Billionaire American investor Howard Marks, whose runs Oaktree Capital Management, sent a 6-page memo out to clients. He sums up his views:

howardmarks oaktree1.14Howard Marks, 74, Co-founder and co-chairman of Oaktree Capital ManagementWhat do we know? Not much other than the fact that asset prices are well down, asset holders' ability to hold coolly is evaporating, and motivated selling is picking up.

I'll sum up my views simply - since there's nothing sophisticated to say:

• “The bottom” is the day before the recovery begins. Thus it's absolutely impossible to know when the bottom has been reached ... ever. Oaktree explicitly rejects the notion of waiting for the bottom; we buy when we can access value cheap.

• Even though there's no way to say the bottom is at hand, the conditions that make bargains available certainly are materializing.

• Given the price drops and selling we've seen so far, I believe this is a good time to invest, although of course it may prove not to have been the best time.

• No one can argue that you should spend all your money today ... but equally, no one can argue that you shouldn't spend any.

• The more you want to garner potential gains and don't mind mark-to-market losses, the more you should invest here. On the other hand, the more you care about protecting against interim markdowns and are able to live with missing opportunities for profit, the less you should invest.

But is there really an argument for not investing at all? In my opinion, the fact that we're not necessarily at “the bottom” isn't such an argument.

March 19, 2020.

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