Howard Marks

I never thought of it before.

And I said, the most conservative companies in America are the life insurance companies.

How can they insure people's lives when they know they're all going to die?

And the answer is, number one, it's risk they're aware of.

Doesn't come as a shock when somebody dies.

You know, nobody breaks into the board meeting and say, hey, one of the people died.

Number two, it's risk you can analyze.

And so they sent a doctor to your house to see if you're in good enough shape to get a policy.

Number three, it's risk you can diversify.

So nobody insures just skydivers or just people who live on the San Andreas fault or just smokers, but they diversify their book.

Number four, it's risk they're well paid to take.

So they look at me, they say, this guy's going to die at 90 and they price the policy on the assumption I'm going to die at 75.

Exactly.

And I said, this is exactly what we do in high yield bonds.

So we started doing it and we made money steadily and safely, investing in the worst public companies in America.

Now, remember my background.

I joined the investment business September of 69.

I'd had a summer job in 68, so I got to look at it.

But in 69, I went to work permanently at Citibank's investment research department.

And the bank was what was called the nifty 50 investor.