Beyond Stocks: The Allure and Strategy of Credit Investments
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 18 October 2023
⏱️ 34 minutes
🧾️ Download transcript
Summary
Why investing in non-investment grade bonds, leveraged loans, and preferred stocks is potentially more compelling than investing in common stocks at present.
Topics covered include:
- Why Howard Marks told institutional clients to sell stocks and buy high-yield bonds instead
- The contractual agreements comprising bonds, leveraged loans, and preferred stock give them an advantage relative to common stocks
- How preferred equity exhibits attributes of both bonds and common stocks
- What is the expected return and risks for high-yield bonds, leveraged loans, and preferred stock
- How do we invest in these three asset types
Sponsors
Delete Me - Use code David20 to get 20% off- To get 20% off Delete Me go tohttps://joindeleteme.com/david20 and use Code David20
Madison Trust Self-Directed IRA - Go Here to Learn More and Get Your $100 Off Promo Code
Show Notes
Sea Change - Memo by Howard Marks
Further Thoughts on Sea Change - Memo by Howard Marks
Investments Mentioned
SPDR Bloomberg High Yield Bond ETF (JNK)
iShares iBoxx High Yield Corporate Bond ETF (HYG)
Invesco Senior Loan ETF (BKLN)
iShares Preferred Stock ETF (PFF)
Virtus Seix Senior Loan ETF (SEIX)
DoubleLine Flexible Income Fund (DFLEX)
BlackRock Debt Strategies Fund (DSU)
Barings Corporate Investors Fund (MCI)
Related Content
397: How to Invest Based on Cycles
451: How Much Should You Invest in Stocks? The Art of Position Sizing in a Volatile Market
423: A “Safe” 6% Yield: The Case for Investment Grade CLOs
How to Invest in Closed-End Funds
Money for the Rest of Us Closed-End Fund Course
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Transcript
Click on a timestamp to play from that location
| 0:00.0 | Welcome to Money for the Rest of Us. This is a personal finance show on Money. How it |
| 0:05.3 | works, how to invest it, and how to live without worrying about it. I'm your host David |
| 0:10.7 | Stein. Today is episode 452. It's titled Beyond Stocks, The Allure and Strategy of Credit |
| 0:17.6 | Investments. There are a handful of investors who have greatly influenced my approach to investing. |
| 0:25.5 | These are investors whose firms, my former clients, and in some cases myself have invested |
| 0:30.4 | with over the years. These investors include Seth Klarman, Jeremy Grantham, Howard Marks, |
| 0:36.2 | Bill Ackman, and others. Last December, one of those investors, Howard Marks, who is co-founder |
| 0:41.8 | and co-chairman of Oak Tree Capital, released one of his periodic memos titled Sea Change. |
| 0:49.5 | Here's a key sentence from the memo. He put it in bold. Marks wrote, as I've written |
| 0:54.8 | many times about the economy and markets. We never know where we're going, but we ought |
| 1:01.0 | to know where we are. He's referring to taking the market's temperature, what are investment |
| 1:06.7 | conditions, what are expected returns, valuations, yields on bonds and other credit instruments. |
| 1:14.6 | We looked at using the market's temperature, investment conditions, in an episode where |
| 1:21.2 | we discussed Howard Marks, episode 397, on investing in cycles. Another quote from that memo, |
| 1:29.4 | Sea Change by Marks, and this really gets to the thesis of the memo. We've gone from a low return |
| 1:36.1 | world of 2009, the 2021, to a full return world, and it may become more so in the near term. |
| 1:44.6 | By full return, we're talking higher returns on cash, something we've discussed in the last few |
| 1:50.5 | episodes, where we can earn over 5% on cash. Marks continues, investors can now potentially |
| 1:56.3 | get solid returns from credit instruments, meaning they no longer have to rely as heavily |
| 2:02.2 | on riskier investments to achieve their overall return targets. Credit instruments are investments |
| 2:09.4 | where the return is primarily driven by a contractual agreement between the investor |
| 2:16.3 | and the investment sponsor. Think about common stocks. There is no contract that a company that |
... |
Please login to see the full transcript.
Disclaimer: The podcast and artwork embedded on this page are from J. David Stein, and are the property of its owner and not affiliated with or endorsed by Tapesearch.
Generated transcripts are the property of J. David Stein and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.
Copyright © Tapesearch 2026.