The Most Important Thing Illuminated

This edition adds commentary from four investors to Marks' original text: Christopher Davis, Joel Greenblatt, Paul Johnson and Seth Klarman. Their annotations appear alongside the chapters, sometimes agreeing, sometimes qualifying and occasionally disagreeing with Marks.

The underlying book is unchanged. Marks argues for second-level thinking, meaning holding a view that differs from consensus and turns out to be right; for defining risk as the probability of permanent loss rather than as volatility; for recognising that the riskiest moments are those when investors believe risk is absent; for assessing where a cycle currently stands rather than attempting to predict its turning points; and for defensive investing, where avoiding losses matters more than finding winners.

The commentary adds practical texture. Klarman's notes are the most substantive, particularly on the difficulty of holding a contrarian position when clients are withdrawing capital, and on the institutional constraints that prevent professionals from acting on what they know. Greenblatt adds material on special situations and on the discipline of doing nothing. Davis and Johnson contribute perspective from long-only management and from teaching.

The value over the original edition depends on whether a reader wants those interjections. Some find they break the flow of Marks' argument, others find they show how experienced investors disagree at the margins. Neither version contains a valuation method or a specific procedure, which is deliberate. Both are collections of judgment rather than technique, drawn from Marks' Oaktree memos, which are available free and which some readers prefer in the original form.

Co-founder and Co-Chairman, Oaktree Capital Management

His client memos, written continuously since 1990, are a primary source on risk, cycles and market psychology that other investors quote directly.

Oaktree Capital Management