Howard Marks: Don’t let emotions cloud your judgment on war

# Long Yue

Source: Wall Street CN

Howard Marks, co-founder of Oaktree Capital Management, warned investors against letting emotions drive their judgment when assessing the impact of the Middle East conflict. With the conflict’s duration, scale, and outcome all unpredictable, investors should exercise caution and avoid impulsive actions. “Since we don’t know what this means, there may be no smart action to take.”

Howard Marks, co-founder of Oaktree Capital Management, cautioned investors to stay calm amid the Middle East conflict, refrain from emotional decision-making, and watch for emerging cracks in the private credit market.

On March 3, Marks spoke via video link at the Australian Financial Review Business Summit in Sydney, urging investors to avoid letting heightened emotions guide their risk-exposure decisions in response to the Middle East conflict.

Marks emphasized that the most critical takeaway from the current situation is recognizing the sheer scale of the unknowns. He noted that the conflict’s duration, magnitude, and ultimate outcome are all unforeseeable.

He bluntly highlighted the dangers of emotional decision-making. “It’s easy to let it affect your emotions, but that may not be very helpful,” he stressed. “The outcome is unpredictable.”

He further advised investors to exercise restraint amid profound uncertainty. “Since we don’t know what this means, there may be no smart action to take.”

At the same summit, Jenny Johnson, CEO of Franklin Templeton, offered a relatively optimistic view, suggesting the conflict is unlikely to last more than five weeks. However, U.S. President Donald Trump has previously made clear that the war has no fixed timeline.

Over the weekend, U.S.-Israeli strikes killed Iran’s Supreme Leader Ayatollah Ali Khamenei, triggering severe shocks in energy markets. In response, Iran has continued launching missile attacks across the Middle East.

*(Video screenshot: Howard Marks)*

## Hidden Risks in the Private Credit Market

Beyond geopolitical risks, Marks also issued a warning about the private credit market. He pointed out that after a decade of massive expansion, the sector has become far less specialized.

Marks observed that cracks are appearing in some corners of the market, risks that may be underestimated by some. He cited the bankruptcies of Tricolor Holdings, a subprime auto lender, and First Brands Group, a U.S. auto parts manufacturer.

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

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

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