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Oaktree’s Latest Memo

08092017 howard-marks-oaktree

Oaktree’s Latest Memo

Howard Marks at Oaktree published his latest memo overnight. It speaks for itself and is valuable reading.  Click here to download the PDF.

Roger is the Founder and Chief Investment Officer of Montgomery Investment Management. Roger brings more than two decades of investment and financial market experience, knowledge and relationships to bear in his role as Chief Investment Officer. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.


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  1. The price of Bitcoin will be one of the best examples of irrational exuberance in the 21st century. I think shorting it will be one of the best trades but as we all know the consequences of being early can be worse than being wrong. There’s a few fundamental issues that people don’t seem to understand:

    – Bitcoin, and other crypos, are effectively toy money. The notion that Bitcoin has limited supply is absolute nonsense. Bitcoin does not have a distinct competitive advantage and people will switch to cheaper alternatives that provide exactly the same utility eg. Litecoin. The spread between Bitcoin and other comparable crypos is a perfect example of an irrational market.
    – The utility and value of crypos is in transactions. There is absolutely no reason why they should operate on a floating price and the ultimate winners of the crypos space will be those pegged to an actual currency. The lowest volatility crypos will be the winners. They are not commodities.
    – Crypos are at high risk of sovereign intervention. As soon as evidence is found of drug cartels dealing in large sums of crypo currencies the international reaction will be to ban them entirely. The utility they offer is dispensable.
    – Crypos are not alternatives to FIAT currency. A FIAT currency’s use is enforced at the tip of a gun. There is no comparable enforcement in the crypto space and therefore any analogy falls over very quickly.

  2. The last paragraph by Howard Marks says it all.

    “This posture has served us extremely well in recent years. Our underlying conservatism has given us the confidence needed to be largely fully invested, and this has permitted us to participate when the markets performed better than expected, as they did in 2016 and several of the last six years. Thus we’ll continue to follow our mantra, as we think it positions us well for the uncertain environment that lies ahead.”

    Like the “Master” (Buffett) says he doesn’t look at the overall price of the market but the “value” of a particular company he is considering , irrespective of where we are in the cycle.

  3. I note “Trading Sardines” from the PDF and the post of May 9, 2016, worth reading both alongside each other in the vein of Bitcoin.

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