In the following presentation, given by Howard Marks - the world's largest distressed debt investor - he warns of the perils of "investing in uncertain times." As Reuters notes, he fears the "unsound practices" from before the financial crisis are creeping back into credit markets, with private equity firms bidding increasingly high prices for companies. Marks points out the ease with which lowly rated companies were issuing debt this year, how companies were paying out record dividends to their shareholders and the increasingly high debt-to-equity multiples private equity firms were paying for companies amid a resurgence in deals. "We have a world in which nobody is thinking bullish. Everybody's worried and yet people are acting bullish," and predicts a looming "shake-out" in the hedge fund industry as he asks rhetorically, "today there are 8,000 hedge funds. Are there really 40,000 exceptional people (working for hedge funds)?" In conclusion, Oaktree Capital's founder warns that investors, in their search for returns, were becoming overly confident while the economic background was still gloomy.
Full presentation here.