霍华德·马克斯最新备忘录：事情变得清晰
红刊财经 2020-10-15
编译 | 记者李健
精彩摘要
对经济复苏的期望必须是现实的。对我来说，就像我说过的，“V形”有一个过于积极的含义。
我们离即将到来的选举只有不到一个月的时间了，任何一方都不愿给对方任何可能被称为胜利的东西。
债券的低收益率意味着它们对股票的竞争较小，因此股票不一定要便宜才能吸引购买。
低利率和由此带来的较低预期回报鼓励了风险承受力和追求回报。
如今的科技领军企业比以往任何时候都更优于普通企业，这使得包括这两类企业的指数变得比以往任何时候都不重要。
当一个投资者愿意以任何价格购买别人都不愿意购买的东西时，就会做出伟大的投资。
“我们投资了，我们试图完全投资。但我们努力‘谨慎行事’。”
10月13日晚，美国著名投资大师、橡树资本创始人霍华德·马克斯发表了最新一期的备忘录，标题为《事情变得清晰》（Coming into Focus）。在文中，霍华德提到了低利率带来的影响，同时提供了他对科技股与价值股估值落差的探讨。
以下是备忘录全文，（《红周刊》在有道翻译的基础上做了编译）。
《事情变得清晰》
距离我的上一份备忘录《思考时间》（Time for Thinking）已经过去了大约两个月，且经济或市场仍没有太大变化。Covid-19造成的死亡人数继续上升，经济展望基本保持不变，疫苗接种仍需一段时间，标准普尔500指数回到了8月初的水平。所以我将重复我说过的话：这主要是思考的时间。幸运的是，我对这些问题思考得越多，我就会越关注这些问题。因此，我将通过这个备忘录来更详细地讨论几个主题。
先决条件
在《思考时间》，我谈到了我认为今年的发展不是周期性的这一事实。你可能会问，“为什么不是呢？”经济和市场下跌了，但是它们正在复苏。这不是一个周期吗？我真正的意思是，这与正常周期非常不同，我想出了一个更好的解释方法，借用了我在2018年出版的《掌握市场周期》（Mastering the Market cycle）一书中的一些内容。我所见过的大部分上升周期的发生，是因为当时经济运行良好，导致心理和决策变得越来越乐观，最终大家都喜出望外。公司选择扩张，股价上涨，金融创新成为可能，甚至鼓励金融创新。最终，生产力过剩，股价超过了潜在价值，大家也都接受了有风险的投资创新。当这些趋势超过基本面，变得不可持续时，结果就是经济下滑。经济衰退往往会引发市场修正，有时，经济衰退的影响会因负面的外源性事件而得到强化，因为这些事件使之前的蓝天变得更加灰暗。
一个很好的例子就是布鲁斯·卡什和我在1990-1991年经历的第一次非投资级债务危机。当时出现了经济衰退，而为了帮助科威特击退伊拉克的入侵而发动战争的冲击又加剧了衰退。新发展起来的高收益债券市场经历了第一波大规模违约潮，这是经济衰退和信贷紧缩的结果，迈克尔·米尔肯（Michael Milken）被起诉和德雷塞尔·伯纳姆（Drexel Burnham）破产加剧了违约潮，使得原本可以帮助企业生存下来的债券交易所无法进行补救。股市下跌，但高收益债券大幅下跌。值得注意的是，上世纪80年代许多著名的杠杆收购——它们的融资来源大约是债务的95%——都破产了。投资者心理崩溃，债券持有人纷纷退出。
一个崩溃的经济需要一剂好的刺激来将其从昏迷中拉出来，而且这也的确发生了。通常这就够了。最终经济会复苏；消费者继续购买；投资者重新获得了平衡——一些人甚至感觉到了可以逢低吸纳的机会；经济的好转将把经济带回到良好的健康状态……这个循环过程还在继续。
因此，在大多数情况下，经济衰退主要源于经济疲软，而经济工具可以修复它们。但这次的情况有所不同。它是由外生的，非经济的发展，流行病造成的。经济衰退——而不是原因——是结果：为了尽量减少人与人之间的接触和阻止疾病传播，故意诱导企业关闭。
因此，仅仅通过实施经济刺激，不可能完全治愈这种下行周期。相反，根本原因必须得到修复，这意味着疾病必须得到控制。一种有效的疫苗可以及时做到这一点，但同时还需要健康的行为。在这方面，欧洲大部分地区出现的感染案例攀升代表着疾控控制出现倒退。
即使疾病得到控制，经济刺激也不太可能逆转所有的损害。创伤已经很深，其影响可能无法轻易摆脱。大公司将继续实行自动化和精简。大量的小型企业——如餐馆、酒吧和商店——将永远不会重新开业。因此，数以百万计的人将不会被重新雇用到他们原来的工作岗位上。因此，对经济复苏的期望必须要现实。对我来说，就像我说过的，“V形”复苏包含的意思过于乐观。
需要进一步的援助
拖累经济复苏的因素之一是来自华盛顿的帮助。尽管财政部能够在春季宣布激进的支出计划，但在秋季却没有新的一揽子计划。两党之间在刺激计划的规模和内容上产生了分歧。此外，我们离即将到来的选举只有不到一个月的时间了，任何一方都不愿给对方任何可能被称为胜利的东西。
但这不是一个学术问题。迄今为止，数万亿美元的支出并不是刺激支出，而是支持。简而言之，分配给失业者、收入低于10万美元的家庭、公司和机构的资金，旨在弥补失去的收入，维持（而非刺激）经济。个人有了钱，所以他们可以买生活必需品。公司得到了资金来弥补损失的收入，所以他们可以继续雇佣员工。这些需求并没有枯竭，即使疾病已经形成，补充失业救济金已经到期。
橡树资本的一位同事上周写信给我说，“我今天在和一家小型连锁影院的老板聊天。谁也不会交换位置。他们在加州的所有剧院都关闭了；州外的影院运营成本高，而且没有赞助人；而且几乎没有什么产品可以吸引观众。贷款者和房东都在敲门。”
个人也有问题。据《Morning Brew》9月25日报道：
由于经济仍处于低谷，人们筋疲力尽地支付他们的抵押贷款。据行业分析师基思·朱洛（Keith Jurow）说，当联邦住房金融局的止赎和迁出延期令在今年年底到期时，“数百万”人将有9个月没有还款。
根据美国住房和城市发展部的数据，七月份有17%的联邦住宅管理局担保的抵押贷款拖欠。在纽约市，27.2%的抵押贷款出现拖欠。
另一个迫切需要是在州和地方政府。他们的收入随着税收和费用的减少而萎缩。但他们的消费需求并未减弱——事实上，储蓄还在增长。警察、消防队员和急诊医生也同样重要，对保健和家庭服务的需求只增不减。然而,不同于联邦政府，城市和州不能进行无限量的赤字开支，因为他们不能印刷钞票或发行似乎无限量的债务。像公司和个人一样，他们需要大量的援助。
9月24日，《华尔街日报》报道了美联储官员在国会的证词：
美联储主席杰罗姆·鲍威尔星期三在为期三天的国会听证会的第二天说，“如果国会和美联储都提供支持”，经济复苏的步伐将会加快。
芝加哥联邦储备银行行长埃文斯对记者说，他对明年年底失业率将降至6%以下的预测是以大约1万亿美元的额外财政救助为前提的。
他表示：“如果不能实现以上救助，那么我认为情况将会困难得多，我们取得那么大进展也变得不太可能。”
“财政政策的力量是无与伦比的，”鲍威尔对众议院一个监督美国应对冠状病毒的小组的议员们说。
同一天，Evercore ISI的Dennis DeBusschere写道：
在货币政策方面，美联储并非没有子弹，而且仍有准财政计划，如主要街道贷款计划（MLSP）和市政流动性工具（MLF）。但正如我们在宏观政策伙伴组织的朋友所指出的那样，“鲍威尔在他的讲话中几乎对这些项目挥起了白旗，这令人不安。”美联储已经在利率和量化宽松问题上采取了“设定好，然后忘掉”的立场，而这些工具不像MSLP和MLF那样很好地适应当前的经济挑战。因此，要么很快出台财政刺激方案，让风险资产走高，要么通胀预期趋势下降，迫使美联储动用更多“子弹”。我们的预感是，美联储将被迫做出反应。
每个人都指望的经济复苏不是一个不受事态发展影响的独立事件。相反，它在很大程度上取决于防治这一疾病的进展（如上所述），但也取决于在此期间财政支出的继续。遗憾的是，在后一种情况下采取行动的前景并不乐观。党派之争达到了我以前从未见过的程度，尤其是在最高法院提名之争的情况下。现在国会两院都掌握在交战的两党手中，如果他们能在选举前就任何问题达成一致，我会感到很惊喜。
几个星期前，众议院两党问题解决者核心小组重新启动了谈判，提出了一项介于民主党提出的3万亿美元目标和共和党愿意提供的5亿美元之间的方案，并在具体的组成部分上做出妥协。（注：我是无标签组织的全国联合主席，该组织支持党团会议和两党合作的目标。让我们抱有希望，即使在竞选活动还在进行的时候，我们也能做些事情来提供适当的必要援助。）
利率的力量
2020年最大的金融新闻之一是始于3月底的强劲市场反弹，迅速导致股指收复失地，有时甚至创出新高。我越想，就越觉得低利率是我的功劳。
如你所知，美联储在3月3日将联邦基金利率——影响许多其他利率的基础利率——降低了半个百分点，从1.5 -1.75%降至1.00-1.25%，并在3月15日进一步降低了一个百分点，降至0-0.25%。像今天这样的低利率会在很多方面产生影响。我在上一份备忘录中提到了其中的一些，但我将在这里对这个主题进行更全面的讨论。
首先，低利率有刺激作用。这可能是人们在降息时首先想到的方面。简而言之，任何需要融资的事情都变得更有吸引力。买房变得更便宜，因为每月的抵押贷款支付更少了。汽车和船也是如此。现有的可调利率抵押贷款的月供下降，消费者的可支配收入增加。企业的利息支出也下降了，从而降低了新工厂或生产线的成本。快速增长的经济改善了人们的普遍情绪，提高了交易的可能性。由于担心错过低利率，人们现在就有理由采取行动，加速原本未来才可能发生的交易。
其次，较低的利率会增加未来现金流的贴现现值。从最理论的意义上说，资产的当前价值就是它在未来产生的现金流的现值折现。我们贴现未来现金流，是因为未来收到的一美元在今天不值一美元：今天投资的钱在未来会带来更多回报。如果你要求7%的回报率，那么你现在需要支付0.51美元来换取10年后得到的1美元。
（贴现现金流，或“DCF”，被广泛用于量化投资的潜在回报。使预计未来现金流量等于初始投资的折现率是如果预期现金流量实现，投资将产生的回报。因此，把上面那句话反过来说，如果你今天投入0.51美元，10年后就能收回1美元，隐含回报率是7%。）
我们贴现未来现金流的比率取决于等待它们的风险。这包括实际损失的风险以及通货膨胀导致的购买力损失。如果有风险，我们应该要求高回报，因此使用高贴现率。然而，我们使用的利率也是随着现行利率和可用于其他投资的回报（机会成本）变化而变化的。当以上利率和投资回报低的时候，我么就会采用低贴现率。贴现率越低，得到的现值就越高。因此，低利率提高了所有投资的DCF价值。
第三，低的无风险利率会拉低整个资本市场的回报率要求。30天期国库券的收益率通常被称为无风险利率。没有信用风险，因为债务人是政府（它可以印出偿还所需的所有货币），也没有因通货膨胀而失去购买力的风险，因为偿还期限只有几天了。
既然无风险利率可以在完全安全的情况下获得，而且大多数人更喜欢安全而不是风险（其他条件都相同），投资者不应该在没有得到补偿的情况下承担风险。随着不确定性水平的增加，增加的“风险溢价”应纳入其潜在回报。因此，“资本市场线”的概念向上和向右倾斜，显示风险和回报之间的关系如下：
在这个图表中，资本市场线显示了预期收益和预期风险之间的一致关系。当我在芝加哥大学商学院（University of Chicago business school）学习时，他们称这种情况为“均衡”：当感知风险增加时，每种资产类别似乎都提供了更高的先验回报，因此每种资产经风险调整后的预期回报相对于其他资产是公平的。在一个运行良好的市场中，没有什么比这更有道理了。
