Howard Marks: “We’re in an asset bubble. It’s everything. It’s not particular to high-yield bonds or bonds or stocks. It’s real estate, it’s private equity, it’s everything...How do you make a decent return in a low return world? The answer is: it’s hard.” ft.com/content/d13e2c…
Howard Marks: “It’s hard for me to see this market rolling over as long as we are putting out good economic numbers . . . If you have four years of growth ahead, can the stock market really die?”
Marks sees 5 options: You can accept lower returns. You can position yourself defensively “in which case the return will probably be lower still”. You can go to cash, and accept a return of zero. Or you can add risk, “but is this really the time you want to increase your risk?”
Or you can say, I’m going to find special niches & special people who permit me to make a high return in a low return world. But then you have a) illiquidity cause most special things are illiquid & b) manager risk...if you try to find the genius & make a mistake, you get a dummy
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