“It’s not easy to find opportunities today,” says Howard Marks, the co-founder of Oaktree Capital Management, the world’s largest investor in distressed assets. Stocks and bonds have risen to the point where they represent fair value compared with near-zero yields on short-term government bonds, yet promise very low absolute returns, he tells CNBC. But out-of-favour assets may still offer some value.
There is a “real dichotomy between the things that are obviously successful but expensive and the things that look low-priced but are challenged in terms of business”. The first group includes technology stocks and other companies that have benefited from Covid-19, such as home delivery, while the second includes real estate – especially retail and offices in big cities – as well as entertainment, hospitality and tourism (such as cruises). “Big money will be made by buying the latter” in situations where the business still works.
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