Seldom you see people explaining things that worry investors or even intermediate active managers and put them out clearly in a few phrases. Howard Marks, chairman of Oaktree capital is one of them. He has a latest newsletter out here (pdf copy) and transcript here. Its basically like an investor must read. He went on Bloomberg to give a master class. I picked out some of the best snippets.

The talk of higher risk higher returns

“Higher — riskier — riskier investments have higher returns. So if you want to make more money, take more risk. It can’t be right, because if riskier could be counted on to produce higher returns, they wouldn’t be riskier. It’s at simple as that. There’s got to be something wrong with that formation. What we should say is that investments that appear riskier have to appear to offer higher returns or nobody will ......