Oaktree Capital examines how low prospective returns, abundant liquidity, and fading risk aversion can push investors toward increasingly speculative behavior late in a market cycle. Howard Marks argues today’s environment resembles pre-crisis periods, noting the Buffett Yardstick reached 145 versus a 1970-95 norm of 60.
There They Go Again… Again
Oaktree
Howard Marks
Research
23 Pages
Key Takeaways
Buffett Yardstick Elevated: Total U.S. market capitalization hit roughly 145% of GDP versus a 1970-95 norm near 60%, signaling historically expensive equity valuations.
Crypto Speculation Accelerates: Ether appreciated 4,500% in 2017, while its market value climbed from 5% to 82% of Bitcoin’s capitalization within the same year.
Risk Premiums Shrink: Marks warns investors accepted slimmer compensation for leverage and risk in 2017, echoing conditions seen before the 2007-08 financial crisis.
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