Most people in finance act like they’ve got a crystal ball tucked in their desk drawer. They’ll tell you exactly where the S&P 500 is going or when the Fed will pivot as if it's a settled fact. Then there’s Howard Marks. If you’ve ever read a memo from Oaktree Capital, you know he’s basically the guy in the room saying, "I don't know, and honestly, neither do you."
It’s a refreshing kind of honesty that has turned Oaktree into a $218 billion behemoth. As of late 2025 and heading into 2026, Oaktree isn't just another private equity shop; it’s the ultimate "clean-up crew" for Wall Street. When things go sideways—and they always do eventually—Marks and his team are the ones waiting with a bucket of cash and a very specific set of rules.
What Most People Get Wrong About Oaktree Capital
There is this persistent myth that Oaktree is just a "distressed debt" firm. People think they only show up when a company is on its deathbed, like vultures circling a carcass. That's a bit of an oversimplification.
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Sure, they made their name buying the debt of companies in bankruptcy, but the strategy has evolved. These days, they call it "opportunistic credit." It sounds like corporate speak, but it’s actually a response to how the world has changed. In the old days, you’d wait for a massive recession to find deals. Now? The "sea change" Marks often writes about—higher interest rates and the end of easy money—means the stress is more constant.
Oaktree isn't just looking for broken companies; they're looking for broken balance sheets. Sometimes a great business just has too much debt because the CEO got greedy when rates were 0%. That’s where Marks thrives. He isn't interested in guessing which tech startup will be the next Nvidia. He wants to buy a dollar’s worth of assets for 60 cents because the current owner is panicking.
The "Second-Level Thinking" Trap
You’ve probably heard the term "second-level thinking" if you've spent more than five minutes on Finance Twitter. Marks literally wrote the book on it—The Most Important Thing.
But here’s the thing: most people think they’re doing it, and they’re really not.
First-level thinking is: "This is a great company, let’s buy the stock."
Second-level thinking is: "It’s a great company, but everyone else thinks it’s a spectacular company, so the price is way too high. I'm selling."
It sounds simple. It’s actually incredibly hard because it requires you to be a contrarian and be right. Being a contrarian just for the sake of being different is a great way to lose a lot of money very quickly. Marks often points out that you can’t outperform the market by doing what the market does. You have to be lonely and uncomfortable. If your investment thesis feels safe and popular, you’re probably not going to make a lot of money.
Why the Memos Actually Matter
If you haven't read the memos, you're missing the real story of how Oaktree operates. Marks has been writing them since 1990. Warren Buffett famously said that when he sees a Howard Marks memo in his mail, it’s the first thing he opens.
They aren't "market outlooks" full of charts and Greek letters. They’re more like philosophy essays for people who hate losing money. In his recent 2025 memo, Nobody Knows (Yet Again), Marks tackled the unpredictability of things like global tariffs and trade wars. His point wasn't to predict the outcome, but to remind investors that the range of possible outcomes is much wider than the market thinks.
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He's big on the "I don't know" school of investing. Basically, if you admit you can’t predict the macro economy, you can stop wasting time on it and focus on finding bargains that can survive a few different versions of the future.
The Big Move: Brookfield and the 2026 Takeover
One of the biggest developments for Oaktree recently is the finalization of its merger with Brookfield Asset Management. Brookfield bought a majority stake back in 2019, but they’ve been moving toward full ownership, a deal expected to wrap up in early 2026 for about $3 billion.
What does this change? For the average investor, maybe not much. But for the institutional world, it’s a massive power play. It creates a "super-manager" with over $1 trillion in assets under management.
Crucially, Brookfield is letting Oaktree stay Oaktree. Marks is still Co-Chairman. The "Oaktree way"—that cautious, risk-averse culture—is being preserved because that’s the whole reason Brookfield bought them. They wanted the brand that stands for "not losing money in a crash."
How to Invest Like Howard Marks (Without $200 Billion)
You don't need to be a billionaire to use the Oaktree playbook. It really comes down to a few core habits that most retail investors ignore because they’re "boring."
- Move when the pendulum swings. Marks talks about the market like a pendulum. It’s either too greedy or too fearful; it’s rarely in the middle. When everyone is talking about "the new era" where stocks only go up, that’s when Oaktree gets quiet and builds cash.
- Focus on risk control, not just returns. Most people ask, "How much can I make?" Marks asks, "How much can I lose if I'm wrong?" It’s a subtle shift that changes everything about what you buy.
- Know where we are in the cycle. You don't have to know exactly when the crash is coming, but you should know if the party is in its first hour or if the sun is coming up and people are starting to pass out.
Honestly, the biggest takeaway from studying Howard Marks isn't a specific stock tip (though Oaktree's current portfolio has some interesting bets in shipping and energy, like Torm Plc and Chesapeake Energy). It’s the psychological discipline. It's the ability to sit on your hands when the market is going crazy and wait for the "fat pitch."
Your Next Steps for Analyzing Oaktree
If you want to actually apply this, start by reading the "Sea Change" memo from 2022. It’s the foundation for everything happening in 2026. It explains why the world shifted from a low-interest-rate environment (which favored growth stocks) to a higher-rate environment (which favors Oaktree’s credit-heavy approach).
Check the Oaktree Specialty Lending Corporation (OCSL) if you want to see how they manage a public vehicle. It’s a BDC that gives you a look at their private credit deals. Just remember: in Howard's world, the goal isn't to be the smartest person in the room—it's to be the one who didn't panic when the smartest people realized they were wrong.
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Look into the concept of Second-Level Thinking by writing out your current investment thesis and then intentionally trying to argue against it. If you can't find a strong reason why you might be wrong, you haven't thought deep enough yet.