The “Illuminated” edition of The Most Important Thing by Howard Marks is filled with great commentary from other investors throughout the book.

Except, when you read it for the first time it can be a bit disruptive. It’s as if a random person is constantly adding their two cents while you’re in the middle of a conversation with the author.

Where the comments really become useful is when you go through the book a second time. Having the likes of Joel Greenblatt, Seth Klarman and others offer insights helps to tie things together.

And even Marks adds comments on his writing. Though, he tags his comments with themes.

The most important of those themes he labels “the riskiest things.” The not so obvious way to sum it up is the riskiest things turn out to be things that seem the least risky. Continue Reading…

Mean reversion is the one thing we can, eventually, rely on to align price with value. It also runs counter to the collective thinking in markets.

Mean reversion is the idea that things – growth rates, earnings, prices, returns – eventually move toward an average. It’s what you get when short-term expectations conflict with long-term reality.

History is littered with companies once considered great, that have since fallen by the wayside. And the companies that were written off for dead often exceed their lowly expectations by briefly performing well.

It turns out, few companies are immune to the cycle of creative destruction (it’s a feature, not a bug, of capitalism). Mean reversion is what results. Tobias Carlisle explains why in his book Deep Value: Continue Reading…