The Memo by Howard Marks The Insight: Conversations - Oaktree Conference 2024 Edition
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Jul 2, 2024 
Guest
Howard Marks
Guest
Oaktree’s Opportunistic Credit team
Guest
members of Oaktree’s Global Credit team
Oaktree co-chairman Howard Marks and experts from Oaktree's Global Credit and Opportunistic Credit teams discuss the sea change in financial markets, impacts of declining interest rates, navigating the changing investment landscape in high yield bonds and senior loans, and the distinctions of rescue loans vs direct lending in a special edition podcast episode.
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Sea Change Thesis Origins
- Howard Marks discusses his "sea change" thesis, inspired by a trip to the Middle East with Bruce Karsh.
- They realized the investment environment had fundamentally shifted due to historically low interest rates.
Impact of Declining Rates
- Declining interest rates create a tailwind for investors, boosting profits and asset values, but also encouraging excessive risk-taking.
- Marks likens this to a "moving walkway" at the airport, creating a false sense of progress.
Post-1980 Investor Mindset
- Investors who began after 1980 experienced primarily declining rates, leading to a skewed perception of normalcy.
- This resulted in over-reliance on leverage and a disregard for potential rate increases.