Memo to: Oaktree Clients From: Howard Marks Re: It's Not Easy In 2011, as I was putting the finishing touches on my book The Most Important Thing, I was fortunate to have one of my occasional lunches with Charlie Munger. As it ended and I got up to go, he said something about investing that I keep going back to: "It's not supposed to be easy. Anyone who finds it easy is stupid." As usual, Charlie packed a great deal of wisdom into just a few words. Let's take the first six: "It's not supposed to be easy." While it's pretty simple to achieve average results, it shouldn't be easy to make superior investments and earn outsized returns. John Kenneth Galbraith said something similar years ago: There is nothing reliable to be learned about making money. If there were, study would be intense and everyone with a positive IQ would be rich. What Charlie and Professor Galbraith meant is this: Everyone wants to make money, and especially to find the sure thing or "silver bullet" that will allow them to do it without commensurate risk. Thus they work hard (actually, study is intense), searching for bargain securities and approaches that will give them an edge. They buy up the bargains and apply the approaches. The result is that the efforts of these market participants tend to drive out opportunities for easy money. Securities become more fairly priced, and free lunches become harder to find. It makes no sense to think it would be otherwise. And what about the next seven words: "Anyone who finds it easy is stupid"? It follows from the above that given how hard investors work to find special opportunities, and that their buying eliminates such prospects, people who think it can be easy overlook substantial nuance and complexity. Markets are meeting places where people come together (not necessarily physically) to exchange one thing (usually money) for another. Markets have a number of functions, one of which is to eliminate opportunities for excess retur