Howard Marks is a legend, sure. And media outlets are gushing over his latest memo titled:
- Further Thoughts on Sea Change
Marks wrote his original "Sea Change" memo in December 2022 saying that, in a nutshell:
- the changes I described in Sea Change aren’t just usual cyclical fluctuations; rather, taken together, they represent a sweeping alteration of the investment environment, calling for significant capital reallocation.
His updated 'Further thoughts ...' memo recommends, again in a nutshell:
- credit securities are likely a much better risk-adjusted investment than equities at the moment
- it may be prudent for investors to reallocate their capital accordingly, particularly into high-yield bonds
Like I said, media outlets are gushing with praise. They love bears, and to be fair Mark's points are not unreasonable at all.
But I think the gushing is misplaced. Mark's published his updated memo on October 11, the but is (and it's a BIG BUT!) Mark's leads off with this:
- In Further Thoughts on Sea Change ... This memo was originally sent to Oaktree clients on May 30, 2023.
Bolding is mine. And let me say again, Mark's leads off with this, he is quite clear he originally published this 4 months ago.
Nowhere in the media gushing has this been mentioned, that it's a four-month-old view. That hasn't aged particularly well.
OK, Mark's views are not meant to be applied over a 4-month time horizon, but I do think its at least worth mentioning.
Anyway, each to his own.
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US 10-year yields have rocketed since end-May:
