Q2 2024 Commentary
Howard Marks is famous for co-founding Oaktree Capital Management, a credit investment firm specializing in distressed securities. Secondary to that, he is well known for his prescient memos on the market. Many of his memos discuss how the market acts as a pendulum, swinging from euphoria/overpriced to depression/underpriced, often spending much more time in the extremes versus the medium.
As simple as this seems, this analogy has always stuck with us and was the founding basis for the name of our firm, Pendulum Asset Management. The takeaway from this analogy is not so much that the market swings from one extreme to the other; that seems like a given. However, the real takeaway is that as investors, our job is to recognize where the “pendulum” is currently at, where it is swinging towards, and assessing our associated risk management, i.e. How do we manage capital based on this?
