Legendary investor Howard Marks from Oaktree Capital recently released his latest client memo. This time centering on COVID 19 and its effects on markets.

In it were some interesting views and food for thought. I thought I’d pass on to our friends and investors some tid bits that I found most interesting.

  1. He points out that the news, in the near term, is unlikely to be good. This we know to be true. It’s going to be awful to put it lightly. We’ve already seen the queues for Centerlink around the nation. This is the first wave of job losses with more to come.
  2. He confirms that the Fed will do everything it takes to get the economy moving again.
  3. Marks comments on the erratic market behaviour. We’ve witnessed huge swings in markets. Down one day and up the next, of which the magnitudes have been large. He argues that given these swings, optimism hasn’t been beaten out of the market quite yet and its only when optimism is no longer seen by the market, have we hit the bottom. I agree with his sentiment – we’re not there yet.
  4. All assets classes have felt the brunt of the market volatility. Even the ones which historically hold up in a crisis including gold.
  5. Whilst there is no way that we can forecast the bottom (even with a crystal ball), bargains can be found. But investing now is not without risk. To paraphrase Marks, “It maybe a good time to invest but it may prove not to be the best time”.

With these factors in mind, I’ve been hearing more of our investors recently asking when should they put more of their money to work in the financial markets. There is no right answer. We don’t know your personal circumstances and the risks are high to move now but there are some good opportunities out there that our Portfolio Managers are selectively taking advantage, should you wish to go along for the ride. Rest assured, it will be a ride.

Be well.

C

You can find Howard Marks memo here.