Via Seabreeze Partners’ Doug Kass,
In late July, Oaktree Capital Management co-chairman Howard Marks issued several market warnings in “There They Go Again … Again,” which I extensively highlighted in my Diary.
“There is plenty more food for thought in this must-read 22 pages of observations. Howard closes his musings with this advice:
“If you refuse to fall into line in carefree markets like today’s, it’s likely that, for a while, you’ll (a) lag in terms of return and (b) look like an old fogey. But neither of those is much of a price to pay if it means keeping your head (and capital) when others eventually lose theirs. In my experience, times of laxness have always been followed eventually by corrections in which penalties are imposed.
It may not happen this time, but I’ll take that risk. In the meantime, Oaktree and its people will continue to apply the standards that have served us so well over the last [thirty] years.”
From my perch, greed reigns today.
As Howard relates, investors make the most — and safest — money when they do things that other people don’t want to do. But when most investors are unworried and taking unusually high risks, asset prices are typically elevated, risk premiums are low and markets are risky.
It’s what happens when there is too much money and too little fear.”
–Kass Diary, “There They Go Again … Again,” July 27, 2017
In that July memo Howard made these principal points in evaluating current conditions:
* The market uncertainties are unusual in terms of number, scale and insolubility. * In the vast majority of asset sectors, prospective returns are about the lowest they have ever been.
This post was published at Zero Hedge on Sep 8, 2017.