但在3月份，美联储将联邦基金利率下调了1.5%。可以预见的是，其他利率、债券收益率和预期回报通常也会随之下降，正如下一张图表所示。
资产类别之间的风险/回报关系仍然合理，但所有预期回报的绝对值都要低得多。因此，一般来说，资本市场线的起始点越低，所有回报就越低。
或者，抛开图表，用文字来说，当我在1978年末开始管理高收益债券时，联邦基金利率和十年期美国国债的收益率都在9%左右。因此，高收益债券必须提供超过12%的收益率才能吸引资本（但很少有投资者愿意购买它们，因为它们不需要那么高的收益率来达到回报目标）。但是今天，当联邦基金利率和十年期收益率远低于1%时，人们蜂拥购买5-6%的高收益债券，就像白拿钱一样。关键在于，无风险利率越低，吸引资本进入其它资产类别所需的预期回报率就越低。
因此，联邦基金利率越低，债券收益率也就越低，这意味着利率较高的未偿债券将会升值。债券的低收益率意味着它们对股票的竞争较小，因此股票不一定要便宜才能吸引购买。而且，如果高质量资产变得高价，从而提供较低的预期回报，那么低质量资产将受到购买——意味着价格上涨和预期回报下降——因为相对于高质量资产，它们看起来很便宜。
大多数投资决策都是相对决策。投资者试图寻找最具吸引力的机会，以达到风险调整后的最高回报。因此，许多选择过程都是比较的。“我正在考虑购买x。与Y相比，它的风险/回报主张如何？”这意味着Y的回报率越低，X要成为更佳投资所要提供的就越少。如果X提供更少的回报，它的方式是通过价格的上升。因此，资产和资产类别本质上是相互关联的。资金从一种资产类别流向另一种资产类别，以寻找最佳的便宜货，然后被大量买进，直到它们与其他资产达到平衡。改变无风险利率有可能重置所有资产的回报。
第四，较低的回报要求直接导致更高的估值。从理论上讲，假设标普收益不变，将要求的净收益率从6%至4%下调，就要求市盈率（p/e ratio）上升，股价也随之上升。这是描述低利率对资产价格影响的另一种方式。低利率意味着股票价格上涨，就像债券一样。（注：由于公司的收益通常会增长，而债券的息票却不会，因此可以认为，对股票的回报率要求应该更低，这意味着市盈率可能更高。）
第五，美联储也有能力通过购买债券来降低收益率。这实际上是上面这一点的延伸。除了降低联邦基金利率，美联储还可以通过购买美国国债和票据以及其他类型的证券来刺激市场。如果美联储购买证券，就会抬高这些证券的价格。当价格上升时，预期到期收益率下降。当债券收益率下降时，其他资产可以吸引资本，而不像过去那样提供那么多的预期回报，因此它们的价格也会上涨。
此外，当美联储购买证券时，它把钱放到了向美联储出售这些证券的人手中，这些钱将被花掉或借出（帮助经济）或再投资（推高资产价格）。在今年3月中旬至7月中旬的四个月中，美联储购买了超过2.3万亿美元的债券，其中大部分是美国国债和票据，也有其他证券。这大约是它在全球金融危机期间18个月内购买量的20倍。
第六，低利率和由此带来的较低预期回报鼓励了风险容限和追求回报。如前图所示，当较低的无风险利率拉低资本市场线时，大多数资产承诺的回报比过去要低。这意味着那些在过去得到回报的人想要或需要从一个给定风险水平的资产，现在必须移出风险曲线到风险更高的资产，以争取相同的回报。
如今，许多美国机构投资者的目标回报率（以捐赠基金为例）或回报精算假设（以固定收益养老基金为例)都在7%左右。不幸的是，这些需要的回报并没有像利率（因此预期投资回报）下降那么多。为了使回报率目标像利率同幅度下降，大学和慈善机构将不得不接受从捐赠基金中得到更少的支持，而养老金计划赞助商将不得不增加资金。
一个人过去可能做出的投资，现在其承诺的回报比过去少得多。在现金预期回报率接近零、10年期美国国债收益率为0.7%、高级别债券收益率为2-3%、股票预期收益率为5-6%的情况下，一个投资者需要7%的收益率来做什么呢？通常的答案是承担更多的风险，以追求高风险投资似乎能带来的更高回报。
通过这种方式，低利率使得规避风险成为一件极具挑战性的事情，而承担风险则更容易让人接受。另一种选择是接受今天较低的承诺回报。但大多数人选择前者，这意味着高风险资产类别会充斥着渴望获得的资本，这对经风险调整后的回报没有好处。当“害怕错过”（FOMO）——害怕错过——取代了风险厌恶或害怕损失金钱时，不好的事情就会发生。
第七，让资金发挥作用，需要资本市场重新开放。在大多数金融危机中，“信贷窗口”都被关闭了，因为有资本的人(a)正在承受他们所拥有资产的损失，(b)对未来的环境感到恐惧。这两个因素使得它们不愿提供新的融资，而这反过来意味着无法获得资金——即使是值得投资的公司和可能有利可图的项目。这进而意味着风险资产价格下跌，导致经风险调整后的预期回报上升。
但今天，美联储和财政部向投资者保证，他们将出手救助，将向企业和经济中的其他参与者提供大量资金，美联储和财政部可以依赖经济的迅速复苏。这使得投资者能够“望穿谷底”看到更好的时代。这反过来又使低利率迫使资本来源提供慷慨的融资水平。
因此，今天，信贷充足，债券发行已经达到或超过了许多以前的记录。例如，尽管美国季度GDP录得有记录以来最大降幅，且资本市场关闭了一段时间，但据标普数据，今年迄今为止美国高收益债券已发行3,456亿美元。这比2012年全年创纪录的3,448亿美元还多。
在所有这些方面，低风险利率使低投资回报看起来更有吸引力。因此，在我看来，目前大多数资产提供的预期回报相对于它们的预期风险和其他一切而言都是公平的。但所有投资的预期回报都处于历史最低水平。
股票市场的结构变化
在《思考时间》备忘录中，我还提到了美国股市日益加剧的分化。简而言之，领先的科技和软件公司(a)与其他公司的差异越来越大，因为科技的角色和力量已经扩大；(b)它们在股票指数中所占的比例已大大提高，因为公司已经发展壮大，估值也越来越高，标准普尔500等指数也改变了它们的结构以保持相关性。虽然我不是专家，但我将引用一些关于这一趋势的重要性和影响的争论。（因此我仅传递这些有力论据，我但并不支持他们）。
首先，这两类股票的属性和回报率变得更加具有差异化。
· FAAMG （Facebook、苹果（Apple）、亚马逊（Amazon）、微软（Microsoft）和谷歌（Google）和类似公司的增长前景与其他公司（在增长缓慢的21世纪）之间的差距是巨大的和且不断扩大。
· 大流行病推动了技术的采用。因此，虚拟会议、电子商务和云计算如今已司空见惯，无一例外。
· 当前的利润严重低估了科技领军企业的潜力。它们目前选择在新产品开发上大举投资，以扩大市场份额，阻止竞争，从而主动压低利润率。因此，当科技公司愿意缓和增长速度时，它们在未来提高利润率方面具有巨大的潜力。
· 他们的目标市场比以往任何时候都更大，而且还在增长，这给了他们更大的“跑道”。“例如，在1999年底，在科技泡沫时期，全世界有2.48亿互联网用户。现在，仅在美国就已超过2.48亿用户，而世界范围内几乎有50亿。因此，世界上62%的人在口袋里都有一台能上网的设备。
· 最后，扩大这些业务的规模比以往任何时候都容易。在过去，人们必须去经销商那里购买光盘上的软件，带回家安装。现在我们从网上下载应用程序只需几秒钟。
基于这些原因，在市盈率方面存在巨大差异是有理由的。
其次，这些股票种类将不仅仅是共存，而且表现不同。相反，科技公司有可能对一些非科技公司产生负面影响。这种现象的常见术语是“颠覆性”。“亚马逊已经危及了实体零售商。Netflix已经挑战了传统的电视和电影生态系统。Facebook已经打入了报纸和其他传统媒体行业——这些行业被认为是被护城河保护的，因此属于“防御型”。“特斯拉革命性地改变了汽车行业，在开发电动汽车方面超越了现有公司。不受技术变革影响的行业，（如果不是本质上的，就是在盈利能力方面）是非常有限。
最后，有人认为，当今领先的科技公司比上世纪60年代末的“漂亮50”要强大。如今的领导企业常常被拿来与“漂亮50”（Nifty Fifty）相提并论，但当今的领导是更好的公司：规模更大；更快的增长；有更大的潜力使增长持续更久；能够获得更高的毛利率（因为在很多情况下没有实际生产成本）；在各自的市场上占据更大的主导地位（因为规模、更大的技术优势和“锁定”，或转换解决方案的障碍）；更有能力在不增加投资的情况下实现增长（因为他们不需要太多工厂或营运资金来生产产品）；而且以未来利润的倍数计算，估值可能会更低。这说明估值差距会更大，或许是支持科技的观点中最具挑衅性的因素。
当然，许多“漂亮50”并不像人们想象的那么强大。施乐（Xerox）和IBM失去了市场领先地位，并遭遇了财务困难；柯达和宝丽来的产品市场消失了，他们破产了；AIG要求政府救助以避免破产；最近谁听说过简单模式？今天的科技领袖似乎更强大，更无懈可击。
但在五十年前，“漂亮50”似乎也坚不可摧；人们完全错了。如果你在1968年投资它们，那时我刚到第一国民城市银行（First National City Bank）的投资研究部门做暑期工作，然后持有五年，那么你几乎赔光了所有的钱。20世纪70年代初，股市下跌了一半，而“漂亮50”的跌幅更大。为什么？因为投资者对价格没有足够的意识。事实上，在银行（当时机构投资的主力军）看来，这些公司如此优秀，“价格再高也不为过（no price too high）”。在我看来，这最后四个字是所有泡沫的必要成分，也是所有泡沫的标志。在某种程度上，我们今天可能正在再次见证这一心理作祟。当然，没有人会根据FAAMG当前的收入或内在价值来对它们进行估值，或许也不会根据对未来某年的每股盈利预测对它们进行估值，而是根据它们在遥不可及的未来的增长潜力和盈利能力。
并注意到，当今科技领军企业的实力和潜力很大程度上来自于它们占主导地位的市场份额和市场力量。同样的因素也造成了它们最大的弱点之一：可能遭到反垄断行动。庞大的规模和成功的策略足以让一些人呼吁对巨头公司进行限制。以下是巴克莱10月7日的报告：
昨天，美国众议院反垄断小组委员会发布了一份449页的报告，建议进行影响深远的反垄断改革，美国大型科技股（如Facebook、亚马逊、谷歌和苹果）面临压力。建议包括结构分离，禁止支配地位的平台与依赖它的公司竞争，以及业务线限制，限制支配地位的公司可以参与的市场。
指数中有两组股票，科技股在其中的数量较大，且不断扩大。例如，标普500指数的成分股中，其市值的大约四分之一是那些快速增长、有能力提高收入和利润率的科技和软件公司，其余四分之三是增长缓慢，利润率已经达到最高水平的公司。如今的科技领军企业比以往任何时候都更优于普通企业，这使得包括这两类企业的指数变得比以往任何时候都不重要。至少有人这么认为。不管你在哪里出来这个问题,如果某股指包含25%的高增长、高估值倍数公司（今年以来截至9月底，大约上涨30%）和75%的低估值倍数普通公司（上涨4%），增长、估值和业绩的平均数据可能不是有意义的足以支持关于“股票市场”的结论。
2020年的危机不同于以往
如今，我经常被问到的一个问题是，2020年的新冠病毒危机与我们经历过的以往危机有何不同：
· 1990-1991年的高收益债券危机，当时许多著名的80年代杠杆收购破产。
· 2001-2002年电信/丑闻公司垮台。
· 2008-2009年的全球金融危机，由次级抵押贷款的内爆引起，以金融机构的崩溃为标志。
