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하워드 막스의 2022년 12월 메모 'Sea Change'를 해설하며, 시장이 위험-수익 인식, 금리 하락기, 저수익에서 정상수익 국면으로 세 번의 큰 전환을 겪었다고 설명한다. 첫 번째 전환은 위험과 수익에 대한 인식이다. 과거 니프티50 같은 우량주도 과대평가되면 큰 손실이 났고, 가치평가를 무시해서는 안 된다는 교훈을 준다. 마이클 밀켄 이후 투자적격 미만(정크) 채권 투자가 주류가 됐고, 해당 시장은 1978년 약 20억 달러에서 현재 1조 달러 이상으로 커졌다. 두 번째 전환은 2009~2021년 금리가 사실상 0까지 떨어진 시기다. 낮은 금리가 자산가격을 밀어올려 주식 밸류에이션과 사모펀드 레버리지 매수를 확대했고, 이 시기 기대수익률은 역사적으로 가장 낮았다. 세 번째 전환은 저수익에서 정상수익으로의 복귀다. 2021년 이후 긴축, 고인플레, 경기침체 우려가 나타났고, 미국 하이일드 금리는 4.2%에서 약 8.5%로 올라 주식 수준의 기대수익을 제공하게 됐다. 막스는 금리와 인플레이션이 중기 투자를 지배할 것이라 보며, 연준의 피벗 가능성은 낮고 장기 금리 수준은 약 2~4%로 복귀할 가능성이 크다고 본다. 미국 경기침체 가능성이 높고 기업이익 감소와 신용 부도율 상승이 예상된다고 정리한다. 영상 진행자는 이 전환을 바탕으로 테슬라 콜옵션, NFT, 암호화폐 같은 복권형 투자보다 전통 시장의 신용상품에서 합리적인 장기수익을 추구하는 것이 낫다고 권한다. 영상 중간에는 패스워드 관리 서비스 스폰서 광고가 포함되어 있다.
다듬은 글
Howard marks is a legendary investor and co-founder of oak tree Capital Management whenever he publishes one of his memos to investors everybody pays attention and one of his most Avid readers is none other than Warren Buffett so in this video we look at his latest missive which is called sea change and it's about a radical change in markets which is going on right now we look at what he says and what it means to us as investors this video is sponsored by Nord pass which lets you securely manage your passwords across multiple platforms so let's look at Howard Marx's sea change in a bit more detail so here is Howard marks being interviewed on CNBC and in fact his background is really interesting he's worked in the investment industry for over 50 years so he's seen many crises come and go and I'd say his specialty is in the corporate bond space so this would be either distressed debt where a company's issued some debt run into financial trouble holes and then its debt becomes hugely discounted and what is very good at is selecting the companies which are going to make it out of that crisis he's also very good at macroeconomics and working out where we are in the credit cycle but also the economic cycle so I think he's very useful to listen to when it comes to finding turning points and what he's saying right now is that we are going through one of those turning points in fact it's only the third one he's witnessed of such a large size in his career so large in fact that he calls it a sea change which if you're not familiar with it is a complete transformation or a radical change of Direction and attitude and goals so now let's go through those three C changes and see what we can learn from them sea change 1 is to do with risk versus return Marx recounts how when he first started in the investment industry everybody thought that you should just go for super safe companies these were blue chips like IBM which were really sound and if you went for these stocks people thought you didn't have to look at valuation at all even if you were hugely overpaying for the stock you'd be fine because it was a great company right well not so much in fact the index which was known as the nifty 50 at the time suffered huge losses and that's because people have just overpaid massively for the stocks many of them were hugely overvalued and trading at price to earnings multiples of over 50 times such that during the sell-off in the years that followed 1972 you can see that these stocks went from hugely overvalued to hugely undervalued relative to the S P 500 so one of Howard Marx's early lessons was that it's not just about buying good companies it's buying them at the right price that matters and the way he describes it in the memo is to say that for these stocks everyone was sure there was no price too high but if you bought the nifty 50 when I started at the bank and held them until 1974 you were sitting on losses of more than 90 percent now if we turn to the bond space which is his specialty of the time financial advisors or fiduciaries as he describes them simply wouldn't let their customers buy sub-investment grade corporate bonds so if you're not familiar with that sub investment grade or junk bonds or any bond with a credit rating of double b or lower because at the time the way people thought was to say proper financial behavior meant that you had to avoid risk at all cost that all changed largely thanks to people such as Michael Milken in the mid-1970s what Milken said at the time was quite radical which is that it's okay to invest in non-investment grade bonds or all you have to do is ensure that the bond income sufficiently compensates you for the risk of default now Milken himself went through quite a few scandals and spent some time in prison but his message about buying sub-investment grade bonds has now become pretty mainstream and how it marks quickly specialized in sub-investment grade investment so he says in 1978 he started investing in these Securities junk bonds the bonds of perhaps America's riskiest public companies and I was making money steadily and safely now in 1978 it was a tiny asset class the entire high-yield Bond Universe was only worth about two billion dollars whereas nowadays it's worth over one trillion dollars in fact if you look at the latest Financial stability report this is from the Federal Reserve you can see that high yield and unrated corporate bonds are worth about 1.6 trillion dollars in the US but what's also interesting is a change in mindset at the time time and Mark says that young people joining the industry today would likely be shocked to learn that back then investors didn't think in Risk return terms now that's all we do Ergo a sea change and you've probably seen me use these risk return plots a great deal in my videos we just take them for granted now before we move on to see change two and three let me just quickly mention Nord pass which is a great way to securely 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now there's a lot of detail here but the general trend is one of rising rates between 1960 