Howard Marks is a successful investor who cofounded Oaktree Capital in 1995. As of today, Oaktree has $170 billion in assets under management, over 1,000 employees, and offices worldwide.  

During a recent interview at the University of Chicago, Howard shared his interesting thoughts about a trait he believes leads to investing success: second-level thinking. He defines it as thinking deeply, differently than the herd, and better than others. Second-level thinking is about insights, he said.

I believe second-level thinking is a key to outsize success in general, not just in investing. You can’t do what everyone else is doing and achieve outsize success. Second-level thinking means taking in information and forming your own conclusions instead of easily agreeing with others. Part of that process is connecting the dots between seemingly unrelated information to produce insights others haven’t had. Those unique insights lead to conclusions and actions that differ from those of the masses. The result is outsize outcomes.

Second-level thinking is important, as it’s the intellectual process that leads to unique insights.