The Memo by Howard Marks

In celebration of Oaktree’s 30th anniversary on April 10, 2025, cofounders Howard Marks (Co-Chairman), Bruce Karsh (Co-Chairman and Chief Investment Officer), and Sheldon Stone (Principal and Co-Portfolio Manager, High Yield Bonds) held a fireside chat for employees where they shared stories about Oaktree’s origins and the firm’s journey over the last three decades. We’re excited to share an excerpt from their conversation.

In his latest memo, Howard discusses how the recent events surrounding tariffs can have a seismic but unpredictable impact on the global economy.  Seismic in that they reflect a fundamental undoing of longstanding norms, and unpredictable in that tariffs would bring untold second- and third-order consequences.  He emphasizes that there is no foreknowledge here, with forecasts even less likely to be accurate than usual.  Howard considers the response of the financial markets, highlighting the key question regards the appropriateness of the market reaction thus far: has it been just right, excessive, or inadequate?

You can read the memo here (https://www.oaktreecapital.com/insights/memo/nobody-knows-yet-again).

In his latest memo, Howard addresses a common question he’s been receiving over the last few months: “What about credit spreads?” He explains that the key question should be whether today’s spread is sufficient to offset the credit losses that’ll occur, rather than whether it’s historically narrow or not. Further, he emphasizes that spread widening is a short-term phenomenon and expresses his belief that the elevated yield offered by credit presents a better deal than equities, even at today’s spreads.

You can read the memo here (https://www.oaktreecapital.com/insights/memo/gimme-credit).

In the latest episode of Behind the Memo, Howard discusses his recent memo, On Bubble Watch, which revisits a subject he first wrote about 25 years ago. He delves into the investor psychology that underpins a market bubble, and assesses the danger of letting excitement and fear of missing out override risk aversion.

You can listen to or read the Memo here (https://www.oaktreecapital.com/insights/memo/on-bubble-watch).

On January 2, 2000, Howard Marks published his first memo to garner any reader response, bubble.com, calling attention to excesses he detected in the market for tech and internet stocks. His newest memo revisits the subject of bubbles. Howard expresses his view that they’re more a state of mind than a quantitative calculation and describes bubble thinking as irrational, often underlaid by a widespread belief that ‘‘this time is different.’’ Rather than opining on whether we’re in a bubble, Howard lists the signs he sees today and suggests how you might think about them . . . just as he did 25 years ago.

You can read the memo here (https://www.oaktreecapital.com/insights/memo/on-bubble-watch).

In his latest memo, Howard Marks outlines the need to base asset allocation decisions around an established risk target. He describes the fundamental differences between ownership and debt, as well as the importance of finding the combination of the two that gets an investor’s portfolio to the desired position on the risk/return continuum. Finally, he expands on the increased utility of debt investments in today’s portfolios.

You can read the memo here (https://www.oaktreecapital.com/docs/default-source/default-document-library/ruminating-on-asset-allocation.pdf?sfvrsn=67775566_2).

In his latest memo, Howard Marks discusses the economic facts of life, as he examines the workings of free markets and what happens when they’re tampered with. He considers what “price-gouging” actually means and how rents should be set. He ultimately argues that the laws of economics shouldn’t be overridden — even when it’s politically advantageous to do so – because of the loss to society.

You can read the memo here (https://www.oaktreecapital.com/docs/default-source/memos/shall-we-repeal-the-laws-of-economics.pdf?sfvrsn=ab205566_1).

In this special episode of Behind the Memo, Howard Marks is joined by Morgan Housel, the bestselling author and partner at the Collaborative Fund. They discuss ideas from Howard’s recent memo “The Impact of Debt,” which was inspired by Morgan’s article “How I Think About Debt.” They explore the relationship between leverage and longevity, the nature of risk, and the eternal relevance of Voltaire’s famous saying: “History doesn’t repeat itself. Man always does.”

You can listen to or read the Memo here (https://www.oaktreecapital.com/insights/memo-podcast/the-impact-of-debt).

In his latest memo, Howard Marks discusses the reasons for the recent market volatility using one of finance’s classic metaphors: Mr. Market, the figure Benjamin Graham created in 1949 to explain the erratic nature of financial markets. Howard pulls together some of his best writing on investor psychology from the past three decades, adds some of his favorite investing cartoons, and offers a few new observations. He suggests that Mr. Market’s lessons about the behavior of markets are as relevant today as they were 75 years ago.

You can read the memo here (https://cnt.oaktreecapital.com/docs/default-source/memos/mr-market-miscalculates.pdf?sfvrsn=ddfe5566_1).

In this episode of Behind the Memo, Howard Marks is joined by two special guests: Oaktree cofounder Bruce Karsh and the chess Grandmaster Maurice Ashley. In a wide-ranging conversation, they discuss Howard’s recent memo "The Indispensability of Risk" as well as the inspiration for that memo: Maurice’s Wall Street Journal article, "Chess Teaches the Power of Sacrifice." They consider the many parallels between chess and investing, including the lesson that not taking enough risk may be one of the riskiest strategies of all.

You can read the memo here (https://www.oaktreecapital.com/docs/default-source/memos/the-indispensability-of-risk.pdf?sfvrsn=52b45666_3).