Legendary investor Howard Marks likes to analyze probabilities and believes the chances of healthy future returns on the equity markets are diminishing, he said in an interview with Bloomberg Television.
In Tuesday's interview, Marks equated buying financial assets with gambling like poker or blackjack, where the results are determined by "skill, luck and hidden information". He made a similar comparison in a quarterly report to investors.
"The market has been active for 11 years. It has quadrupled from the low. We are in the longest bull market, the longest expansion in history. Profits are not increasing, stock prices. We call this a liquidity-driven rally, and that means that people have to spend a lot of money. When you sum up these factors, it doesn't mean the market will go down tomorrow, but it does mean that, in my opinion, the opportunities are not good for investors. "
Marks argues that while there is a lot of relevant stock market information that investors do not have – such as developments in private companies between the reporting season – an experienced investor will be able to use the information that wise decisions are available to him.
"The superior investor has the skills to better assess sales and profit potential when we are in the cycle, the fairness of the price of an asset, and the margin of safety it offers," he wrote in the quarterly report released on Monday Letter.
Marks told Bloomberg TV that a wise assessment of stock prices and the state of the business cycle means "is probably not a good time to invest." He added that this should result in investors taking less risk than before.
"I don't know if we're going to go over the cliff tomorrow or go straight up to the sky, but the odds are less good for investors than three or five years ago," he said.
Against this backdrop, the Dow Jones Industrial Average
DJIA, + 0.43%
While the Nasdaq Composite posted a historic intraday record of over 29,000
COMP, + 0.13%
and the S & P 500
SPX, + 0.09%
Indices were not far from their own high perches.
However, all of these gains have made Marks a little nervous.
Marks is the co-chair and co-founder of Los Angeles-based Oaktree Capital Management, which manages more than $ 120 billion within Brookfield Asset Management
BAM, + 0.60%.
which acquired a share of more than 60% in Oaktree last year. According to Forbes, Marks has approximately $ 2.2 billion in net worth.