Howard Marks

And it is the fact that high valuations are being applied to more average companies that I think is more alarming than the fact that exceptional valuations are being applied to exceptional companies.

Well, you know, as John Stuart Mill said in, I believe it was 1859, you have to know all the sides of the story to understand whether your side holds water.

And I cite the bull case there for why the market isn't overvalued.

I think that's part of the job.

But as you say, my conclusion is that, as I said before, I'm not raising an alarm bell, but I do think it's time for some caution.

you know this is a little bit of what we call on wall street talking your own book uh but you know what what uh what i do what what oak tree does is is mostly something called credit buying the debts of of companies um and debt is inherently

more defensive than equities.

And you have a promise of payment.

You know what your return will be if they pay interest in principal as promised, and most of the time they do.

So I just think that this is a time to put a little more defense into your portfolio, and investing in credit as opposed to equities is one way to do it.

Well, first of all, Lisa, what you see.

Debt or fixed income or bonds or what I call credit, all different words for the same thing, is different in nature from equities because you do have a promised contractual rate of return.

You can say that the promised contractual return isn't as high as it has been historically, or the increment that it provides over treasuries to compensate for the credit risk isn't as high as it has been historically.

But you can't say that they don't promise 7.5%.

And a promise of 7.5%, you're gonna pay for some fees, you're once in a while gonna encounter a credit loss.

I think it's highly likely to provide, let's say a return in the sixes over the next 10 years.

A contractual guarantee approaching something in the sixes over the next 10 years is,

I think, more defensive than being in the stock market at these elevated valuations.

That's the point.

And, you know, you just said tighter than they have been since 98.