At Barron's
Billionaire Investor Howard Marks on Ownership vs. Debt
Nov 7, 2024
Howard Marks, co-chairman of Oaktree Capital Management, shares his extensive insights on investment. He explains the vital distinction between ownership and debt, especially in stocks and bonds. Marks delves into the changing landscape of high net worth investments, emphasizing the need for educating investors on alternatives. He discusses the historical decline in interest rates and warns of the anomaly it represents. Throughout, he highlights effective strategies for navigating today's high-interest environment, stressing informed decision-making.
23:05
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Quick takeaways
- Risk should be understood as the likelihood of negative outcomes rather than mere volatility measurements or historical data reliance.
- The shift from low interest rates signals a need for investors to adjust expectations and reconsider strategies in the current market environment.
Deep dives
Understanding Risk in Investment
Risk is often misconceived as a measurable aspect based on volatility or price fluctuations, but it fundamentally represents the likelihood of an undesirable outcome, especially the probability of losing money. Many investors rely on historical data to gauge risk, which can lead to misguided assessments since accurate probabilities for adverse results are not readily available. This distinction highlights the importance of recognizing that quantitative approaches may lack precision in predicting actual risk. Therefore, a better understanding of risk involves focusing on the potential for negative results rather than solely on numerical proxies.
