Howard Marks' Latest Memo: The Race Is On ~ market folly

Wednesday, December 4, 2013

Howard Marks' Latest Memo: The Race Is On

Oaktree Capital's Chairman Howard Marks has released his latest memo entitled "The Race Is On."

Marks' latest conclusion is that:

"Over the last 2-3 years, my motto for Oaktree has been consistent: “move forward, but with caution.” If feel the outlook is not so bad, and asset prices are not so high, that it’s time to apply maximum caution (or, as they said in The Godfather, “go to the mattresses”). But by the same token, the outlook is not so good, and asset prices are not so low, that we should be aggressive. That’s the reason for my middling stance.  

Having said that, however, there’s no doubt in my mind that the trend is in the direction of increased risk, and I see no reason to think that trend will be arrested anytime soon. Risk is likely to reach extreme levels someday – it always does – and great caution will be called for. Just not yet.

Here's my conclusion from The Race to the Bottom [Feb. 2007].  I'll let it stand - another case of "ditto."

... there's a race to the bottom going on, reflecting widespread reduction in the level of prudence on the part of investors and capital providers.  No one can prove at this point that those who participate will be punished, or that their long-run performance won't exceed that of the naysayers.  But that is the usual pattern."

Embedded below is Howard Marks' latest memo: "The Race Is On":

You can download a .pdf copy here.

For more from this hedge fund, we've highlighted some of Oaktree's recent portfolio activity.

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