was an expression for a horse that runs best on bad tracks: a mudder. So maybe we're a mudder. Maybe we have our best days in bad times.

Mann: Fantastic.

Marks: This is what we're good at, and we're going to stick to our last.

Mann: Well, I certainly appreciate that. You have been writing incredibly detailed memos in your role at Oaktree Capital starting, I believe, in 1990. Is that when you began?

Marks: Yes, right.

Mann: What made you start writing, and what have you gotten out of it?

Marks: Well, I can promise you I didn't start writing because I thought it would make me any money.

Mann: [laughs]

Marks: Or because I thought it would change Oaktree's business, of course. Oaktree didn't exist when I started in 1990. I started writing for the simple reason that I came across some events the juxtaposition of which I thought was very interesting and educational, and I wanted to share it.

In those days we only sent them to our clients. Those were the days when you would run them on the Xerox machine, fold them up, put them in an envelope, put a stamp on, address them, and put them in the mailbox. There was no concept of being viral, and they want out to a few hundred people. But it was interesting.

And the other reason is because I like to write. It's my creative outlet. They say it's only work if you'd rather be doing something else. I'd rather write than not write. There's usually a memo in January and September, which means that I wrote them on Christmas vacation and summer vacation, and to me it's great.

So I started writing in 1990. I wrote one in 1990 and one in 1991 and maybe two in 1992, and maybe I skipped 1993. I forget. But the point is I did it for 10 years, and I never had a response, Bill. Not only did nobody ever say they were good; nobody ever said, "I got it!"

Mann: It was as if you were throwing them over the wall into North Korea.

Marks: Exactly.

Mann: You don't know if your message was received at all.

Marks: Right. But then, on the first day of 2000, I put one out called "Bubble.com," poking some fun at the tech stocks, and the excesses, and talking about what I thought was wrong in that market, and that had the virtue of (1) it was right and (2) it was right fast. If you're right slow, you don't get much credit.

Mann: That's right.

Marks: And so I think in the introduction to one of my books, I said that after 10 years I became an overnight success. But now I get plenty of recognition. Now they go out to 30,000 people. And I just heard from somebody the other day who said he sent it to 30,000 people. So I have no idea how many people see them. I get a lot of very positive responses, which makes my day and keeps me going, and I do not intend to quit.

Mann: Well, they have been a wonderful education for me as I've been on the path of trying to be a better investor every day, and also as a better communicator every day. I have a debt to you, and I really just appreciate you taking all of those hours to put the pen to paper and put the finger to keyboard and help other people be better investors.

Marks: Well, it's really my pleasure. And then when I think I have a big idea, I put it into a book, and I hope that people will find the book interesting. You know, my main objective, in writing my two books now, is that I want people to say, "Oh, yeah, that's right." I don't want them to say, "That's what I always knew." I want them say, "I never thought of that that way."

Mann: Yeah. Something that they may have thought was correct, but then it challenges one or two of their closely held beliefs and pushes them down the path a little bit.

Marks: Right.

Mann: Well, Howard, I really do appreciate your time today. It is an honor and a joy to speak with you. Your new book is called Mastering the Market Cycle: Getting the Odds on Your Side. It comes out this week; is that right?

Marks: Yes, that's right.

Mann: It comes out on Friday?

Marks: No, it actually came out two days ago.

Mann: It came out two days ago.

Marks: Yup.

Mann: I have no idea what day of the week it is anymore. Well, I do appreciate you spending this time with us, and with me, and I wish you all the best.

Marks: Thank you, and I appreciate your questions. Let's do it again.

Mann: All right. Thank you so much, Howard.