It was a warm afternoon in Midtown Manhattan when the Financial Times author had lunch with the investing legend, Howard Marks. In a time when the US economy is going through the mare’s nest with skyrocketing inflation and booming interest rates, not to mention the anticipated plight of the coming recession, the duo chatted about the status quo and the future of financial markets.
Howard suggested that the famous equity-debt correlation has come into play. The stock prices fell, and bonds regained their attractiveness. Risk aversion gained pace over FOMO(fear of missing out) and mindless speculation. He expressed his faith in the performance of securities like high-yield bonds, leveraged loans and mortgage-backed securities in the coming years. In fact, these debt instruments were highly responsible in the thriving success of his company, Oaktree Capital Management.
“The short run is by the least important thing’, Marks said. It does not make sense to predict the future of interest rates and how the companies will perform. In the end, what matters the most is the long run. After all, that’s when companies we invest in will become more valuable, and the corporates we lend to will pay back their debts.
Howard Stanley Marks is an American investor, writer and co-founder of Oaktree Capital Management. He is a contrarian who likes to break the stereotypes in the world of finance and provide the market with a fresh perspective.