Asks if concerns about private credit are warranted given current market worries.
Lisa
Howard Marks
Lending to companies is fundamentally sound, but problems arise when too many people compete for deals, bidding down interest rates and safety standards.
Asks if AI displacement and software obsolescence changes investment approach.
Lisa
Howard Marks
AI renders the world much less predictable than at any time in his lifetime, creating unprecedented uncertainty about societal impacts.
Asks about private credit transparency, leverage, covenants, and whether we're at cycle end.
Lisa
Howard Marks
Private credit has gone from special opportunity to equilibrium with public markets, with early success attracting competition that bids down returns.
Asks if retail investors in private credit understand illiquidity and mark-to-market issues.
Lisa
Howard Marks
Retail investors probably invested out of ignorance rather than understanding illiquidity risks, with problems overlooked in happy times.
Asks if private credit stress signals larger default cycle throughout credit markets.
Lisa
Howard Marks
Credit cycles are normal - easy borrowing leads to lowered standards, and we've had 17 years of good times with low defaults.
Asks if corporate debt market prices in elevated default cycle.
Lisa
Howard Marks
Yield spreads at low end of normal range suggest fear of elevated defaults not present and compensation not available.
Asks if it makes sense for Google, Microsoft, Amazon to sell 30-100 year debt when we can't predict next 5 years.
Lisa
Howard Marks
Google issuing 100-year bonds at 5.8% shows optimism and credulousness in ascendancy, making it hard to find excess returns.
Asks how to invest in AI companies given uncertainty.
Lisa
Howard Marks
If taking business model risk with AI, should be owner (stock) rather than lender to get paid for uncertainty.
Asks how AI transforms Oaktree's business.
Lisa
Howard Marks
AI is an aid for data marshaling but hasn't changed business model; humans still needed for intuition and judgment.
Asks if unpredictability requires more liquid assets.
Lisa
Howard Marks
No asset is so good it can't become overpriced, and few are so bad they can't become cheap enough to buy.
Asks if we're headed toward another financial crisis like 2008.
Lisa
Howard Marks
Who knows - market is voting machine in short run; not investing now believing crash isn't coming, will wait and see.
Asks if current approach is cautious.
Lisa
Howard Marks
Always cautious until time to be aggressive; lender should be 80% cautious since lending only has downside.
Asks what people are underestimating today.
Lisa
Howard Marks
Most people underestimate AI's impact, citing Block cutting 40% of workforce in one day due to AI efficiency.