ET Exclusive: Leadership key to India growth story, says top Wall Street bargain hunter Howard S Marks

“This is a very unusual cycle because it’s hard to know when to date the cycle from,” he said in an interview, during which he spoke about Donald Trump, tariff wars and the technology arms race with China. He touched upon the unprecedented shifts in the world order and the valuation of the US Big Tech.

‘Biggest Worry is Politics’

Apart from the Big Tech companies, known as the Magnificent Seven, he also spoke about the improving spotlight on India.

“I believe these (Magnificent Seven) may be the greatest companies we’ve ever seen,” he said, adding that he doesn’t have equity exposure to any of them. Since its inception in 1995, Oaktree has expanded beyond its roots in distressed debt and now invests in credit, private equity, real assets and publicly listed equities. In 2019, it sold a 62% controlling stake to Brookfield for $4.7 billion.

Offering a peek into his investment outlook and worldview, Marks said: “This (US) administration introduces unusual levels of unpredictability and uncertainty.” “Nobody should sit there and assume they know what’s going to happen.” Yet he feels President Trump, who views things “transactionally,” is at heart pro-business and growth.

Marks, 79, was noncommittal on whether Washington is upending the post-World War II economic paradigm.He characterised “the US role in the world in the last 80 years as generosity spurred by enlightened self-interest. He (Trump) probably thinks in some ways the US has been a sucker subsidising the rest of the world. Would you rather be too generous or not generous enough?” Citing a recent article that likened Trump’s policies with a machete, not a scalpel, Marks emphasised that he prefers things “getting done without too much collateral damage”.

Comparing key asset classes like equities with credit investments, Marks said, “From the S&P, you’re not going to get the historic return of 10% a year for the next decade. You will get something less and if that’s true, then the returns described from credit are quite competitive and dependable.”

Credit investments have historically had low yields. Now the tables have turned.

“High yield bonds are at 7%… private credit at 9-11%,” he said. “These are very good absolute returns and competitive with equities earned contractually and independently.”

He remains optimistic about the demographic dividend from 1.4 billion Indians, but cautioned, “A lot will always depend on leadership. I think India will have a rising GDP per capita, and that’s a very good formula for future growth. But if you have 1.4 billion people, where the top 0.1 billion people do great, you have to do something for the other 1.3 billion. I hope India will.”

His greatest worry about the global economy is politics.

“If the US withdraws from the leadership role, does China fill the vacuum?” he said. “The other thing to worry about is demographics because the world has a declining birth rate and there are major countries which have declining populations. The immigration policy worldwide is a challenging subset of demographics.”