저자: HowardMarks · 외국인
요약 보기
미래는 복권과 같아 불확실하지만, 투자자 낙관·탐욕이 높은 고점에서는 위험하고 공포가 큰 저점에서 유리하다. 현재 시장은 내재가치보다 다소 높고 저수익·고위험 환경이며, 과열 신호(낙관, 위험 감수, 자본 과잉)가 관찰된다. 대응으로는 완전 투자하되 신중한 포트폴리오를 권고하며, 현금화나 공격적 베팅은 지양한다.
다듬은 글
Getting the odds on your side. And that's very important. We never know what the future holds. Remember what I said. You can't do anything which is short to be right or or or anything close to certainty. All you can do is get the odds of a favorable future on your side. So, the way I think of this, and this is described in the book at length, cuz I think it's important, is the future is like a lottery.
There's a bowl and it's full of lottery tickets. And the lottery tickets are the possible future outcome. And there are many of them. And it's because there are many possible future outcomes that the world is uncertain and investing is risky. And something, fate or whatever you want to call it, reaches into the bowl and pulls one ticket.
All the tickets in the bowl are the possible outcomes, and the one that is selected is the actual outcome. And we never know which one it's going to be. You reach in the bowl, you get a ticket. It could be any of the tickets in the bowl, and there are many. Now, does that mean that we can't know anything about the future?
That we can't deal intelligently with the future? And no, it doesn't mean that. What we can know is the mix, the character of the tickets in the bowl. Sometimes there are a lot of good tickets and not too many bad ones. And sometimes there are a lot of bad tickets and not too many good ones. So, you want to invest when the odds are in your favor.
When are the tickets in the bowl most favorable? When are the odds in your favor? When we're at a low. When are the tickets in the bowl unfavorable? When are the odds against you? When we're at a high. So, the question is, can we figure out the difference? So, when are the odds against you? When are there more losing tickets in the bowl than winners?
And the answer is, if you put all the things together that I've said so far, when there's a high level of investor optimism, when investors are spurred on by greed and excitement, and jealousy of other people's good results, when there have been good results in the market to date because that reassures people, when investors are happy with their gains or jealous of the gains of others, when there is unwise risk tolerance, and when there's eagerness to supply capital.
And when are these things seen? At cyclical highs. You can't see these things at lows. There's no optimism. There's no greed. There's no willingness to provide capital at lows. If If those things existed, we wouldn't be at a low. These things are the fear, the greed, and so forth. They're seen at highs.
And when are the odds in your favor? What causes there to be more winning tickets in the bowl than losers? The answer is when there's a lack of optimism, a high level of fear, poor recent market performance, widespread losses, excess of risk aversion, and reluctance to supply capital. And if you see these things, then clearly people are going to be upset and fearful, and as a result prices are going to be low.
And when are these things seen? At cyclical lows. Now, where are we now? Well, I thought you'd never ask. The The line moving through the chart is the fair value, the intrinsic value, the central value, the norm, the right value, whatever you want to call it. And then, of course, with market fluctuates around it, excesses and corrections.
So, as depicted here, I think that we are somewhat above the intrinsic value. It's hard to say exactly where we're where we are, but I think we're above intrinsic value. And uh you know, this I'll talk to a minute more uh about the where we are, but that's how I would sum up. Now, what's going to happen tomorrow?
Let's assume that I'm correct. Let's assume that that the market really is somewhat above the intrinsic value. What does that imply for performance tomorrow? By which I don't mean tomorrow tomorrow. I mean over the next year. And the answer is, who knows? The fact that something is overpriced does not mean that it's going to go down.
Because if you could if you look back at the last uh the if you look back at the last cycle, the last time we were at the same place, you can see that it went much higher. So, the fact that we're in a little bit overpriced doesn't mean we're not becoming more overpriced. These trends continue until they stop.
But, the question is, what's the where are the odds? And it is true that from this point in the cycle, we can have up or flat or down. All three are possible. Does that mean that they're equally possible? And the answer is no. We are more likely to have a decline than a gain. The odds are against us when the price is above the intrinsic value, but not to the point where we should have certainty.
Knowing where we stand in the cycle, and knowing the odds of success can deliver one of the greatest advantages in investors' world, but it's not perfect. So, now, if we if we have established, I have established to my satisfaction, I don't know about yours, the fact that we're a little bit overpriced today, now I'm going to talk about how one goes about investing in what I call an a low return world, which is where I think we are.
In looking at today's market conditions, and by the way, my These remarks do not apply just to Spain or just to Europe or just to the US or just to China or just to stocks or just to bonds. These are general comments about all the markets. But when I look out today, I see that the uncertainties are unusual in terms of their number and level.
