Howard Marks on Markets, Tech Selloff and Private Credit
- Editor
- Feb 15
- 2 min read
In Brief: Former Bloomberg TV anchor John Dawson interviewed Oaktree Capital Co-Chairman Howard Marks at the Global Alts Miami 2025 conference. The wide-ranging discussion covered market psychology, interest rates, and alternative investments amid growing economic uncertainty.
Big Picture Drivers:
Psychology: Market reactions, like Nvidia's 16% drop affecting unrelated sectors, demonstrate how sentiment drives short-term market movements
Rates: The end of a 40-year declining interest rate environment marks a fundamental shift in investment landscape
Uncertainty: Political unpredictability and Fed policy decisions are creating an unusually opaque market environment
Key Topics Covered:
Tech Selloff: Marks used the Nvidia/Deepseek situation to illustrate how market psychology can create irrational ripple effects across sectors
Interest Rates: Discussion of the transition from ultra-low rates (2009-2021) to a new normal of higher, stable rates
Alternative Assets: Analysis of risk-return profiles in private credit and distressed debt, with particular focus on upcoming debt maturities in 2026-27
Key Insights:
Risk Assessment: The distribution of returns for lending strategies is narrow and predictable, while ownership assets offer wider potential outcomes
Market Evolution: Companies that thrived in the low-rate environment may struggle as their debt comes due in 2026-27 at higher rates
Investment Strategy: Focus on fundamental analysis rather than short-term market movements or Fed guidance
Private Credit: While the sector has seen massive growth, it likely doesn't pose systemic risk due to lower leverage and interconnectedness compared to banks in 2008
By The Numbers:
Historical Context: Interest rates dropped 2,000 basis points over 40 years, from 22.25% in 1980 to 2.25% in 2020
Current Market: High-yield bonds offering 7.3% returns versus Goldman Sachs' projection of 3% returns for S&P 500 over next decade
Scale: Oaktree Capital manages approximately $200 billion in alternative investments
Memorable Quotes:
"A bubble is not a period of rising prices, it's a period of temporary insanity" - Marks on market psychology
"It's only work if you'd rather be doing something else" - Marks quoting Bill Graham, explaining why he continues working at 78
"Success in investing doesn't come from buying good things but from buying things well" - Marks on investment philosophy
"We never know where we're going, but we sure as hell ought to know where we are" - Marks on market awareness
The Wrap: This conversation captured a pivotal moment in markets where traditional assumptions about returns and risk are being challenged. Marks' insights on the end of the easy-money era and the importance of fundamental investing over market timing resonated particularly given the current tech sector volatility and broader economic uncertainties.
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