Howard Marks

The lender has no upside.

You make a 9% loan, all you're gonna get is 9% no matter how well the thing does.

You certainly shouldn't do that in activities that have a high probability of not paying off at all because then you have unlimited downside and limited upside.

That's absolutely the wrong combination.

Yes, exactly, because the point is that if you go into some startup which has, let's say, a small possibility of a raging success,

you wouldn't lend to it because you have a high probability of losing all your money and no probability of participating in the success.

That's a bad trade.

Well, yeah.

Well, I think that it's, you know, Buffett says, the less prudence with which others conduct our affairs, the greater the prudence with which we must conduct our own affairs.

So when other people are acting imprudently and mindlessly and carefree, we should be worried.

When other people are showing appropriate concern, that's a positive sign that the

Some of the greatest moments that I've seen, some of the greatest signals of danger in the markets have been when people were not applying any prudence at all, like in 06, for example.

So if people are reacting harshly to aggressive, possibly risk-indicating activities, yes, that's a healthy sign.

And this market is...

It seems healthier than the 2000 market to me.

Well, I was thinking about this when I was waiting to see you today.

Most of the people listening to this program, including me and you, are interested in the free markets.

And we think free markets just set the prices of things.

And the Fed manipulations are a form of price controls.

They control the price of money.