That prospective returns in many asset classes are relatively low. That asset asset prices range from full to excessive. And risky behavior is common. The bottom line for me of these four things is that we are living in a low return, high risk world. But our money has to go someplace, and the rest of this presentation will be about how we figure that out.
Now, I look out at the environment of the last couple of years, and what do I see? We're in the 10th year of an economic recovery in the states, and the longest recovery in history ran 10 years. In fact, we're in the 11th month of the of the 10th year. So, by historic standards, we're getting very late in the cycle.
There is no rule that says because there's never been a a recovery in the states that went below beyond 10 years, this one can't either. There's no gate that comes down on the 10th anniversary and says the recovery has to stop, but what? What are the odds? What are the odds that the economic recovery continues for another 5 years?
Or what are the odds that it stops relatively soon, but certainly not today? We're in the longest bull market in history. Stocks have risen. You know, the the low was reached on March the 9th of '09. So, we're more than 10 years into the bull market. It's more than it's any other in history. There are a few super stocks called the FANGs, Facebook, Apple, Amazon, Netflix, Google, uh which are moving way, way, way up, getting everybody excited.
Some Some group of what I call super stocks is present in every bull market. There's very strong demand for corporate credit. I wrote a memo in September entitled too much money chasing too few deals. That has been the case, in my opinion, in corporate credit. There's money flowing into emerging market debt.
And in normal, cautious, risk averse times, the the money is not so eager to get into the emerging markets, but in in bullish, aggressive, excited times, it is. And by the way, back in I guess it's now 2 years, back in May of '17, uh the world was prepared to buy 100-year bonds of Argentina uh at 9%.
And you know, Argentina had uh I think five devaluations in the prior century. So, what's the probability that Argentina is going to get through the next century without a devaluation? Not not high. And yet people were willing to lend Argentina money for 100 years. That's a sign of optimism and aggressiveness on the part of most investors.
We have record financing for private equity, which is piling up money, which is a statement that if you if you buy corporate assets and you buy it with borrowed money, uh you'll make a lot. We have an onrush of capital for technology and venture investing, which of course requires great bullishness because it's all about big gains in the future.
Everybody knows that eight or nine out of every 10 venture investments fail, but they're seduced by the opportunity to make 100 times your money in Uber or Lyft, and so the money is now flowing in. And finally, investment in cryptocurrencies. And I see that Bitcoin has now doubled in the last few months.
Of course, it's it's down uh about almost 2/3 from the high at the end of '17, but there's excitement about crypto. So, you take all these things together, and by the way, so I think one of the most important words that I'd like to teach you today in English is the word inference. The important thing is not what happened.
These are the events that have occurred or are occurring. The important thing is, what do they mean? What should you conclude? What message should you take away from the events that are occurring? And in my opinion, when you see these things, what it tells me, you look at that list, it says to me, the things that are governing the market today are optimism, trust in the future, faith in investing and investors, a low level of skepticism, risk tolerance, not risk aversion.
The question is, do you agree that these are the proper inferences? And if they are, what do they tell you about the market? What they tell me is that this is not a positive climate for prospective returns and safety. In this kind of climate, safety and returns are not made easy, they're made hard to get.
Now, let's talk about why prospective returns are low. Uh we mentioned risk aversion. And I said as I said to you, it's an extremely important concept. It's not one that most people are familiar with, but I was very fortunate it back in the middle '60s to go to graduate school at University of Chicago where they were teaching a new investment theory.
And what it taught was that there's a line like this that connects return and risk. And as you can see, the line slopes up and to the right. And what that means is that as as as perceived risk increases, perceived return increases. That's where people get this belief that the more risk they take, the more money they make.
But it can't be that easy because if it was true that you could depend on risky assets to make you a lot of money, then they wouldn't be risky. So, there must be something wrong with that expectation. No, what that means is that assets that are perceived as being risky have to be perceived as offering higher returns or else nobody will make those investments, but they don't have to deliver.
That and you have to understand the difference between expectations and and events. But anyway, there is an expectation that riskier assets will produce higher returns and that is embodied in the line that goes up and to the right. And it starts with something called the risk-free rate uh here, which is the return on the safest investments, which is 30-day Treasury bills, and it proceeds from there up and to the right.
And all asset classes fall into line. So, if you go back a reasonable period of time, it looked like this. So, you have the risk-free rate, then you have Treasuries, then you have which are a little riskier, then you have high-grade bonds, still riskier, quality stocks, aggressive stocks, high-yield bonds, private equity, and the line slopes up and to the right as it should.
Every investment which is a little riskier should appear to offer a little more return or else the market is not rational. That's the way it was. I'm going to say, you know, 10 or 20 years ago. And that's the way it should be. The The issue is that when we got into the global financial crisis, the central banks of the world uh were afraid about the economic future.
