During his recent interview with BQ Prime, Howard Marks explained why investors should consider lower risk investments in credit or debt. Here’s an excerpt from the interview:
Marks: Most of my clients need seven percent returns, their pension funds or endowments, or insurance companies, or something like that, and they need seven.
They can’t make much use of things that yield four with no upside. So it was very difficult for them, difficult for us.
Today those bonds yield eight. Now they have a real use in our portfolios. So that’s just an example.
I think that if you can get returns, the returns you need with a heavy allocation to credit or debt you don’t have to go into risky strategies for those things.
People had to do that in the teens because they used to say TINA, there is no alternative to stocks. I used to call those people ‘handcuffed volunteers’. They were going into risky Investments not because they wanted to but because they had to to get the returns they needed.
Now they don’t have to do it to get the returns they need. So I think this is going to change. You’ll probably have less money in equities and less money in alternatives such as private equity.
You can watch the entire discussion here:
For all the latest news and podcasts, join our free newsletter here.
Don’t forget to check out our FREE Large Cap 1000 – Stock Screener, here at The Acquirer’s Multiple:
