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The Most Important Thing IlluminatedUncommon Sense for the Thoughtful Investor$
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Howard Marks

Print publication date: 2013

Print ISBN-13: 9780231162845

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231162845.001.0001

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The Most Important Thing Is … Investing Defensively

The Most Important Thing Is … Investing Defensively

(p.171) 17 The Most Important Thing Is … Investing Defensively
The Most Important Thing Illuminated

Howard Marks

Columbia University Press

This chapter examines a vital element for successful investing: defensive investing. The problem with investing is that the investor can’t simultaneously go all out for both profit making and loss avoidance. Each investor has to strike a reasonable balance between these two goals. The decision should be made consciously and rationally. The best way to put this decision into perspective is by thinking of it in terms of offense versus defense in sports, and especially tennis. This chapter explains how to invest defensively by referring to Charles Ellis’s article, titled “The Loser’s Game,” published in The Financial Analysts Journal in 1975. The point of Ellis’s article is that defense is an important part of every great investor’s game. Investment defense has two principal elements: the exclusion of losers from portfolios and the avoidance of poor years and, especially, exposure to meltdown in crashes. This chapter presents comments and insights from four renowned investors and investment educators.

Keywords:   defensive investing, offense, defense, sports, Charles Ellis, investors, investment

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