现在，将其与2020年的事件进行对比。2月中旬，新冠病毒疫情的发展以及为抗击疫情而实施的封锁措施开始打击市场。股票和信贷价格下跌，市场情绪变得悲观。标普500指数2月19日创下历史高点，但是此后在仅仅33天内就下跌了34%。高收益债券和杠杆贷款的价格也受到了重创。证券发行几乎停止。就像上面描述的那样，危机发生的条件已经准备好了，而在3月份，事态也在朝着危机的方向发展。
我在这里想要说明的明显区别与当前循环的特点有关。最好的开始方式可能是描述过去的危机：
· 在上述三次危机中，衰退造成或加剧了经济疲软。
· 经济和企业的负面发展、市场崩溃和恐惧加剧导致了信贷紧缩，融资变得不可能获得。
· 经济疲软和融资难的结合，导致违约和破产大幅增加。
· 资产价格下跌。
· 资产/负债错配或高杠杆水平的公司和投资实体遭遇追加保证金通知和破产。
· 恶性循环似乎势不可挡。
· 悲观情绪泛滥，导致避险情绪高涨。
· 这导致了资产的恐慌性抛售，使得大多数投资者完全不愿意购买。由于上述原因，可以以能够获得极高回报的价格购买资产，而且往往风险很低。
但正如大家所知，美国财政部和美联储在3月中旬宣布了救助计划，并美联储在3月23日当周扩大了应对计划：零利率、债券购买、补助、贷款和大幅增加失业补贴。救助计划总额高达数万亿美元。这样一来，当局表明，接下来还有更多的举措——可用资源是无限的。
· 人们接受了衰退会结束，复苏会很快到来的观点。在短期利率接近于零的情况下，投资者排着队购买债券以寻求回报。因此，与其说是信贷紧缩，不如说是可获得的资本达到了创纪录的水平。尽管救助提供了“流动性而不是偿付能力”，但整个行业（比如航空公司）都免于破产。
· 没有像大多数危机那样出现引人注目的内爆。
· 恐慌性抛售也是如此。
· 悲观情绪被对未来更美好时光的思考所取代。
· 在利率为零的情况下，投资者无法承担风险厌恶。他们不得不拥抱风险资产，以求获得高于低个位数的回报率。
· 因此，资产价格恢复了。
举例来说，自4月1日以来，不良债务投资者有机会向需要迅速应对流动性不足或债务即将到期问题的公司或实体发放大笔救援贷款，而且这方面的资金仍有充足的渠道。但随着投资者的乐观情绪增强，贷款竞争加剧，而安全资产的超低回报率，使得投资者竞相追求可能的两位数回报率成为可能。所有这些因素加在一起，使得预期回报率远低于危机时期的通常水平。
因此，这是一场不寻常的危机：这场危机的特点包括非金融和外生起因，而且对大多数投资者来说，没有持久的痛苦……且并非逢低买进的人都能拥有的机会。伟大投资的诞生，往往是某位投资者愿意购买别人以任何价格都不愿意买的资产。在过去的危机中，我们能够做到这一点，因为你需要的是钱和花钱的勇气，
我们拥有这些，而大多数人却没有。其他投资者在过去的危机中缺乏资金和勇气，这使他们成为了买入的大好时机。今天，多亏了美联储和财政部，每个人都拥有了这两者。这让事情变得更加困难。
但是，如果人们用尽了他们已经得到的补助，华盛顿不能提供足够的额外援助，随之而来的是大范围的裁员（似乎正在开始）和商业再次放缓，会发生什么呢？我们是否会看到违约和破产的增加，以及投资者心理以及资产价格的变化？
经济救援可能带来的负面影响
鉴于Covid-19疫情的蔓延和抗击疫情导致的经济衰退的严重程度，美联储和财政部的救援努力的规模和成功是2020年的重大事件之一。在全球金融危机中，当局花了好几个月时间才弄清楚该做什么并付诸行动。但今年，他们重拾2008年的剧本，在几周内实施了它。
我们从未见过封锁所带来的这样的经济环境。许多行业（以及其他实体和机构）没有活动，没有收入，但成本仍然很高。以及数百万没有工作或收入的人。有一种信念（从未记录在案），认为很大一部分美国人缺乏在400美元的紧急情况下生存下去的资源。几个月没有薪水，他们怎么活？没有薪水，他们怎么去光顾商家？如果没有销售，商家怎么付租金呢？或他们的税呢？没有租金收入，业主如何偿还债务？如果没有偿还债务的收入，放贷者如何维持偿债能力？没有税收，州和地方政府如何支付他们的雇员和继续提供服务？发达国家将如何购买新兴经济体赖以生存的出口产品？我们在3月中旬所面临的情况确实是我见过的最糟糕的情况。当时来看，全球萧条似乎是可能的。
但美联储和财政部协作完成了规模巨大的经济救援措施，刺激了经济活动，弥补了损失的相当一部分现金流。它取得了惊人的成功。大多数投资市场复苏，经济也显示出惊人的强劲。因此，我想讨论的下一件事是救援可能产生的后果。我之前已经提到过了，但这是我想深入讨论的另一件事。
首先，零利率的政策含义是什么？对我来说，最明显的就是没有进一步削减的空间了。（美联储官员坚称，他们不会将利率降至负利率水平，负利率当然也不能说是重新推动了日本和欧洲的经济增长。）因此，问题是美联储将如何应对与第二波疫情以及由此导致的第二次封锁有关的经济衰退。
其次，救助和救助有可能引发道德风险。当政府让人们免于损失时，它告诉人们，进行风险投资是可以的：如果投资成功了，你就发财了：如果投资不成功，你也会得到救援并得以纾困。这样的教训很糟糕。例如，今年，那些过度借贷、过度扩张和/或将太多现金用于股票回购的行业获得了救命水。原因不过是在于政府决定不允许他们破产。
此外，通过大幅提振市场，美联储可能已经让一些人相信它将一直这样做——可以指望“鲍威尔对策”（Powell put）让市场保持活跃。
2018年第四季度，10年期美国国债收益率高达3.25%，引发了股市的恐慌。这足以结束珍妮特·耶伦启动的加息计划，取而代之的是一系列的减息措施。）如果投资者相信美联储总能让市场保持坚挺，这将鼓励危险的行为。而且，无论如何，这似乎是一个不可能完成的任务，而且在我看来，美联储如果有这样的目标，也令人咋舌。
第三，对财政部数万亿美元赤字支出和美联储进一步数万亿美元债券购买计划的本能反应其实是担心通胀。向经济注入数万亿的流动性，似乎有可能创造出过多的货币，追逐相对来说太少的商品，从而导致价格上涨（就像资产那样）。此外，由于这些救助措施，我们的赤字高达数万亿美元，国债也增加了数万亿美元，国债占国内生产总值（GDP）的比例目前已接近二战后的最高水平。
在过去，大量印钞已经造成了严重的后果。有人想知道，2020年的版本是否会带来一些传统上与货币贬值有关的事情：
· 不受欢迎的高通胀，
· 美元疲软，
· 美国信用评级下调，
· 为弥补增加的赤字而增加的借贷成本，
· 利率普遍上升，进一步增加偿债成本，从而增加赤字和债务，
· 将越来越多的联邦预算用于偿还债务
· 美元失去了世界储备货币的地位。
当然，也有反驳：
· 我们长期以来一直处于赤字支出状态，没有引发通货膨胀或其他不良影响。（当然，这类似于温水煮青蛙。青蛙不会在为时已晚之前，注意到温度是逐渐升高的。）
· 各国多年来一直试图创造2%的通胀，但都没有成功。因此，(a)通货膨胀不容易引发，(b)问题不在于通货膨胀，而在于没有通货膨胀。
· 现代货币理论（过于简单化）认为，赤字和债务无关紧要。（但大多数经济学家不同意这种观点，常识表明，一个国家不太可能在不受影响的情况下无限制地支出。）
· 最后，美元作为储备货币的地位，目前来看还是不可取代。
我所知道的是(a)美联储和财政部似乎并不担心上述任何一种可能性，(b)无论如何，它们认为继续实施该计划是必不可少的。
第四，美联储真正担心的是经济增长乏力。GDP要恢复到2019年达到的水平和2020年应该达到的水平，肯定需要一段时间——在今年第二季度触底后一年或更长时间。停滞的经济不会让因封锁而失去工作的人们重新就业，当然也不会为不断增长的人口提供就业机会。
“这个风险是螺旋式下降式的，”（美联储理事莱尔·布雷纳德（Lael Brainard）在最近的一次演讲中指出）。她警告称，美国经济可能陷入低利率、低通胀和低增长的恶性循环。
令人失望的生产率增长和有限的劳动力增长等长期趋势正在削弱美国经济的潜力。今年7月，国会预算办公室表示，从长期来看，美国经济的年平均增长率可能只有1.8%，低于2000年的百分之四点多。（《华盛顿邮报》10月3日）
因为这是美联储最关心的问题，所以它不太担心上述拯救和刺激经济的努力所带来的风险。美联储完全愿意看到2%的通货膨胀率，这是它多年来从未有过的。事实上，美联储最近宣布了一项平均方法，在此方法下，将保持宽松的货币政策和低利率，直到通胀率平均为2%。也就是说，通胀率将被允许在一段时间内运行在2%以上，以使平均值达到2%。
有人说，世界上最糟糕的情况将是滞胀，我在上世纪70年代就经历过这种情况：高通胀和经济疲软。毫无疑问，那是一个惨淡的十年。但另一些人认为，经济低迷更有可能导致反通货膨胀（通货膨胀下降）甚至通货紧缩，这是一种我们对其知之甚少的罕见现象。
经济增长的长期恶化创造了资源过剩和反通货膨胀的条件。（Hoisington季度回顾与展望，2020年第三季度）
我的回答是，我不知道我们将会看到通胀、滞胀、停滞、反通胀还是通缩，而橡树资本不会在任何一种情况下押注。我们投资理念的原则之一是，我们的投资决策不受宏观预测的驱动。并不是说知道这些方面的未来会是什么样子不太好；更简单的说，大多数投资者——当然还有我们——没有能力对宏观经济做出更好的判断。那么为什么还下注呢？
最后，我想声明的是，我所写的有关救市及其可能产生的后果的文章，都不是为了批评美联储和财政部及其行动。我简单地说：仅仅因为某件事有潜在的负面影响，并不意味着你不应该做它。在疫情和相关衰退的情况下，绝对没有其他选择。尽管不完美，但政策回应相当出色。
进一步暴露不平等
特别是在当前社会和种族平等受到高度关注的环境下，我在结束这篇备忘录时，必须提到最近的经历在许多方面进一步揭示了我们社会中的不平等：
· 在封闭管理期间，经济地位较低的人可依靠的金融资源更少，而且他们通常也没有从利率下调导致的资产价格上涨中受益。
· 由于封闭管理和经济衰退，低收入工人更有可能失业。那些保住了工作（通常在食品生产、零售和医院等行业）的人更可能是必要的工人，他们需要工作，并处于危险的境地。另一方面，白领和行政人员更有可能在家工作。
· 低收入人群更有可能生活在狭小的空间和拥挤的社区中，这使得他们在家工作的生活质量较低，并增加了感染疾病的几率。
· 由于所有这些原因，在这些人口中，与新冠肺炎相关的疾病和死亡发病率高得不成比例。
· 收入较低的人更依赖学校帮忙照顾孩子。因此，学校停课对低收入家庭的影响更大，因为如果让他们选择的话，他们不太可能让孩子待在家里。相反，他们必须把孩子送到学校，在学校孩子们可能会感染上新冠肺炎，并把病毒带回家给父母和祖父母。
· 最后，女性比男性更容易受到这种现象的影响：她们在单亲父母中所占的比例更高，她们的工资可能比男性伴侣低，而且她们常常被期望担负起照顾孩子的责任。
当然，“低收入”在很大程度上等同于“非白人”。综上所述，我相信这是一个“双城记”。低收入美国人、黑人和拉美裔人在疫情期间的总体经历，与白人和那些收入更高、财力更雄厚的人大不相同。这些观点很可能成为我们国家关于机会平等辩论主题的一部分。
这一切对市场意味着什么
在2020年之前的几年里，我对投资环境的描述如下：
· 异常高的不确定性（主要是外生的和地缘政治的）
· 有史以来最低预期回报率
· 过高的资产价格
· 试图获得高回报的投资者从事的风险偏好行为