and 1980 but since the early 1980s what we've seen is a steady fall in interest rates which has carried on for 40 years only recently have we started to see interest rates increase again and in his memo Howard marks says that I consider it nearly impossible to overstate the influence of declining rates over the last four decades are the beautiful metaphor which he uses is one of these walkways now if you've been to an airport you know how it works your speed suddenly increases because it combines the walkway speed with your walking speed and similarly decreasing interest rates have given a boost to almost every asset class bonds equities and they've even spawned entirely new asset classes how does that work well for starters you get faster GDP growth when interest rates are lower because it stimulates the economy borrowing becomes cheaper so people can get credit and spend more and also companies can borrow more cheaply and expand their operations so this has also been great for profit growth for U.S companies and we have seen incredible returns over this falling interest rate period now it isn't all good news it's good news for borrowers but it comes at the cost of lower interest payments to lenders and Savers but primarily what's happened is that the cost of capital if you're a business has fallen quite dramatically over those years and that in turn has increased the profitability of U.S companies in the tech sector in particular we've seen spectacular growth and some of that growth has benefited hugely from lower interest rates the overall effect has been to raise asset prices because the price price of an asset is the value of its discounted cash flows and when interest rates fall the value of the company increases today we know that happens with bonds but it also happens with stocks as a result of that price to earnings multiples have risen so stocks have become more expensive and it's had a trickle-through effect into consumer Behavior because if people feel richer they'll spend more in the shops so the wealth effect is also benefited the overall economy but there's a downside to all of this which is that the prospective returns have reduced as valuations have increased it's a simple fact that if you buy stocks when they're very expensive it reduces your long-term return now if you're somebody that invests with leverage in other words you borrow money to invest this has been a bonanza period That's not just true of individual investors maybe they bought stocks on margin for example it's also true of private Equity where leverage buyouts are very common so if you buy company you can issue debt in the name of that company and there's a huge demand for high yield debt now as we saw but if interest rates are falling that leverage isn't necessarily a problem because the company can easily afford to service that debt so the whole asset class of private Equity essentially has had an incredible period for the last 40 years in fact Howard Mark says that the private Equity industry owes its existence to these falling interest rates now the period after the global financial crisis took these low interest rates and pushed them to the max essentially interest rates were zero over the period between 2009 and 2021 and this is the way Howard marks describes this period I notice these are all qualitative attributes these aren't quantitative but the fed's behavior was highly stimulative the recovery took a very long time after the GFC and over this period inflation was large dormant despite huge money printing from the third the economic Outlook was largely positive the likelihood of distress was minimal the mood was optimistic buyers were eager holders once you bought an asset were complacent that's true of equity and credit and the key worry of investors was fear of missing out during this huge rally risk aversion was essentially absent the credit window if you wanted credit was essentially wide open financing was plentiful interest rates were the lowest ever yield spreads were modest but the prospective returns were the lowest ever and that's because of these very high multiples if you look at price to earnings multiples for example but then in 2021 all of this came to an end a very abrupt end and that finally brings us to see change three low return to full return so almost all of those qualitative attributes from 2009 to 2021 have now been reversed the fed's gone from stimulative to tightening inflation's gone from dormant to a 40-year high the economic out that's gone from positive to recession and almost every other attribute has turned negative most important from the point of view of investors was that we went from fomo feeling left out from the incredible rally to being worried about investment losses and this is as Equity markets sold off sharply in the United States and elsewhere in the credit Market which is remember Howard Marx's specialty the credit window went from wide open to constrict it and financing went from plentiful to scarce now what's interesting is what he says about interest rates which went from the lowest ever to something which is just normal and I think it's easy to forget that interest rates of 5 percent at the long end of the curve are absolutely typical and a Fed policy rate which is above four percent is also not unusual what was really unusual was that period from 2009 to 2021 but the good news that comes with this is the prospective returns are now more than ample particularly in credit and Howard Marx bemoans the fact that during the period between 2009 and 2021 all of his slide decks said things like making money in a low return environment and that was particularly true of credit so if you look at the US high yield Market over the space of just six months we've gone from a yield of 4.2 percent which is the lowest it's been for decades it went all the way up above the long-term average which is around 8 percent to