20VC: Howard Marks on How COVID-19 Impacts Our Economy, Liquidity and National Debt, Why The Theory of Falling Knives and Market Bottoms is Wrong & Why The Best Investors Are Fundamentally Unemotional
Howard Marks is the Co-Founder and Co-Chairman of Oaktree Capital Management, a leading investment firm with more than $120 billion in assets. Prior to founding Oaktree, Howard spent 10 years at The TCW Group, where he was responsible for investments in distressed debt, high yield bonds, and convertible securities. Previously, Howard was with Citicorp for 16 years, where he served as Vice President and senior portfolio manager in charge of convertible and high yield securities. Howard has also written two books, most recently Mastering the Market Cycle: Getting the Odds on Your Side, and it was Warren Buffet who said, “When I see memos from Howard Marks in my mail, they’re the first thing I open and read. I always learn something.”
In Today’s Episode You Will Learn:
1.) How Howard first made his way into the world of finance over 50 years ago? How did not getting an investment banking job change the course of Howard’s life?
2.) What does Howard believe is the fundamental economic crisis occurring today? How does Howard expect liquidity availability to change over the next few years? What analogies of prior downturns and recessions can we look to learn from? How does this downturn differ and align to prior recessions and downturns? What policies would Howard like to see governments enact to prevent the worst-case scenario?
3.) In conditions of such uncertainty, how does Howard think about how to manage and move forward with such volatility? What are Howard’s frameworks and mechanisms to analyse crises events like this? Taking the analysis one level further, how bad does Howard believe this could get? If short of The Great Depression, are there scenarios that could lead there? What are the leading signals?
4.) Being proactive, how does today’s situation change the mentality and activity at Oaktree? Why does Howard not agree with the notion of “the falling knife”? How does Howard think about market bottoms? How does Howard determine the right insertion point? Why does Howard believe the best investors are unemotional? How can one manage the psychology of catching a falling knife that falls further?
5.) What advice would Howard give to the may millions of working professionals today that have never seen a recession in their professional career? What makes Howard the most nervous when he looks at and assess the landscape today? What does Howard believe is the biggest misconception people believe with regards to the current economic crisis?
Items Mentioned In Today’s Show:
Howard’s Fave Book: Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets