Howard Marks said: Don't let emotions affect your judgment of war.

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Howard Marks, co-founder of Oaktree Capital, warned investors to remain calm in the face of Middle East conflicts, avoid emotional decisions, and stay alert to emerging cracks in the private credit market.

On March 3, at the Australian Financial Review Business Summit in Sydney via video link, Marks stated that investors should avoid emotional surges when making risk exposure decisions due to Middle East conflicts.

Marks emphasized that the most important thing in the current situation is to recognize the vast number of unknown factors. He pointed out that the duration, scale, and eventual outcome of the conflict are all unpredictable.

In his address, he bluntly pointed out the dangers of emotional decisions. “It's easy to let it affect your emotions, but that might not be very helpful,” he stressed. “The outcomes are unpredictable.”

He further advised investors to exercise restraint in the face of high uncertainty. “Since we don't know what this means, there may not be any smart moves to make.”

At the same conference, Franklin Templeton Chief Executive Jenny Johnson expressed a relatively optimistic view, believing the conflict is unlikely to last more than five weeks. However, US President Trump had previously made it clear that there is no fixed timetable for this war.

Over the weekend, a US-Israeli strike resulted in the death of Iran’s Supreme Leader Khamenei, causing severe shock to the energy market. In response, Iran continued launching missiles in the Middle East.

Video screenshot, Howard Marks

Concerns in the Private Credit Market

In addition to geopolitical risks, Marks also sounded the alarm about the private credit market. He noted that due to massive expansion over the past decade, private credit is now much less specialized.

Marks observed that cracks are appearing in some corners of the market, and some of these risks may be underestimated by some people. He cited the bankruptcy cases of subprime auto lender Tricolor Holdings and US auto parts maker First Brands Group.

“There have been moments like this,” Marks said. “You can feel these tremors.” But he also noted that cognitive dissonance leads people to reject information that conflicts with their biases.

“People and markets tend to resist new information for a while, rather than gradually adapt, and then suddenly give in,” Marks warned.

Risk Disclosures and DisclaimerThe market involves risks, and investment should be made cautiously. This article does not constitute personal investment advice, nor does it consider the specific investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investment based on this is at your own risk. ```