Howard Marks: Investment risk resides most where it is least perceived and vice versa

Howard Marks of Oacktree Capital in a new memo to clients writes, "When everyone believes something is risky, their unwillingness to buy usually reduces its price to the point where it is not risky at all. Broadly negative opinion can make it the least risky thing, since all optimism has been driven out of price. As demonstrated by the experience of Nifty Fifty investors, when everyone believes something embodies no risk, they usually bid it up to the point where it's enormously risky. No risk is feared, and thus no reward for risk bearing - no "risk premium" - is demanded or provided. That can make the thing that's most esteemed the riskiest." To read more from Marks click the (VIEW LINK)