总之，这些事情告诉我，我们生活在一个低回报的世界，在这个世界里，承诺的回报并不能完全补偿风险。它不是以高得离谱的价格为特征的泡沫。也没有办法确切地说，好日子什么时候会结束，为什么会结束。这仅仅是缺乏承担全部风险的理由。
因此，橡树资本的经营理念是“向前迈进，但要谨慎”。“我们投资了，我们试图完全投资。但我们努力“谨慎行事”。由于我们对风险资产战略总是采取谨慎的态度，所以它的真正含义是“比平常更谨慎”。“由于完全投资于一个谨慎的投资组合，导致我们持有这些资产的一些资产类别略微落后于基准，因为事实证明，谨慎通常是不需要的——直到今年。”
我们的谨慎立场在2020年艰难的第一季度得到了回报。我上面描述的情况使市场很容易受到外源性冲击的影响，于是我们陷入了混乱。重要的是，这种谨慎使我们能够冷静地对待我们的投资组合，总体上不担心价格下跌，也不为需要纠正的普遍问题所累。在资金可用的情况下，我们能够采取积极的行动，在资金可用性3月份达到峰值时成功抄底。
但现在，我认为我们已经回到了我曾经谈论过的市场状况。
· 和去年一样，不确定性依然存在（除了被认为最终不可避免的衰退和牛市的结束已经来了又去）。此外，我们还有一些新的不确定性。这份清单包括抗击新冠肺炎的斗争、复苏的形式、选举的影响以及选举是否会顺利进行、对更高税收和更多再分配的担忧、我们国家的分裂，以及种族和谐的前景。如果说过去几年的预期回报率很低，那么由于利率的下调，现在的预期回报率甚至更低。现金回报率接近零，投资级债券的回报率为2%，高收益债券的回报率为5%，预计股票的回报率为5-6%——与此同时，大量资本都渴望投入使用。充足的回报可能很难获得。
· 股市又回到了2月份触及的高点附近，并以高于平均估值（如之前所述）的价格抛售。唯一看起来价格低廉的，是那些从根本上看风险最大的产品，比如石油和天然气、零售商和零售房地产、写字楼和酒店。以及评级较低的结构性信贷。正如我之前所说的，相对于其他东西，每样东西的价格似乎都是合理的，但由于基准利率较低，任何东西都不便宜。因此，在3月份短暂抄底后，我们又回到了低回报的世界。但由于大多数投资者并没有降低他们的要求或目标回报，他们不得不冒更高的风险来追求回报。
在我看来，低利率代表了当前金融环境的主要特征，为投资者创造了主要考虑因素：历史上最低的预期回报。因此，我重拾了近年来一直在做的一个名为“投资于一个低回报的世界”的演讲。最后，在列举了以上大部分内容后，我列举了投资者的战略选择，并以此作为结论：
· 像往常一样投资，期待你的历史回报。事实上，这是一个转移注意力的话题。你过去拥有的东西经过现在定价后获得了更低的回报。
· 像往常一样投资，接受今天的低回报。这是一个现实的，虽然不是一个令人兴奋的前景。在不确定性高的情况下降低风险，接受更低的回报。这是有道理的，但你的回报会更低。
· 在回报率接近于零的情况下持有现金，等待更好的环境。我反对这个观点。持有现金是极端的做法，目前肯定不需要。在你等待调整的时候，你的回报率大概是零。大多数机构无法做到这一点。
· 增加风险，追求更高的回报。这种做法“理应”会奏效，但这并不是确定无疑的，尤其是在这么多投资者都在尝试同一种做法的情况下。高水平的不确定性告诉我，现在不是大举投资的时候，因为较低的绝对预期回报似乎不太可能弥补这一点。
· 把更多的钱投入到特殊的利基市场和特殊的投资经理身上。换句话说，进入另类的、私人的和“阿尔法”市场，那里可能有更多抄底的潜力。但这样做会带来流动性不足和管理者风险。这当然不是免费的午餐。
有一种选择是完全令人满意且没有负面影响的。但在我看来，没有别的了。
用我过去几年一直在用的术语来说，今天应该如何在侵略性和防御性之间取得平衡呢？你应该如何“校准”你的投资组合的风险？它应该在你的正常水平；朝向进攻，试图从一个低回报的世界夺取高回报；还是出于对不确定性的尊重而倾向于防御，要求你满足于较低的回报？
我确信这是我的偏见，我倾向于在这个时候进行防御。在我看来，当不确定性很高时，资产价格应该处于低位，从而创造具有补偿性的高预期回报。但由于美联储将利率定得如此之低，回报率正好相反。因此，投资者的胜算并不大，市场很容易受到意外的负面影响。这是我对前几年的描述，现在我又说了一遍。这种情况并不是极端的——价格并没有高到可怕的地步（假设利率保持在低水平，这种情况可能会持续好几年）。但在这种情况下，很难找到令人垂涎的东西。
2020年10月13日
（文中观点仅代表嘉宾个人，不代表《红周刊》立场，提及个股仅做举例分析，不做投资建议。）
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以下是备忘录原文：
《Coming into Focus》
Roughly two months have passed since my last memo, Time for Thinking, and still not much has changed in the economy or the markets. The toll from Covid-19 continues to rise, the economic outlook is largely the same, vaccines remain some time off, and the S&P 500 is back where it was in early August. So I’ll repeat what I said then: it’s mainly been time for thinking. Fortunately, the more I’ve thought about the issues, the more things have come into focus for me. Thus, I’m going to use this memo to go into greater detail on a few topics.
『The Prerequisite』
In Time for Thinking I talked about the fact that I don’t consider this year’s developments to be cyclical. You could say, “Why not? The economy and the markets went down, and now they’re recovering. Isn’t that a cycle?” What I really mean is that this is very different from a normal cycle, and I’ve figured out a way to better explain that, borrowing a bit of what I said in my 2018 book, Mastering the Market Cycle. Most of the up-cycles I’ve witnessed occurred because things were going well in the economy, causing psychology and decision-making to become increasingly optimistic and eventually euphoric. Corporations favored expansion, stock prices rose and financial innovation became possible, even encouraged. Eventually, productive capacity exceeded what was needed, stock prices exceeded underlying value, and shaky investment innovations were embraced. When these trends outstripped the fundamentals and became unsustainable, the result was a downturn. Often a recession triggered a market correction, and sometimes the impact of that recession was reinforced by negative exogenous events that further darkened the previously-blue skies.
A good example is the first non-investment grade debt crisis Bruce Karsh and I managed through, in 1990-91. There was a recession, exacerbated by the shock of going to war to help Kuwait repel an invasion by Iraq. The newly developed high yield bond market experienced its first major spate of defaults, the result of a recession and credit crunch and exacerbated by the prosecution of Michael Milken and the failure of Drexel Burnham, precluding remedial bond exchanges that otherwise might have helped companies stay alive. Stocks declined, but high yield bonds went into free-fall. Notably, many of the prominent LBOs of the 1980s – which had been financed with perhaps 95% or so of debt – went bankrupt. Investor psychology collapsed and bondholders headed for the exits.
A collapsing economy needs a good dose of stimulus to pull it out of its swoon, and that’s what occurred. Usually that’s enough. Eventually the economy recovers; consumers resume buying; investors regain their equilibrium – some even sense the bargains that have been made available; and the upswing takes the economy back toward good health . . . and the cyclical process continues.
