Howard Marks on leverage
From Howard Marks - Reflections on Oaktree Conference 2026 - Oaktree Capital · · Gilberto Santos
“I put out a memo called leverage plus volatility equals dynamite. People like leverage because leverage magnifies financial results. And in Las Vegas, the pit boss says, 'The more you bet, the more you win when you win.' You can't argue with that. So, people only buy assets because they think they're attractive. And if they're attractive, they'll make a profit. And if there's a profit, the less of your own money you used, the higher the return on your money. That's why people use leverage. But it works the other way, too. The more you bet, the more you lose when you lose. And the more leverage you have, the lower the probability is that you can get through a rough patch.”
On , Howard Marks, Co-Chairman at Oaktree Capital, spoke about leverage during Howard Marks - Reflections on Oaktree Conference 2026 - Oaktree Capital on Gilberto Santos.
About Howard Marks
Howard Marks, co-chairman of Oaktree Capital Management, has been a frequent commentator on market conditions and investment philosophy in mid-2026. In a June 2026 interview with Barron's, Marks stated that he does not see a reason to cut interest rates, arguing that the economy is "doing fine" and does not need stimulus. He described the most important indicator for investors as understanding whether the market is driven by optimism or pessimism, noting that optimism leads to higher prices relative to intrinsic value and lower expected returns. Regarding the wave of high-profile IPOs from companies like SpaceX, Anthropic, and OpenAI, Marks said in a separate interview that investors should accept that such investments are closer to "speculating" than "analytical investing," given the enormous uncertainty around future earnings. He remarked that if the current technological exuberance does not produce a money-losing bubble, "it'll be the first." Marks has also discussed the role of artificial intelligence in investing. He stated that AI can act as a mentor by analyzing data and generating ideas, but he argued that it is weakest at analyzing "brand new things where there aren't established patterns." Marks said he believes AI will "raise the bar and weed out the people who don't add value" but will not replace the best investors. At Oaktree's 2026 client conference, he reiterated the firm's focus on risk control and avoiding losers, stating that the firm's motto is "if we avoid the losers, the winners take care of themselves." He also reflected on the firm's history, noting that a decision to keep a fund smaller than demand allowed helped create Oaktree's reputation.
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