In his June Roundup of OakTree Letters, Howard Marks explained why the years ahead won’t be easy for investors. Here’s an excerpt from the roundup:
Marks: The overarching theme of my sea-change thinking is that, largely thanks to highly accommodative monetary policy, we went through unusually easy times in a number of important regards over a prolonged period, but that time is over.
There clearly isn’t much room for interest rate declines from today’s levels, and I don’t think short-term interest rates will be as low in the coming years as in the recent past. For these and other reasons, I believe the years ahead won’t be as easy.
But while my expectations may prove correct, there’s no evidence yet on which I can hang my hat. Why not? My answer is that the economy and markets are in the early stages of a transition that’s far from complete.
Asset prices are established through a tug-of-war between buyers who think prices will rise and sellers who think they’ll fall.
There’s been an active one over the last year or so as sentiment has waxed and waned regarding the outlook for inflation, recession, corporate profits, geopolitics, and especially a Fed pivot back to accommodation.
The tug-of-war is ongoing, and, as a result, the S&P 500 is within a half percent of where it was a year ago.
You can read the entire roundup here:
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