Where Investor Howard Marks Looks For Signs Of Market Trouble

Kevin Mwanza
Written by Kevin Mwanza
Market trouble
The co-chairman of a distressed debt investor believes that too “too much optimism” and tolerance to risk could lead to market trouble.

Howard Marks, co-chairman of distressed debt investor Oaktree Capital, says that he gets worried that the economy could be tanking when people start clamoring to get into risky assets.

In an interview with Bloomberg, Marks said “too much optimism” and tolerance to risk was not good and a clear sign that things were headed for a collapse.

Signs of market trouble

“When investors fall over themselves to supply money for risky ventures, that’s the kind of thing one should look for,” Marks said.

Marks said that to survive a challenging market, investors have to get the odds on their side by understanding where the cycle is and acting accordingly. This can be done by balancing the risk of losing money and the risk of missing opportunities.

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“They always say that nothing is going to get very cheap, because there are so many buyers and so much money,” he said.

“(But) rather than rush into the burning building, back away.”