Howard Marks: The tide has not receded yet, we will only find out "who's swimming naked" in 2025.

2025 may become a "naked swimming" test for investors to see who can survive adversity. On Thursday local time, Howard Marks, founder of Oaktree Capital and billionaire investor, warned about the current economic situation in an interview with the media. He pointed out that facing the massive debt coming due in 2025, top global companies may be facing significant challenges. Marks said that although the current economic performance is still good, a large amount of debt accumulated in 2021 and 2022 will start to mature next year. Investors will soon find out "who is swimming naked." If the economy weakens further and the maturing debt increases sharply, it could trigger a wave of defaults. If the debt matures during an economic downturn, especially for companies that have taken on significant debt, they will have to face reality. In the increasingly challenging market environment, it is crucial to determine which companies and industries can survive in deteriorating conditions, and whether current pricing reflects reality, is overvalued, or undervalued. Regarding inflation prospects, Marks predicted that if the US inflation rate begins to fall to around 2%, Powell may start cutting rates earlier than previously indicated: Powell's speech on Monday mentioned, "We won't cut rates until inflation is trending towards 2%," the word "towards" is important here. He didn't say we'll wait until it reaches 2% before cutting rates, if inflation drops to 3%, 2.75%, or 2.5%, he might start cutting rates. Marks also pointed out that although current interest rates are not high compared to historical data, yields on credit, fixed income, bonds, and loan investments have significantly increased compared to the low-interest rate environment from 2009 to 2021. Today's rates are higher than in the past decade, meaning credit investments will receive more significant returns. Regarding investment philosophy, Marks said, "I make money by buying investments that others don't like at a low price, as long as the price is cheap enough, it will eventually turn out to be a good choice." This article is excerpted from the WeChat public account: Wall Street Observer, author: Zhao Ying. GMTEight Editor: Zhang Jiwei.