HedgeFundLIVE.com — Howard Marks, manager of Oaktree Capital, today released his yearly review memo in which he sums up how 2010 was an “unusual year.” Last year was all about correlation, according to Marks, as macro trends drove performance within asset classes. As a result, most stocks had a difficult time outperforming benchmarks. 2010 was certainly not a stock picker’s market and, hedge funds, particularly long/short funds, saw weak returns as longs and shorts tended to perform similarly.
A lot of interesting material in his year in review letter, which you can read for yourself, but I will just highlight Marks’ outlook:
– When looking at the macro picture today, factor in that the financial crisis and economic contraction are past us, but so is much of the market recovery.
– The U.S. economic recovery is genuine. Economy is gradually improving and capital markets have stabilised, even turning generous.
– Low yields on short term Treasuries render the idea of solid returns + safety impossible. It is one over the other. As more investors choose the former (return), most equities have become at least fairly priced.
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