Trump’s election win could be favourable for business: Oaktree’s Howard Marks

A top US hedge fund boss says Trump’s win could help drive business, but the bull run in shares is coming to an end.

Howard Marks, chairman and co-founder of Oaktree Capital: “I am a nuts and bolts value investor”. Pic: Bloomberg

US investor Howard Marks — the founder of the $US98 billion ($130bn) Oaktree Capital hedge fund — believes Donald Trump’s election win could be favourable for business, but he is in the “I don’t know” camp about what it will mean for markets in the long term.

Indeed the renowned hedge fund boss warned the global economy could be seeing the end of the latest bull run in shares.

“Even though people are not thinking bullish, they are acting bullish....In American terms we are in the seventh innings, if not the eighth,” he told the Sohn Hearts & Minds Investment Leaders conference in Sydney this morning.

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Promises to cut taxes and regulation will be a positive for business but the protectionist trade policies won’t, he told the conference.

“The jury is far from out, it’s barely in,’’ Mr Marks said.

“He (Trump) has a slim margin in the Senate, it includes people who said they wouldn’t support him, and I don’t think it will be a rubber stamp.

“On paper he should be a pro business president, should be more of a pro-business president than Hillary Clinton would’ve been.”

Mr Marks’ comments came as investors scooped up shares of big banks and industrial companies on Wall Street overnight, with the Dow Jones Industrial Average closing at a record high. The Dow industrials rose 218 points, or 1.2 per cent, to 18808, breaking its previous closing record of 18636 hit on August 15. The index is up more than 5 per cent this week.

A renowned contrarian, Marks has made his estimated $US1.8bn fortune and turned Oaktree into one of the world’s biggest alternative asset managers by exploiting inefficiencies in lesser understood markets.

On investment style, Mr Marks has some unconventional views. For him “long term investing” is the best and he rejects the idea of trading. “We only buy bonds we plan to hold to maturity,” he adds.

He is also critical of using debt to drive trading. “Leverage doesn't make an investment a better investment, It is just a magnifying glass. The more leverage you have your losses are

magnified too.

“I am a nuts and bolts value investor. You have to do the things you are good at. I am not a futurist. I am not a dreamer and a futurist. It is hard to be right about major societal trends.

“You have to think differently to be a superior investor. You have to think differently and be better,” he adds.

Mr Marks also revealed he follows US billionaire investor Warren Buffett and Jeremy Grantham of GMO in Boston.

Mr Marks noted Mr Trump had said a number of things a lot of people didn’t like, but at the same time was supportive of business, ranging from tax cuts to infrastructure spending. If a Trump administration implemented such initiatives, this would be positive for business.

“His appointments will be important. We’ll see what kind of people he can attract to work in his administration and see what he tries to move forward.”

Promises to spend on infrastructure were made by both sides and are likely to get support in Congress.

But Mr Marks said it won’t be enough to change the trajectory of the US economy.

On how the US election was decided, Mr Marks said the Trump campaign tapped deep emotions in the US.

“The economy has been growing more slowly in the last eight years, I think it will continue to grow more slowly than it used to ... we will have social issues to deal with and government will have to do a good job.”

Oaktree’s clients in Australia range from the Future Fund to Telstra Super and industry fund Cbus.