something like 8.5 percent currently now if you look at the return on Equity long term that's also around 8.5 or 9 so suddenly we have an asset class which can and compete with equity and as we saw as long as you're cogent of the risks I think high yield is definitely an interesting asset class and the way Howard marks describes it is to say that even after allowing for some defaults High your bonds are now likely to deliver equity-like returns and let's finish with Howard Marx's Outlook now I think it's fair to say that 2022 has been characterized by a series of bear Market rallies as Equity markets sold off people kept on buying the dip and making Equity rally to a slightly lower high and that's happened about three or four times now now the psychology of the people who buy into these dips is as follows according to Howard marks the usual trigger for buying is that people think inflation is now easing as a consequence people think that the FED will soon pivot from a restrictive policy that's a high interest rate back towards a stimulative policy rate in other words people think that interest rates will return to the low levels we've been used to if there is a recession people think that it'll be averted or it'll be modest and brief because the FED will come to the rescue and there's an overarching belief that the economy and markets will return to the Halcyon Days that we saw with zero interest rate policy now this by the debt mentality flies in the face of what the federal reserve's been saying and how it marks is quite negative about going back to zero interest rates but he says what will create a turning point for the fed and make it less aggressive with its rate increases is when it starts to see the federal funds rate becoming positive in real terms in other words if we subtract the core inflation rate that's the one the FED looks at from the federal funds rate which is the fed's policy rate until recently it's been deeply negative inflation was running at 10ish percent and the FED funds rate was well below that what we're seeing now is that it's not far from positive territory and that according to Howard marks is what it'll take for the FED to ease off its rate increases now the neutral rate the rate at which the federal reserve's policy is neither restrictive nor stimulative is roughly what we get when when we look at the fed's long run rate and we can get that from the summary of economic projections which is published by the Federal Open markets committee now you can see that neutral rate has come down over time so in 2013 it was above four percent and the fomc now gauges it to be around two and a half percent and their current policy is well above that so they're deliberately having a restrictive policy and they expect that that's going to go up to five percent by the end of next year but once inflation comes back under control Howard Marx's point is that we're not going to go back to zero that zero lower bound is gone what we'll go back to is this long run rate which is around two and a half percent in other words the Halcyon Days of free money are over so to summarize his Outlook Howard Marx thinks that inflation and rates are going to dominate investment for the medium term you can just look at Market reactions when inflation is is below expectations to see that that's true on the inflation Outlook he's very modest he doesn't try to produce a hard forecast what he does say is that inflation will remain higher until people's savings are spent and that brings Supply back into balance with demand a longer term Trend which he describes is a globalization is slowing for example the manufacturing of chips has been onshored back to the United States now that's going to be inflationary because instead of trying to Source goods and services from the cheapest source globally countries are instead choosing to go for a potentially more expensive local supplier as a consequence he thinks that's going to bump up inflation by around 0.6 percent if he thinks the FED pivot is very unlikely particularly when the FED funds rate is negative in real terms and he thinks a Return To Zero to two percent is very unlikely it's much more likely that we'll go back to that long run rate which is in the two percent to four percent range and overall the Outlook is just less Rosy a US recession is looking very likely and it looks like corporate profits earnings in other words are likely to fall and when it comes to credit it's very likely that if we get a recession we'll get a pickup in the default rate and that's going to be negative for the credit Market and for a credit fund manager that's great news because what it means is that investors can now get solid returns from credit instruments we saw that in the high yield Market the returns are now around 8.5 percent which is equity like and you don't have to take a great deal of risk to generate that return so instead of going for these lottery ticket Investments such as call options on Tesla or nfts or cryptocurrency you can now invest in conventional markets and still achieve a pretty good long-term return and that's a positive outcome so it's certainly not all negative when he's talking about this sea change there are definitely positives in his Outlook I can see what Warren Buffett means when he says that he always learns something new from Howard Marx's memos I certainly learned a lot from this one and I think it's always useful to look at what these really seasoned investors think and also their macro Outlook even if they're not right it'll certainly give you idea is about what's going on now don't forget our offer from Nord pass if you want to securely manage your passwords across multiple devices you can learn about how to do that and get our special discount code by clicking on the link in the description below and as always thank you for listening
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