Howard Marks Latest Memo: All Bonds in a Bubble

Howard Marks Latest Memo is out. The memos are read by the oracle of Omaha himself. In the new report, Howard Marks discusses high yield bonds. Marks’ background is in distressed debt and he has some interesting comments about investing in the current low yield environment. Marks states that not only are high yield bonds in a bubble, but rather all bonds are in a bubble. He puts the blame for the creation of the bond bubble on Central bankers. He thinks that high yield bonds may actually be even safer than other types of debt. He notes that most high yield bonds have a lower duration and are therefore more protected from a rise in interest rates. Furthermore, rising interest rates imply a recovering economy which should lead to fewer defaults. The full memo can be found below in pdf format:

High Yield Bonds Today Revision 1