We recently came across the latest investor letter from Howard Marks of Oaktree Capital Management.* Marks is a high profile hedge fund manager focusing on the debt-side of the equation. In the piece he does a good job of explaining the credit cycle and its impact. He goes on to discuss the events of the past decade and where we stand relative to the credit cycle, including the effect of monetary easing on various asset classes.
The plan being we would pull some select quotes from the piece. The problem was there were too many choice quotes. So here is an excerpt with the recommendation that you click through and read the entire letter.
Today some assets are fairly priced and others are high, but there are no bargains like those of 2008. Capital and nerve can’t hold the answers in such an environment. We’re no longer in a high-return, low-risk market, especially in light of the inability to know how today’s many macro uncertainties will be resolved. Instead of capital and nerve, then, the indispensable elements are now risk control, selectivity, discernment, discipline and patience. (emphasis his)
Like we said it is worth a read not only for Marks’ assessment of the current environment but for a way to view the development of the credit cycle.
*Hat tip: Morgan_03