Howard Marks Sees WeWork Implosion as Isolated Incident
Howard Marks (Trades, Portfolio) is the famous investor and Chairman of Oaktree Capital. On Dec. 6, he laid out his market views to CNBC. Marks is a measured observer of financial markets and an expert on market cycles.
Marks sees a Trump impeachment as no surprise. If the market is intelligent, it should not have an impact, as it should have priced this event in already. Marks does not believe Trump will be convicted in an impeachment, as all the evidence is already on the table and the expected number of votes don't support that outcome.
People switch from active to passive wealth management because active isn't working for them. We are in a rational market and things that make money for people will be compensated. Other things will not.
Marks views the WeWork debacle as a special case. The valuation of $47 billion was set by one buyer. It is not typical of a broader trend. In other words; the WeWork implosion is an isolated incident.
One role of the market is to serve as a vigilante. The fact that the private market rejected the WeWork valuation is a sign of a healthy market. It doesn't accept just any valuation cooked up in the private venture market.
Marks believes one should not have as much risk investing in stocks now as they would have six years ago. He doesn't know whether things will go down, but there are reasons to believe in less risk going forward compared to recent years.
Oaktree continues to invest but has been cautious for several years now.
Disclosure: no position
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This article first appeared on GuruFocus.
