Legendary investor Howard Marks told the Financial Times that investors should start loading up on cheap stocks rather than trying to time the bottom.
Heidi Gutman/CNBC/NBCU Photo Bank/NBCUniversal/Getty Images
Investors should buy the dip in markets right now, Howard Marks told the Financial Times.
But the Oaktree Capital Management chief warned investors not to try to time the bottom.
“Everything we deal in is significantly cheaper than it was six or 12 months ago,” Marks said.
Investors should load up on “bargain” stocks and bonds right now rather than waiting to exactly time the market bottom, according to Howard Marks.
The legendary investor said that this year’s sell-off has made high-quality assets significantly undervalued — and that he himself is now buying the dip.
“Today I am starting to behave aggressively,” the founder and co-chair of Oaktree Capital Management told the Financial Times in an interview published Sunday. “Everything we deal in is significantly cheaper than it was six or 12 months ago.”
Marks invests in a range of assets including high-yield bonds, mortgage-backed securities, and a small number of stocks. He founded Oaktree in 1995 with a focus on investing in quality companies with high levels of debt.
Stocks and bonds have both suffered this year as investors fret about rising interest rates causing a recession. The S&P 500 and Nasdaq are down 18.1% and 26.3% year-to-date, while US 10-year Treasury yields have risen over 150 basis points to 3.17%.
It’s tempting for investors to try to time the exact market bottom, but Marks warned against this strategy. He told the FT that Oaktree’s value investing strategy was not based on macroeconomic signals or trying to time the market.
“Waiting for the bottom is a terrible idea,” Marks said. He added that assets could become cheaper from their current valuations, “in which case we’ll buy more”.
Marks — whose Oaktree investment memos are read by legendary market gurus including Warren Buffett — also weighed in on cryptocurrencies. That asset class is also suffering from a broad and deep sell-off this year, with bitcoin sliding 54.7% and ethereum tumbling 67.1%.
Like Buffett and his business partner Charlie Munger, Marks said he doesn’t invest in crypto because assets like bitcoin don’t produce any cashflow.
“Assets that don’t have cash flow don’t have intrinsic value,” he said. ”A good part of the value has to be conceptual and future-oriented.”