By Dan Ferris in Extreme Value:

In his latest letter to investors, Oaktree Capital Management's Howard Marks offered some advice I felt obliged to pass on to you:

Investors must never again abdicate the essential task of assessing risk. It's their number-one job to perform thorough, skeptical analysis.

Putting Marks' words into my own, I came up with the following three rules:

Obsess about risk, not return. Marks writes, "Risk is something every investor should think about constantly."

Be skeptical. Don't buy anything unless the price and the risk are low enough.

Do your homework. If you don't do your own homework on every investment you put your hard-earned money into, you're juggling dynamite sticks over a bonfire.

Marks said the word "risk" has become too commonplace. We should consider replacing it with the word "danger." Good idea. Keeping your money away from danger is your No. 1 job as an investor. You can't have investment success unless you consistently avoid financial danger.

Crux note: Dan Ferris is the editor of Extreme Value. For serious long-term investors, it's one of the most useful advisories you can buy for any price. Learn more about Extreme Value here...

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