Time to play defence, says Howard Marks

Singapore

CELEBRITY investor Howard Marks has advised punters to be "more defensive than usual" in their picks, as the global bull run tapers off.

"We should worry more about losing money than about not missing out," the septuagenarian bargain hunter and co-chairman of Oaktree Capital Management said on Monday.

Mr Marks, who is based in Los Angeles, was in town for the Bank of Singapore's Global Outlook 2019 event at Raffles City Convention Centre.

Investors' risk tolerance is fading, after a stretch of low interest rates whetted their appetites and moved them up the risk curve, Mr Marks said.

He pointed to punters' froth over Bitcoin, emerging market debt and FAANG stocks (technology darlings Facebook, Apple, Amazon, Netflix and Google parent Alphabet) as indicators of some market optimism - "but I don't think to a great extent".

In the wake of recent equities sell-offs, Mr Marks told his audience of some 1,200 investors that the US-China trade war was just one factor behind the year-end slump. "Things had gone so well for so long, we were getting good for a downturn," he said.

He noted that the fourth-quarter equities pull-back could have corrected high, risky valuations, and "it's better to invest today than it was on Oct 1". Nonetheless, he warned that "you should be more defensive than usual, not more aggressive".

"Things are beginning to go the way of the distressed investor or the value investor; things are not as expensive as they were six months ago," Mr Marks said, citing the impact of Fed rate hikes on companies' debt.

"The interest rates are biased towards the upside and will be going higher. It makes life tougher for debtors and creates investment opportunities away from the stock market."