Let’s be honest—most people are terrible at investing. They follow the crowd, buy what’s already popular, and wonder why they never make real money. Howard Marks nailed it in his memo Everyone Knows when he said, “Superior investors know—and buy—when the price of something is lower than it should be.” But here’s the catch: if something’s cheap, it’s usually because nobody else wants it. And that’s exactly where the smart money goes.
Think about Yogi Berra’s famous line: “Nobody goes to that restaurant anymore; it’s too crowded.” It sounds ridiculous, but it’s the same logic people use in markets. If everyone thinks an investment is a sure thing, it’s already too late.
As Marks puts it, “It’s just as nonsensical to say, ‘Everyone realizes that investment’s a bargain.’” Because if everyone did realize it, they’d all pile in, prices would shoot up, and suddenly—it’s not a bargain anymore.
The truth is, big profits don’t come from buying what’s already loved. “Large amounts of money aren’t made by buying what everybody likes,” Marks writes. “They’re made by buying what everybody underestimates.”
That means going against the grain, buying when others are scared, and ignoring the noise. It’s simple in theory but brutally hard in practice because it means being okay with looking wrong—or even foolish—for a while.
So what separates the great investors from the herd? Marks lays it out: First, you have to “see some quality that others don’t see or appreciate.” Maybe it’s a company with a hidden edge, a beaten-down industry ready to rebound, or a trend everyone’s ignoring.
But vision alone isn’t enough—you also need the second part: “having it turn out to be true (or at least accepted by the market).” In other words, you can be early, but you can’t be wrong forever.
That’s why the best investors are usually loners. They don’t get their ideas from CNBC or Reddit threads. As Marks says, “successful investors are said to spend a lot of their time being lonely.”
They’re comfortable sitting quietly while everyone else chases the next big thing. They know that real opportunities don’t come with fanfare—they come when everyone else is looking the other way.
The lesson? If you want to win in investing, you can’t just follow the crowd. You have to think for yourself, be patient, and embrace the discomfort of going against the tide. Because as Marks reminds us, the crowd is usually wrong at the extremes—and that’s exactly where the money’s made.
You can read the entire memo here:
Howard Marks Memo – Everyone Knows
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