(Revised caption)
The caption above is taken directly from this week’s
Barron’s (print). I couldn’t fit it all in, so here’s the exact / full quote from Barron’s:
“Today I am starting to behave aggressively. Everything we deal with is significantly cheaper than it was six to 12 months ago.”Barron’s provides no additional detail, so I linked a reference to Marks’ comment from
The Business Insider.
Title:
Legendary investor Howard Marks says to snap up cheap assets now, as "waiting for the bottom is a terrible idea" - Story by George Glover
(This post has been substantially revised to clear up any possible confusion)
Comments
Original/MarketWatch https://www.marketwatch.com/story/oaktrees-howard-marks-is-finding-bargains-i-am-starting-to-behave-aggressively-he-says-11656414153
"That brings us to our call of the day from a well known voice on Wall Street, Oaktree Capital's founder Howard Marks, who says now's the time for "bargain" hunting follow the market's selloff.
Marks is best known for his lengthy investment letters, and warnings. In early May he cautioned over bull-market excess, which seems as prescient as his similar year-earlier warning.
"Today I am starting to behave aggressively," he told the Financial Times in an interview. "Everything we deal in is significantly cheaper than it was six or 12 months ago."
The manager said now seems like a "reasonable time to start buying," noting lower prices for such assets as high-yield bonds, mortgage-backed securities and leveraged loans. Oaktree specializes in alternative investment strategies.
"Things may well go lower. In that case, I hope we'll have the will to buy more. It makes no sense to say: "I'm not going to buy until we reach bottom." We never know when we're at the bottom, and certainly I'm not saying we are today," Marks said."
Knowing his thoughts, however, might give me a bit more confidence to “risk up” slightly in the equity realm. As always, time horizon, tolerance, etc. weigh on any such decision.
Nobody knows
Hope rally upswings soon
Ust10, commodities, usdollars have retrieved last few wks
Whether trend continues we will see
Dipping small amount slowly
What is particularly ominous is how detached junk bonds have been from equities and Treasuries. Meaning while equities had a vicious bounce a few weeks ago, junk and bank loans just kept making new lows. While Treasuries are having a nice recovery presently still new lows in the risk on credits aka junk and and bank loans. Below is a link to Morgan Stanley’s outlook for junk. Sounds much more objective and reasoned than much of what I have read recently
https://www.zerohedge.com/markets/morgan-stanley-recession-arrives-will-we-see-surge-corporate-defaults
Edit: Obviously as with Treasuries recently, these markets can turn on a dime. And junk bonds are notorious for strong recoveries after bear declines. Coming off the 2008 bear market in
2009 junk had the greatest credit rally of all time rising over 50%.
Edit: Today’s action in junk bonds so far at least so far not as negative as it may appear. Although down, the junk ETFs are still trading well above Friday’s NAV meaning the open end may be up today.
There was no accompanying article in Barron’s. The interview they were referencing appears to have been published in the Financial Times. I’m unable to access it.
I never felt Marks was telling you and me to start buying risky assets. Running a large investment company is much different than levering your family’s life savings.
Thanks @Junkster for the comments. +1
I’ll try to draw from original sources in the future. My thoughts are that Marks doesn't customarily dish-out investment advice to others. He runs his own ship and discusses his own methods and philosophy. I think trying to take instruction from him would be difficult. Personally, I love reading and learning about investing. It’s not important to me whether or not “actionable advice” can be gleaned from a source. But, others differ in expectations.
https://www.oaktreecapital.com/
(Minimum investment for individuals is generally $100 Million.)
Oaktree Emerging Markets Equity Fund
OEQIX - $1M min.
OEQAX - $2.5K min with 4.75% load at Fidelity
Oaktree Diversified Income Fund (Interval Fund)
ODIDX - $25K min.
Vanguard Emerging Markets Select Stock Fund
VMMSX - $3K min.
Oaktree manages 25% of the assets (one of four managers).
Click this link for ODIDX info.
This is not a recommendation...
https://www.marketwatch.com/investing/fund/odidx
We have been nibbling little, bought more qqqm voo lcid xlf tna today
Friends buy lots tech asml tlsa goog Amazon upst soxl
Find it curious that in a businessinsider article date June7, he declares "we (Oaktree) are not market timers...(because).. we never sell to prepare for a market decline."
Well, OK, but if you happen to have material amounts of investable cash lying around before the market sells-off, and then you "buy low" (as he now recommends) that kind of makes one a "market timer". I just think Howard should not try to rhetorically run away from who he is -- from whom most well known investors are. Even Buffett has maintained unusually large amounts of cash underployed for years. He could have just deployed a lot of into collateral-backed S&P futures. Why didn't he? He was timing the market -- in his case by maintaining a mountain of dry powder for a crash he could reasonably predict would happen at some point.
That's not a criticism of the Sage, simply an observation that the captains of finance engage in the "market timing" which they suggest we little folks should not..
One more thing re Marks, for those who may be interested. His Oaktree does have a readily available public vehicle, ticker OCSL. It trades every day the stock market is open and pays a fat distribution:
https://www.oaktreespecialtylending.com/about/investment-strategy
My definition of market-timers is different. They are either all in or all out. Others vary on this. I call other styles strategic allocation (with static/fixed allocations, like in traditional 60-40) or tactical allocation (with variable allocations), etc.
WB has lot of direct cyclical business exposure due to many operating businesses that BRK has. His stock portfolio isn't the only thing he has to worry about. He does have excess cash, but it is not all excess.
He sold it to Brookfield Asset Management which is publicly traded BAM but has Billions of dollars in other assets, mostly real estate and infrastructure.
OCSL lists Marks as a co-chairman, but I am not sure if he really is involved day to day. It is hard to figure out if OCSL is a BSD or really is buying distressed debt etc.
I would tread carefully
What does BSD stand for?
Below is the company's description, from a source deemed to be reliable..
Oaktree Specialty Lending Corporation is a specialty finance company. The Company is providing customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. The Company provides flexible financing solutions, including first and second lien loans, unsecured and mezzanine loans, bonds, preferred equity and certain equity co-investments. The company acts as a business development company. The Company serves various industries, including application software, multi-sector holdings, data processing and outsourced services, pharmaceuticals, biotechnology, health care services, specialized finance, personal products, property and casualty insurance, industrial machinery, internet and direct marketing retail, construction and engineering. The Company’s investment advisor is Oaktree Capital Management, L.P.
Thanks for the tip. I like companies that can mint money out of thin air. Will have a look at this one,
The -10% YTD doesn’t trouble me. I gravitate to stuff that’s down. Suspect it’s holding up better than TRP or BlackRock.
The “B.S.” part should be obvious.
Not sure again how much Marks is really involved.