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WABAC said:Is he talking about his Sea Change memo?
Is he talking about his Sea Change memo?
In a nutshell, Marks looks for whatever appears “cheap” at the moment. (I affectionately term this practice “dumpster diving”).
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“We’ve gone from the low-return world of 2009-21 to a full-return world, and it may become more so in the near term. Investors can now potentially get solid returns from credit instruments, meaning they no longer have to rely as heavily on riskier investments to achieve their overall return targets. Lenders and bargain hunters face much better prospects in this changed environment than they did in 2009-21. And importantly, if you grant that the environment is and may continue to be very different from what it was over the last 13 years – and most of the last 40 years – it should follow that the investment strategies that worked best over those periods may not be the ones that outperform in the years ahead. That’s the sea change I’m talking about.”
Love Mark’s thinking. @Crash’s 15-20 minute video is well worth the time. In a nutshell, Marks looks for whatever appears “cheap” at the moment. (I affectionately term this practice “dumpster diving”).
I thought the memo kind of boring. Blame that on my short attention span. But generally I’m one who comprehends things better verbally than in writing. I treasure Mark’s book “The Most Important Thing” - the audible version of which I’ve listened to a number of times.
Back to basics, Mark’s “sea change” rests on his perception we’ve moved from an environment of ultra-low interest rates to a more moderate range of 3-4% on investment grade paper. The ramifications of this are too widespread to cover here. But, seemingly, investors will be inclined to to shun riskier assets now that decent returns are available with safer ones.
Not much new here. Working on a new sleeve in the allocation model which will include a 5-10% allocation called “La-La Land” - essentially high volatility funds like GUG (that I own) which employ options strategies, tons of leverage and charge exorbitant fees.
As most know, Oaktree caters more to larger more affluent investors. Probably takes more risks than most retail investors should (or want to) endure. To me Marks makes eminent sense, but only if you have patience and a long enough time horizon. I confess I no longer have that long a time horizon. But still can learn from his teachings.