So, most of the time, downturns stem primarily from economic weakness, and they are repaired with economic tools. But this episode is different. It was caused by an exogenous, non-economic development, the pandemic. The recession – rather than being the cause – was the result: a closure of business induced intentionally in order to minimize inter-personal contact and halt the spread of the disease.
Thus, this down-cycle cannot be fully cured merely through the application of economic stimulus. Rather, the root cause has to be repaired, and that means the disease has to be brought under control. An effective vaccine will do this – in time – but healthy behavior will be required in the meantime. Spikes like much of Europe is seeing represent something of a step backward in this regard.
And even with the disease controlled, economic stimulus is unlikely to reverse all the damage. The trauma has been deep, and the impact may not be easily shaken off. Large firms will continue to automate and streamline. Large numbers of smaller businesses – such as restaurants, bars and shops – will never re-open. Thus millions of people will not be rehired into the jobs they formerly held. For this reason, the expectations with regard to economic recovery have to be realistic. To me, as I’ve said, “V- shape” has too positive a connotation.
The Need for Further Assistance
One of the things weighing on the recovery is the matter of help from Washington. Whereas the Treasury was able to announce aggressive spending programs in the spring, there has been no new package here in the fall. Partisan differences have arisen regarding the size of a package and its contents. Further, we’re so close to the upcoming election – less than a month away – that neither side wants to give the other anything that might be described as a victory.
But this is not an academic matter. The trillions of dollars paid out thus far were not stimulus payments, but support. They weren’t made to get the recipients to spend so much as to keep them and the economy alive. In short, the amounts distributed – to the unemployed, families with incomes below $100,000, companies and institutions – were designed to replace lost income and maintain, rather than stimulate, the economy. Individuals got money so they could buy the necessities of life. Companies got money to replace lost revenues, so they could continue to employ people. These needs have not dried up, even as the disease has ground on and the supplemental unemployment benefits have expired.
As one of my Oaktree colleagues wrote me last week, “I was chatting today with the owner of a small movie theater chain. One wouldn’t trade places. All of their theaters in California are closed; the ones out of state are operating with high costs and no patrons; and there is virtually no product to attract audiences. And the lenders and landlords are banging on the door.”
Individuals have problems, too. According to Morning Brew on September 25:
With the economy still in the basement, people are straining to pay their mortgages. According to industry analyst Keith Jurow, “several million” people will have gone nine months without making a payment when the Federal Housing Finance Agency’s foreclosure and eviction moratorium expires at the end of the year.
17% of FHA-insured mortgages were delinquent in July, per the Department of Housing and Urban Development. In NYC, 27.2% of mortgages were.
Another pressing need can be found at state and local governments. Their revenues have withered as the take from taxes and fees has declined. But their need to spend is unabated – they’re not enjoying any savings in connection with the slower economy – and in fact it has grown. Police, firefighters and EMTs are no less essential, and the need for health care and family services has only increased. And yet, unlike the federal government, cities and states can’t engage in unlimited deficit spending since they can’t print money or issue seemingly unlimited amounts of debt. Like companies and individuals, they need significant aid.
On September 24, The Wall Street Journal reported on Fed officials’ testimony to Congress:
The recovery would move along faster “if there is support coming both from Congress and from the Fed,” Chairman Jerome Powell said during the second of three days of congressional testimony Wednesday.
Chicago Fed President Charles Evans told reporters that his projection that the unemployment rate would fall below 6% by the end of next year had been premised on around $1 trillion in additional fiscal relief.
“If that doesn’t happen, then I think it’s going to be a lot harder, and much more unlikely that we make that much progress,” he said. . . .