And so, they lowered the risk-free rate. And when they lowered the risk-free rate, everything else fell with it. The return on Treasuries and high-grades and quality stocks and high-yield bonds and private equity also declined. That's what we call a parallel shift. The line fell and throughout. And so, the returns on other assets fell into line with the decreased return on uh the risk-free rate.
And that's approximately where we are today. It would not make any sense if the risk-free rate is very low. And of course, in in Europe, there's trillions of dollars of uh bonds that have negative yields. It wouldn't be wouldn't make any sense for you know, the risk-free rate to be low or negative and other classes to be safely high.
So, everything falls in line. And it So, because the rates are low, let Can we back up one? Yeah. You can see that the people who used to invest here and get good returns with safety, now have to go out here to high-risk behavior to try to get the similar return. And so, investors in many markets have taken on increased risk to try to get the returns they want.
Too much money is chasing the limited opportunities in risk markets, and the race to the bottom is underway. And as I said before, the seven worst words in the world are out there today, in my opinion, too much money chasing too few deals. If that's true, you want to know about it. Maybe you don't want to participate in that giveaway.
Now, as investment managers, as we as your bank, what can we do for you? Everything we do falls under one of two headings. Asset selection or cycle positioning. Asset selection means trying to hold more of the things that will do well and less of the things that will do less well. And cycle positioning means trying to have more money invested more aggressively when the odds are in your favor and less money invested aggressively when the odds are against you.
It doesn't mean in out. People always say to me, is it the time to get in or get out? Is it the time to buy or sell? And the answer is it's not black or white. It's more aggressive sometimes and more defensive at other times. And some people say, well, yeah, there is no better or worse time to be aggressive or defensive.
And I think that that's selling short because if you say that, then you're giving up on the second of these features. And I think the second pursuit can be very valuable. Now, I believe that there are times for aggressiveness and there are times for defensiveness. When prices are low, pessimism is widespread, and investors are fleeing from risk, most investors, that's the time you should become aggressive or we.
But when prices are high and enthusiasm is every place and investors are risk tolerant, that's the time to be defensive. I think it's very easy to see that. It's not so easy to do. Not so easy to understand. It's not so easy to take the action, but that's the very simple formula. So, if you agree, then the question is, which time is this?
Are investments rich or cheap? Where do we stand in the market cycle? How should we be positioned versus our normal risk posture? Is today, if you have a certain normal risk attitude, today should you be more aggressive or more defensive? It's a very simple question. Should we emphasize offense or defense?
Should we worry more about losing money or worry more about missing opportunity? Today, will there be a reward for money and nerve to invest or will there be reward for conservatism and risk control? And our mantra today and recently, last few years, has been move forward but with caution. Things are not so bad that we have to be terrified and not move forward, not invest.
We are essentially fully invested today, but with caution, which means that our portfolio, we're always cautious at Oaktree, our portfolio is even more cautious than usual today. We are fully invested with a cautious portfolio. And I think it's a good formula for success. Now, you should say, well, why not no investments?
Well, the answer is we can't be sure that the future is bad. Why not fully invested? Well, we can't be sure that it's good. And the evidence to me is that it's not quite good. So, fully invested but with caution. So, here's the last slide. I As I said to you, I think we're in a low-return world. And if so, the options are limited.
You can invest as you always had and expect your historic returns, but the truth is they're not out there because nothing yields what it used to yield. To to Used to be a bond yield five, today it may yield negative. So, you can't get your historic returns by doing the things that you used to do be do historically.
So, maybe number two. Number two says you should invest as you always have and expect that the that the returns will be lower. And that is mature. That's grown-up. It's not fun, but it's the truth. Number three, you can reduce the risk in your portfolio to prepare for bad times and accept a return which is even lower still.
And that is cautious. Number four, you can go to cash at at in your case a negative return and wait for a buying opportunity. The trouble is it's it's tough to wait for a few years. And if the market does well as it has in our country in recent years, you'll have a lot of regret. Or you can go the other way.
You can do five. You can increase your risk in pursuit of high returns in the belief that you'll get higher returns if you do riskier things. Or number six, you can put money into what I call special niches and invest with what I hope are special people in the hope that you can do better. Now, in my opinion, none of these is entirely satisfactory.
They all have problems. There's only one observation, however. This is all the choices there are. When you're living in a high-risk, low-return world, there's no easy way to make a satisfactory return. So, you really have to choose between these. And by the way, that means without number one cuz number one doesn't exist.
So, to me, the right things to for today are a mix of two, three, and six. I wouldn't do four. I don't think it's appropriate to go to cash. The The outlook is not so bad and the asset prices are not so high that you should go to cash. And you shouldn't, in my opinion, certainly do number five. I don't think this There's any point today in being aggressive.
So, some combination, in my opinion, of two, three, and six. And that's what I wanted to tell you today at the request of uh the bank.
Comments 0