Howard Marks offers advice on how to navigate negative interest rates - Business Insider

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Billionaire Howard Marks gives his best advice for navigating an anomalous market where 30% of the world’s debt has a negative yield

But today, almost 30% — or roughlyA number of market pundits have weighed in on the debate, and explanations range from investor fear and deflationary expectations to the greater fool theory and lack of economic growth. It's hard to pin down exact reasoning behind the anomaly, which in finance usually means the true answer lies amidst the culmination of multiple ideas.

What Marks is saying here is that the future becomes more nebulous in the absence of a positive, risk-free rate of return that can be easily slotted into financial models. Tried-and-true valuation methodology — like the type highly dependent on historical relationships — suddenly becomes futile in a world of negative rates.

To accomplish this task, Marks suggests investors "move out the risk curve to strive for returns above those offered by safe instruments in this low-return world . . . but do so with caution."

 

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