“The power of fiscal policy is really unequaled by anything else,” Mr. Powell told lawmakers on a House panel overseeing the U.S. response to the coronavirus. (Emphasis added)
The same day, Dennis DeBusschere of Evercore ISI wrote:
On monetary policy, the Fed is not out of bullets and still has quasi-fiscal programs like the Main Street Lending Program (MLSP) and the Municipal Liquidity Facility (MLF). But as our friends at Macro Policy Partners pointed out, “Powell all but waved the white flag on those programs in his remarks, which is troubling. The Fed has already adopted a ‘set it and forget it’ stance on rates and QE, and these tools are not as well-suited to the current economic challenges as MSLP and MLF.” So either there is a fiscal package soon and risk assets move higher, or inflation expectations trend lower, forcing the Fed to use more bullets. Our hunch is the Fed will be forced to react. (Emphasis added)
The economic recovery everyone’s counting on is not an independent event, unaffected by developments. Rather, it is highly dependent on progress against the disease, as described above, but also on the continuation of fiscal expenditures in the interim. Sadly, the outlook for action in this latter regard is not good. Partisan enmity is at a level I’ve never seen before, especially given the fight over the Supreme Court nomination. With the two houses of Congress in the hands of warring parties, I’d be pleasantly surprised if they can agree on anything before the election.
The bipartisan Problem Solvers Caucus in the House restarted the negotiations a couple of weeks ago by surfacing a proposal that would come out in the middle between the Democrats’ target of $3 trillion and the Republicans’ willingness to spend $500 million, and compromise on the individual components as well. [Note: I’m a national co-chair of No Labels, the organization that supports the caucus and the goal of bipartisan cooperation.] Let’s be hopeful that something can be done to appropriate needed aid even while the election campaign is underway.
The Power of Interest Rates
One of the biggest financial stories of 2020 is the powerful market rally that began in late March and quickly caused the equity indices to regain the ground they had lost and in some cases reach new highs. And the more I think about it, the more credit I attribute to the low level of interest rates.
As you know, the Fed reduced the fed funds rate – the base rate that influences many other interest rates – by a half-percent on March 3, from 1.50-1.75% to 1.00-1.25%, and by an additional percent on March 15, to 0-0.25%. Low rates like those of today exert influence in a broad variety of ways. I touched on a few of them in my last memo, but I’m going to undertake a fuller treatment of the subject here.
First, there’s the stimulative effect of low interest rates. This is probably the aspect people think of first when there’s a rate cut. In short, everything that entails financing is made more attractive. It becomes cheaper to buy a house because the monthly mortgage payment is smaller. Ditto for cars and boats. Monthly payments on existing adjustable-rate mortgages decline, leaving consumers more disposable income. Corporate interest expense declines as well, reducing the cost of a new factory or production line. A faster-growing economy improves the general mood and makes transactions more likely. And fear of missing out on the low rates gives people a reason to act now, accelerating transactions that might otherwise have taken place in the future.
Second, lower rates increase the discounted present value of future cash flows. In the most theoretical sense, the current value of an asset is the discounted present value of the cash flows it will produce in the future. We discount future cash flows because a dollar to be received in the future isn’t worth a dollar today: money invested today should bring back more in the future. If you demand a return of 7%, you’ll pay $0.51 today for $1 to be received in ten years.
(Discounted cash flow, or “DCF,” is widely used to quantify the potential return from investments. The discount rate that sets the estimated future cash flows equal to the initial investment is the return the investment will produce if the flows materialize as expected. Thus, reversing the sentence just above, if you can put up $0.51 today and get back $1 in ten years, the implied return is 7%.)
The rate at which we discount future cash flows depends on the risks involved in waiting for them. These include the risk of actual loss as well as the loss of purchasing power to inflation. If something’s risky, we should demand a high return and thus use a high discount rate. However, the rate we use is also a function of prevailing interest rates and the returns available on other investments (opportunity costs). When those things are low, a low discount rate will be used. And the lower the discount rate, the higher the resulting present value. Thus low interest rates raise the DCF value of all investments.
Third, a low risk-free rate brings down demanded returns all along the capital market line. The yield on the 30-day Treasury bill is often referred to as the risk-free rate. There’s no credit risk, since the obligor is the government (which can print all the money it needs for repayment), and there’s no risk of losing purchasing power to inflation, since repayment at maturity is only days away.
Since the risk-free rate can be earned with complete safety, and most people prefer safety over risk (all else being equal), investors shouldn’t take risk without being compensated for doing so. As investments increase in terms of the level of uncertainty, an incremental “risk premium” should be incorporated in their potential returns. Thus the notion of the “capital market line” that slopes upward and to the right, showing the relationship between risk and return, as follows:
In this graphic, the capital market line shows a coherent relationship between expected return and expected risk. When I studied at the University of Chicago business school, they called this “equilibrium”: as perceived risk increases, each asset class appears to offer a higher a priori return, such that the prospective risk-adjusted return on each asset is fair relative to the others. Nothing else makes sense in a market that’s functioning well.
But in March, the Fed lowered the fed funds rate by 1.5%. Predictably, other interest rates, bond yields and prospective returns generally followed suit, as suggested in the next graphic.
The risk/return relationships among asset classes are still reasonable, but all prospective returns are much lower in the absolute. Thus, in general, the lower the point at which the capital market line originates, the lower all returns will be.
Or to get away from the graphic and say it in words, when I began to manage high yield bonds in late 1978, the fed funds rate and the yield on the ten-year Treasury note both stood around 9%. As a result, high yield bonds had to offer yields above 12% in order to attract capital (and yet few investors were willing to buy them because of the stigma and because they didn’t need yields that high to reach their return goals). But today, with the fed funds rate and yield on the ten-year well below 1%, people are flocking to high yield bonds paying 5-6% like it’s free money. The point is that the lower the risk-free rate, the lower the prospective return needed to attract capital to other asset classes.
So the lower the fed funds rate is, the lower bond yields will be, meaning outstanding bonds with higher interest rates will appreciate. And lower yields on bonds means they offer less competition to stocks, so stocks don’t have to be cheap to attract buying. They, too, will appreciate. And if high-quality assets become high-priced and thus offer low prospective returns, then low-quality assets will see buying – implying rising prices and falling prospective returns – because they look cheap relative to high-quality assets.
Most decisions in investing are relative decisions. Investors try to find the most attractive opportunity so as to be able to achieve the highest risk-adjusted return. Thus a great deal of the selection process is comparative. “I’m considering buying X. How does its risk/return proposition compare with the one on Y?” That means the lower the return is on Y, the less X has to offer to be the superior investment. And if X is to offer less return, the way it gets that way is through an increase in its price. Thus, assets and asset classes are inherently interconnected. Money moves from one asset class to the next in search of the best bargains, which get bought up until they’re at equilibrium with everything else. Changing the risk-free rate has the potential to reset the returns on everything.
Fourth, lower demanded returns lead directly to higher valuations. When Treasury notes yield a more normal 3%, investors might demand a return of, say, 6½% (incorporating an “equity premium” of 350 basis points) if they’re to invest in the S&P 500 instead of Treasurys. The S&P offers such an “earnings yield” when its earnings represent 6½% of its price, which written as a fraction is 6½/100. The ratio of earnings to price is obviously the inverse of the ratio of price to earnings, or the p/e ratio. An earnings yield of 6½/100 equates to a p/e ratio of 100/6½, or 15.4, which is a rough approximation of the S&P’s average p/e ratio since World War II.
Now let’s assume a Treasury yield like today’s 1%. To offer the same 350 basis point equity risk
premium, the earnings yield only has to be 4½%. And an earnings yield of 4½/100 implies a p/e ratio of 22.2. So, in theory, assuming S&P earnings are unchanged, a reduction of the required earnings yield from to 6½% to 4½% calls for an increase in the p/e ratio, and thus in the price, of 44%. This is another way to describe the impact of lower interest rates on asset prices. Lower rates mean higher prices for stocks, just as they do for bonds. (Note: since companies’ earnings generally grow while bonds’ interest coupons don’t, it can be argued that required return on stocks should be even lower, meaning p/e ratios can be even higher.)
Fifth, the Fed also has the ability to lower yields by buying bonds. This is really an extension of the point just above. In addition to lowering the fed funds rate, the Fed can goose the markets by buying Treasury bonds and notes and other types of securities. If the Fed buys securities, that lifts the prices of those securities. When their prices go up, their expected yield to maturity goes down. And when the yield on bonds goes down, other assets can attract capital without offering as much prospective return as they used to, so their prices can rise, too.
Further, when the Fed buys securities, it puts money into the hands of the people who sell them to the Fed, and that money will be spent or loaned (helping the economy) or reinvested (driving up asset prices). In the four months from mid-March to mid-July of this year, the Fed bought mostly Treasury bonds and notes, but also other securities, to the tune of more than $2.3 trillion. That was roughly 20 times what it bought in 18 months during the Global Financial Crisis.
Sixth, low interest rates and the resultant low prospective returns encourage risk tolerance and reaching for return. When a lower risk-free rate pulls down the capital market line as shown above, most assets promise less return than they used to. That means people who in the past got the return they want or need from an asset with a given level of risk now have to move out the risk curve to riskier assets in order to try for that same return.
Today, many U.S. institutional investors are saddled with target returns (in the case of endowments) or actuarial assumptions for return (for defined-benefit pension funds) in the area of 7%, give or take. Unfortunately, these needed returns have not come down nearly as much as interest rates (and thus prospective investment returns) have fallen. For return targets to decline as much as interest rates, universities and charities would have to be content with receiving reduced support from their endowments, and pension plan sponsors would have to come up with increased funding.
The investments one might have made in the past now promise far less return than they used to. With prospective returns on cash near zero, the ten-year Treasury at 0.7%, high grade bonds yielding 2-3% and stocks expected to return 5-6%, what’s an investor needing 7% to do? The usual answer is to take on more risk in pursuit of the higher returns that riskier investments appear to promise.
In this way, low rates make risk aversion a challenging thing to practice and risk taking much more palatable. The alternative is to accept today’s lower promised returns. But most people opt for the former, and that means risky asset classes become crowded with eager capital, something that’s not beneficial for risk-adjusted returns. Bad things tend to happen when FOMO – the fear of missing out – takes over from risk aversion, or the fear of losing money.
