Howard Marks

So the big banks weren't doing it.

Right.

And the big investment banks, which in those days were separate, the big underwriters.

And let's remember that in Moody's manual, it defined a B-rated bond as follows.

fails to possess the characteristics of a desirable investment.

And when I teach classes about this, I say to them, let's go down to the street.

I have a car there I don't need anymore, and you have money and you need a car.

But hopefully before you say whether you'll take it or not, hopefully you're going to ask me one question.

What is that question?

But the value you can't ask me because I'm a seller.

But you can ask me the price.

Hopefully before you say I'll take it or I won't take it, you know the price.

But, you know, in 1978, Moody said these bonds are not proper for investment regardless of price.

How can that be?

That's right.

That was one of my real epiphanies.

Around 81 or two, one of the first financial cable shows interviewed me, and the reporter said to me, how can you buy these bonds?

You know some of them are going to default.

And this is one of those times when, you know, you just get the answer.

It pops into your mind.