Our readers often ask what truly separates durable investment success from temporary performance. Howard Marks offers a framework that avoids predictions and instead focuses on behavior, discipline, and price.

In his letter Dare to Be Great Too, the message is not about being bold for its own sake, but about understanding what risk really is and how opportunity is created when discomfort rises.

Marks rejects the common shortcut definitions. As he explains, “the real risk that matters for investors is the probability of a permanent loss.”

Short-term price movement may be unsettling, but it is not the enemy. The enemy is paying too much or misunderstanding what can go wrong.

He later broadens the definition further, stating that “risk is the possibility of an undesirable outcome.” That framing matters because it forces investors to confront trade-offs rather than hide behind formulas.

This way of thinking naturally leads to contrarian behavior. Marks is explicit about where value comes from: “You have to buy the things nobody else likes.” The logic is simple.

Assets that are popular rarely offer bargains, while neglected or uncomfortable situations often do. He challenges investors directly with the question, “What possible reason would you have for thinking that you’re getting a bargain?” when everyone already agrees something is attractive.

That discipline becomes most valuable when conditions deteriorate. Marks does not romanticize buying into stress, but he is clear about the mechanism.

A value-driven investor looks at intrinsic worth and price, not headlines. When fear takes over and prices fall, he describes the mindset clearly: “It’s like it’s in the department stores. It’s on sale now.” This is not bravado; it is preparation meeting opportunity.

Crucially, Marks warns against false confidence. He emphasizes that “there is no place in the investing business for certainty,” reinforcing that good decisions are made with probabilities, not promises.

He even cautions investors to remove certain language from their vocabulary entirely, because overconfidence is often the precursor to permanent loss.

Psychology ties all of this together. Long stretches of favorable conditions encourage carelessness. Marks observes that “in good times, bad deals get done,” not because standards change consciously, but because vigilance fades.

When investors worry more about missing out than losing money, discipline erodes and risk quietly accumulates.

For value-oriented investors, the relevance is obvious. Enduring results do not come from consensus or comfort. They come from thoughtful disagreement, patience, and the willingness to look wrong before being proven right. As Marks notes, “investment management requires the adoption of uncomfortably idiosyncratic positions.” Dare to Be Great Too is ultimately a reminder that excellence requires difference, and difference rarely feels easy when it matters most.

You can watch the entire interview here:

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