Seventh, the need to put money to work causes the capital markets to reopen. In most financial crises, the “credit window” slams shut because people with capital (a) are nursing losses on the assets they own and (b) are terrified about the future of the environment. Those two factors make them reluctant to provide new financing, and that in turn means capital is unavailable – even to deserving companies and potentially lucrative projects. That, in turn, means risk assets decline in price, causing prospective risk-adjusted returns to rise.
But today, the Fed and Treasury have reassured investors that they will ride to the rescue, that large amounts will be made available to companies and other participants in the economy, and that they can depend on a prompt recovery. This has enabled investors to “look across the valley” to better times. This in turn has enabled low rates to coerce sources of capital to provide generous levels of financing.
Thus, today, credit is liberally available, and bond issuance has equaled or eclipsed many prior records. For example, despite the biggest quarterly decline in GDP in recorded history and the closure of the capital markets for a while, $345.6 billion of U.S. high yield bonds have been issued so far this year, according to S&P. That’s more than the record $344.8 billion issued in all of 2012.
In all these ways, a low risk-free rate makes even low investment returns seem attractive. Thus, today, it seems to me that most assets are offering expected returns that are fair relative to their expected risk, relative to everything else. But the prospective returns on everything are about the lowest they’ve ever been.
Changes in the Composition of the Stock Market
In Time for Thinking, I also mentioned the increased bifurcation of the U.S. equity market. In short, the leading tech and software companies (a) have become more different from other companies as the role and power of technology have expanded and (b) have become a much larger part of equity indices as such companies have grown and become more highly valued, and as indices like the S&P 500 have changed their composition to remain relevant. While I’m no expert, I’m going to cite a few of the arguments regarding the significance and implications of this trend. (Thus I pass on these appealing arguments; I don’t endorse them).
First, the attributes and returns on the two groups of stocks have become more differentiated.
· The gap between the growth outlook for FAAMG (Facebook, Apple, Amazon, Microsoft and Google) and similar companies and that for the rest (in the slow-growing 21st century) is huge and expanding.
· The adoption of technology has been pulled forward by the pandemic. Thus virtual meetings, ecommerce and cloud computing are now commonplace, not the exception.
· Current profits severely understate the tech leaders’ potential. They currently choose to spend aggressively on new product development to expand share and head off competition, voluntarily suppressing profit margins. Thus enormous potential exists for the tech companies to increase profit margins in the future when they become willing to moderate their growth rates.
· Their addressable markets are larger than ever and growing, giving them greater “runway.” For example, at the end of 1999, during the tech bubble, there were 248 million Internet users in the world. Now there are more than that in the U.S. alone and almost 5 billion worldwide. Thus 62% of the world’s population carries a computer with Internet connectivity in his or her pocket.
· Finally, it’s easier than ever to scale these businesses. In the past, one would have to go to a dealer to buy software on a disc, take it home and install it. Now we download apps from the web in seconds.
For these reasons, a large differential in terms of p/e ratios is warranted.
Second, these groups will not merely coexist and perform differently. Rather, the tech companies have the potential to negatively impact some of the non-tech companies. The common term for this phenomenon is “disruption.” Amazon has endangered brick-and-mortar retailers. Netflix has challenged the traditional TV and movie ecosystem. Facebook has cut into newspapers and other traditional media – industries thought to be protected by moats and thus “defensive.” Tesla has revolutionized the auto industry and outperformed the incumbents in developing electric vehicles. The list of industries immune to technological change – in terms of profitability if not their essential nature – is limited.
Finally, it’s argued that the leading tech companies of today are stronger than the Nifty Fifty of the late 1960s. Today’s leaders are often compared to the Nifty Fifty, but they’re much better companies: larger; faster growing with greater potential for prolonging that growth; capable of higher gross margins (since in many cases there’s no physical cost of production); more dominant in their respective markets (because of scale, greater technological superiority and “lock in,” or impediments to switching solutions); more able to grow without incremental investment (since they don’t require much in the way of factories or working capital to make their products); and possibly valued lower as a multiple of future profits. This argues for a bigger valuation gap and is perhaps the most provocative element in the pro-tech argument.
Of course, many of the Nifty Fifty didn’t prove to be as powerful as had been thought. Xerox and IBM lost the lead in their markets and experienced financial difficulty; the markets for the products of Kodak and Polaroid disappeared, and they went bankrupt; AIG required a government bailout to avoid bankruptcy; and who’s heard from Simplicity Pattern lately? Today’s tech leaders appear much more powerful and unassailable.
But fifty years ago, the Nifty Fifty appeared impregnable too; people were simply wrong. If you invested in them in 1968, when I first arrived at First National City Bank for a summer job in the investment research department, and held them for five years, you lost almost all your money. The market fell in half in the early 1970s, and the Nifty Fifty declined much more. Why? Because investors hadn’t been sufficiently price-conscious. In fact, in the opinion of the banks (which did much of the institutional investing in those days) they were such good companies that there was “no price too high.” Those last four words are, in my opinion, the essential component in – and the hallmark of – all bubbles. To some extent, we might be seeing them in action today. Certainly no one’s valuing FAAMG on current income or intrinsic value, and perhaps not on an estimate of e.p.s. in any future year, but rather on their potential for growth and increased profitability in the far-off future.
And note that a lot of the strength and potential of today’s tech leaders derives from their dominant market shares and market power. This same element creates one of their greatest vulnerabilities: potential exposure to anti-trust action. Bigness and the successful tactics that led to it are enough to make some people call for constraints on the incumbents. Here’s what Barclays reported on October 7:
Yesterday, US large-cap technology stocks (i.e. Facebook, Amazon, Google and Apple) came under pressure after the House antitrust subcommittee released a 449-page report proposing far-reaching antitrust reforms. Recommendations include structural separation, prohibiting a dominant platform from operating in competition with the firms dependent on it and line-of-business restrictions, limiting the markets in which a dominant firm can engage.
There are two groups of stocks in the indices, and the representation of tech stocks is large and expanding. In the S&P 500, for example, roughly one-quarter by value consists of tech and software companies that are fast growing and have the ability to increase both revenues and profit margins, and the remaining three-quarters is slow growing and already enjoying maximum margins. Today’s tech leaders are more superior than ever to run-of-the-mill companies, rendering indices that include both types of company less relevant than ever. Or so it’s argued. Regardless of where you come out on that question, if an index consists 25% of great growth companies at high multiples (up roughly 30% this year as of the end of September) and 75% more pedestrian companies at low multiples (up 4%), the average figures in terms of growth, valuation and performance might not be meaningful enough to support conclusions about “the stock market.”
A Different Kind of Crisis
One question I’m often asked nowadays is how the coronavirus crisis of 2020 differs from the past crises we’ve managed through:
· the high yield bond crisis of 1990-91, when many prominent LBOs of the ‘80s went bankrupt,
· the telecom/scandal company meltdown in 2001-02, and
· the Global Financial Crisis of 2008-09, brought on by the implosion of sub-prime mortgages and marked by the meltdown of financial institutions.
The clear difference I want to cover here relates to the characteristics of the current go-round. The best way to start might be to describe the crises of the past:
· In each of the three crises listed above, recessions caused or exacerbated economic weakness.
Now, contrast that with the events of 2020. In mid-February, developments regarding the coronavirus pandemic and the lockdown implemented to fight it began to hammer the markets. Prices for equities and credit fell, and the mood turned darkly negative. From the all-time high reached on February 19, the S&P 500 fell 34% in only 33 days. The prices of high yield bonds and leveraged loans were hard-hit as well. Security issuance stopped cold. The pieces were in place for a crisis just like those described above, and things were moving in that direction in March.
But as everyone knows, the Treasury and Fed announced rescue programs in mid-March and an enlarged Fed program during the week of March 23: zero interest rates, bond buying, grants, loans and significantly enhanced unemployment payments. The total ran to multiple trillions of dollars. And the authorities made it clear that there was more behind that: that the available resources were unlimited.
To illustrate the effect, since April 1, investors in distressed debt have had opportunities to make large rescue loans to companies or entities needing a quick response to problems related to illiquidity or pending debt maturities, and there’s still a good pipeline. But with investor optimism reinforced, competition to lend has increased, and the ultra-low returns available on safe assets have made the possibility of double-digit returns something people compete to achieve. The sum of all this has kept prospective returns far lower than is usual in times of crisis.
Thus this is an unusual crisis: one marked by a non-financial, exogenous cause and a lack of lasting pain for most investors . . . and not by widespread opportunities for bargain hunters. Great investments are often made when an investor is willing to buy something no one else will touch at any price. We were able to do just that in past crises, because what you needed was money to spend and the nerve to spend it,
and we had those things when most didn’t. Other investors’ lack of money and nerve in past crises made them great times for buying. Today, thanks to the Fed and Treasury, everyone’s got a lot of both. That makes things much tougher.
But what happens if people exhaust the support payments they’ve received, Washington fails to deliver sufficient additional assistance, widespread layoffs ensue (as seems to be beginning) and business slows again? Mightn’t we see a rise in defaults and bankruptcies and a softening of investor psychology and thus asset prices?
The Potential Downside of the Rescue
Along with the sweep of the Covid-19 epidemic and the magnitude of the recession that resulted from combatting it, the size and success of the Fed/Treasury rescue effort is one of the big stories of 2020. In the Global Financial Crisis, it took the authorities months to figure out what to do and do it. But this year, they dusted off the 2008 playbook and implemented it in a couple of weeks.
