A sea change: Howard Marks on the end of easy money

THE financial markets are experiencing a sea change marking the end of a long period of accommodative central bank monetary policy, and there is little hope of ultra-low interest rates returning anytime soon, legendary investor Howard Marks explained in a virtual conversation with Margaret Franklin, president and chief executive officer of CFA Institute, at the Asset and Risk Allocation Conference in May 2023. Marks believes this represents the beginning of a new era in the financial markets that will force many investors to rethink how they approach investing, use different risk/reward assumptions and adjust to more difficult conditions that many practitioners are seeing for the first time in their careers.

“I’m not saying interest rates are going to go back up. I just think they’re done coming down,” Marks said. “One of the basic tenets of my thesis is that in the next five to 10 years, interest rates will not be constantly coming down or constantly ultra-low. And if that’s true, I think we’re in a different environment, and that’s a sea change.”

As co-chair and co-founder of Oaktree Capital Management, an investment firm with more than US$170 billion in assets under management (AUM), Marks has earned a reputation as one of the world’s most prominent value investors.