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Howard Marks: This time it might be different

Howard Marks of Oakmark follows up on his much-publicized and discussed memo “Sea Change.” Here, Marks argues that interest rates in the Western world have fundamentally changed over the past 18 months compared to recent decades.

Det betyder at mange aktivklasser må revurderes og at afkast kan komme fra andre aktivklasser end for de seneste mange år. Here he argues that we as investors reduce our allocation towards stocks and debt and towards lending – in other words, investment in credit and bonds.

 

This is the first sea change I’ve remarked on and one of the few calls I’ve made for substantially increasing investment in credit. But the bottom line I keep going back to is that credit investors can access returns today that:

  • are highly competitive versus the historical returns on equities,
  • exceed many investors’ required returns or actuarial assumptions, and
  • are much less uncertain than equity returns.

Unless there are serious holes in my logic, I believe significant reallocation of capital toward credit is warranted.

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