We’ve never seen an economic environment like the one brought on by the lockdown. Many industries (plus other entities and institutions) with zero activity and no revenues, but still high costs. And millions of people without jobs or incomes. There’s a belief (never documented) that a large part of the American population lacks resources with which to survive a $400 emergency. How would they survive months without paychecks? Without paychecks, how would they patronize merchants? Without making sales, how would merchants pay their rent? Or their taxes? Without rental income, how would property owners service their debt? Without income from debt service, how would lenders stay solvent? Without tax revenues, how would state and local governments pay their employees and continue to provide services? And how would developed nations purchase the exports that emerging economies need to make to survive? The picture we faced in mid-March was truly the worst I’ve seen. Global depression seemed possible.
But the Fed and Treasury brought their massive concerted effort, simulating the activity of the economy and replacing a good bit of the lost cash flows. It succeeded to a startling degree. Most investment markets recovered, and the economy has shown surprising strength. Thus the next thing I want to discuss are the possible ramifications of the rescue. I’ve touched on this before, but it’s one more thing on which I want to go into greater depth.
First, what are the policy implications of zero rates? To me, the most obvious one is that there’s no more room to cut. (Fed officials insist they won’t take rates into negative territory, and negative rates certainly can’t be said to have rekindled economic growth in Japan and Europe.) Thus the question is how the Fed would counter an economic relapse connected with something like a second wave of Covid- 19 and resultant second lockdown.
Second, rescues and bailouts have the potential to cause moral hazard. When the government saves people from losses, it teaches that it’s okay to make risky investments: if they work out, you get rich; if they don’t work, you’ll be bailed out. That’s a bad lesson. This year, for example, lifelines have been thrown to industries that over-borrowed, over-expanded and/or spent too much of their cash on stock- buybacks. Yet it was decided that they wouldn’t be permitted to go bankrupt.
Further, by dramatically lifting the markets, the Fed may have caused some people to believe that it will always do so – that there’s a “Powell put” that can be counted on to keep things humming. (Think back to the tantrum the stock market threw in the fourth quarter of 2018, when the yield on the ten-year Treasury got up to 3.25%. It was enough to end the program of interest rate increases that Janet Yellen had initiated and bring on a series of cuts instead.) If investors believe the Fed can always be counted on to keep the markets aloft, that will encourage dangerous behavior. And, anyway, it seems like an impossible task and, in my opinion, a questionable goal for the Fed.
Third, the kneejerk reaction to trillions of dollars of deficit spending on the part of the Treasury and further trillions of dollars of bond buying by the Fed is worry about inflation. The injection into the economy of trillions in added liquidity would seem to have the potential to create too much money chasing too little in the way of goods, causing prices to rise (as it has done for assets). Further, as a result of the rescue measures, we’re running a multi-trillion-dollar deficit and adding trillions to the national debt, which as a percentage of GDP now approaches the high established after World War II.
Printing large amounts of money has had severe consequences in the past. One wonders whether the 2020 version might bring about some of the things traditionally associated with currency debasement:
· undesirably high inflation,
· weakness of the U.S. dollar,
· a downgrade of the U.S. credit rating,
· an increase in the cost of borrowing to cover the increased deficit,
· rising interest rates generally, adding further to the cost of debt service, and thus to the deficit and debt,
· the allocation of an increasing share of the federal budget to debt service, and
· the dollar’s loss of status as the world’s reserve currency.
Of course, there are rejoinders:
· We’ve been engaged in deficit spending for a long time without any rekindling of inflation or other ill effects. (Of course, this can be likened to the frog sitting in the pot of water that’s being heated. It doesn’t notice the gradually rising temperature until it’s too late.)
· Nations have been trying to create 2% inflation for years without success. Thus (a) inflation isn’t easily ignited and (b) inflation isn’t the problem – the lack of it is.
· Modern Monetary Theory says (over-simplifying) that deficits and debts don’t matter. (But most economists disagree, and common sense suggests it’s unlikely a country can spend beyond its means to an unlimited degree without repercussions.)
· Finally, there’s no obvious candidate to replace the dollar as the reserve currency.
All I know is that (a) the Fed and Treasury seem unworried about the possibility of any of the above and (b) anyway, they consider continuing the program indispensable.
Fourth, what the Fed does worry about is anemic growth. It will certainly take a fair while – a year or more following the low reached in the second quarter of this year – for GDP to regain the level achieved in 2019 and what it was supposed to be in 2020. A stagnant economy would fail to put people back to work who lost their jobs as a result of the lockdown, and it certainly wouldn’t provide jobs for a growing population.
“The risk here is a downward spiral,” [Lael Brainard, a Fed governor, noted in a recent speech], warning that the economy could be trapped in a vicious cycle of low interest rates, muted inflation and weak growth.
Long-term trends such as disappointing productivity gains and limited labor force growth are sapping the economy’s potential. In July, the Congressional Budget Office said the U.S. economy could expand in the long run at an average annual rate of just 1.8 percent — down from more than 4 percent in 2000. (The Washington Post, October 3)
Because this is the Fed’s prime concern, it’s less worried about the risks entailed in its efforts to rescue and stimulate the economy as described above. It is perfectly willing to see inflation at 2%, something that it hasn’t been for years. In fact, it recently announced an averaging approach under which monetary policy will remain loose and rates low until inflation averages 2%. That is to say it will be permitted to run above 2% for a while as a way to bring the average up to 2%.
Some say the worst of all worlds would be stagflation, which I lived through in the 1970s: high inflation and economic weakness. Certainly it was a dismal decade. But others think economic sluggishness is more likely to lead to disinflation (declining inflation) or even deflation, a phenomenon so rare we know little about it.
The secular deterioration in economic growth has created a condition of excess resources and disinflation. (Hoisington Quarterly Review and Outlook, Third Quarter 2020)
My answer is that I have no idea whether we’ll see inflation, stagflation, stagnation, disinflation or deflation, and Oaktree won’t bet on any of them. It’s one of the tenets of our investment philosophy that our investment decisions aren’t driven by macro forecasts. Not that it wouldn’t be nice to know what the future holds in these regards; rather it’s simply that most investors – and certainly we – aren’t capable of superior judgments about the macro. So why bet?
Finally, I want to state clearly that nothing I’ve written on the subject of the rescue and its possible ramifications is intended to be critical of the Fed and Treasury and their actions. I put it simply: just because something has potential negative consequences doesn’t mean you shouldn’t do it. In the case of the pandemic and associated recession, there was absolutely no alternative. While not perfect, the policy response has been brilliant.
Further Exposing Inequality
Especially in this environment of heightened attention to social and racial justice, I can’t end this memo without touching on some of the many ways in which the recent experience has shed additional light on inequality in our society:
Of course, “lower income” is disproportionately synonymous with “non-white.” Taken together, I believe there’s been a “tale of two cities.” The overall experience of lower-income Americans during the pandemic – and thus of Blacks and Hispanics – has been a far cry from that of whites and those with higher incomes and greater financial resources. These observations are likely to be part of the conversation on equality of opportunity that lies ahead for our country.
What It All Means for the Markets
For years leading up to 2020, I described the investment environment as follows:
· An unusually high level of uncertainty (mostly exogenous and geopolitical)
· The lowest prospective returns ever
· Asset prices that were full to excessive
· Pro-risk behavior being engaged in by investors trying for high returns
Taken together, these things told me we were living in a low-return world in which the promised returns didn’t fully compensate for the risks. It wasn’t a bubble, characterized by absurdly high prices. And there was no way to say for sure when the good times would end or why. It was merely the absence of justification for taking full risk.
Thus Oaktree operated under the mantra “Move forward, but with caution.” We invested, and we tried to be fully invested. But we endeavored to do so “with caution.” And since we always take a cautious approach to our risk-asset strategies, it really meant “more caution than usual.” Being fully invested in a cautious portfolio caused us to lag the benchmarks a bit in some of the asset classes where we have them, as it turned out that caution generally wasn’t needed – until this year.
Our cautious stance was rewarded in the difficult first quarter of 2020. The conditions I described above made the markets vulnerable to exogenous shock, and we got a doozy. Importantly, that caution enabled us to approach our portfolios calmly, generally unconcerned about price declines and not burdened with widespread problems requiring remediation. In drawdown funds with capital available, we were able to act affirmatively, picking up bargains when their availability peaked in March.
Now, however, I think we’ve returned to the market conditions I used to go on about.
In my view, the low interest rates represent the dominant characteristic of the current financial environment, creating the dominant consideration for investors: the lowest prospective returns in history (for the reasons described on pages 4-6). Thus I’ve dusted off a presentation I’ve been giving in recent years called “Investing in a Low-Return World.” At its end, after laying out much of the above, I conclude by enumerating the strategic alternatives for investors:
None of these alternatives is completely satisfactory and free from downside. But in my view there are no others.
To put it into the terms I’ve been using over the last several years, how should the balance be set today between aggressiveness and defensiveness? How should you “calibrate” the riskiness of your portfolio? Should it be at your normal level; titled toward offense to try to wrest high returns from a low-return world; or tilted toward defense in deference to the uncertainties, requiring you to settle for lower returns?
As I’m sure is my bias, I lean toward defense at this time. In my view, when uncertainty is high, asset prices should be low, creating high prospective returns that are compensatory. But because the Fed has set rates so low, returns are just the opposite. Thus the odds aren’t on the investor’s side, and the market is vulnerable to negative surprises. This is how I described the prior years, and I’m back to saying it again. The case isn’t extreme – prices aren’t grievously high (assuming interest rates stay low, which they’re likely to do for several years). But it’s hard in this context to find anything mouth-watering.
October 13, 2020
往期精彩解读
1.霍华德·马克斯最新备忘录：美股牛市继续演绎，不要低估科技龙头股的增长能力
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