Howard Marks Turned A Random Call Into A $224B Empire — Why He Chose Bonds Over Stocks

Oaktree Capital Management co-founder Howard Marks, whose estimated net worth sits at approximately $2.2 billion (£1.7 billion), told Indian entrepreneur Nikhil Kamath that his 48-year career in bonds began with a phone call he did not seek and a job he did not choose.

Speaking on the People by WTF podcast, the 80-year-old said a superior at Citibank asked him in August 1978 to investigate a California financier named Michael Milken and a nascent asset class called high-yield bonds. 'That put me here today,' Marks said. 'Forty-eight years later.'

Oaktree, which Marks co-founded in 1995, now manages $224 billion (£177 billion) in assets as of 31 March 2026, according to Brookfield Oaktree Holdings. The firm is the world's largest investor in distressed securities.

Why Marks Chose Bonds Over Equities for 48 Years

Marks spent nine years in Citibank's equity department before being moved to bonds in May 1978. His employer had bet heavily on the Nifty Fifty—50 fast-growing US companies whose share prices were treated as untouchable. Marks said investors who bought those stocks the day he started work in September 1969 and held for five years lost approximately 95% of their money, with price-to-earnings ratios between 60 and 90.

When a new chief investment officer asked Marks to start a convertible bond fund, he agreed. Three months later came the call about Milken. 'I said, yes, I can do it,' Marks told Kamath. That placed him at the front of the high-yield bond market before most institutional investors knew it existed.

Asked why he stayed in bonds rather than returning to equities, Marks pointed to temperament. His parents were adults during the Great Depression. 'Don't put all your eggs in one basket, save for a rainy day, avoid risk,' he said.

Where stock investors see bonds as instruments with capped upside, Marks framed them differently. 'Predictable outcome, which is achieved almost every time,' he said. He added that 99% of Oaktree's high-yield bonds have paid interest and principal as promised. Funds led by Marks have returned an average of 19% per year net of fees over their lifetime, per Oaktree's public filings.

He pointed to the S&P 500 to illustrate why equity markets overshoot. The index has averaged roughly 10% annually over a century, yet the return in any given year almost never lands between 8% and 12%. In the 1990s it returned around 20% a year. In the 2000s, zero. 'Greed and fear,' Marks said. 'Excess and correction.'

How Oaktree Earns 'Excess Return' in Distressed Bonds

Marks described Oaktree's core skill as identifying mispriced default risk. If the market prices a company's likelihood of non-payment at 5%, but Oaktree's analysis puts it at 2%, the borrower still pays an interest rate calibrated to the market's higher estimate. The gap between the actual risk and the compensation received is what Marks calls excess return.

'That's what we do,' he said. 'That's the essence of lending money.'

The numbers back the claim. Marks said Oaktree's default rate over 40 years has run at roughly one-third of the industry-wide average, which he put at 3.6% to 3.7% annually. Moody's Investors Service has published a long-term speculative-grade default rate averaging closer to 4.9% since 1983, though methodologies differ.

He attributed the gap to analysts who stay in their roles for decades. 'We have people who've been doing it for years and years,' he said. 'We have the benefit of their expertise.'

Bruce Karsh, his co-founder who joined in 1987, has managed approximately $70 billion (£55 billion) in distressed debt since 1988. Marks said well over 90% of that total represents profits. The global high-yield bond market was valued at approximately $5.5 trillion (£4.3 trillion) in 2025, according to Expert Market Research.

Marks addressed the stigma that helped build his career. 'Junk bonds are much more predictable than stocks,' he said. 'And yet they called them junk.' That label kept prices low for decades, handing a structural advantage to anyone willing to do the work.

Asked what field offers the best opportunity for someone starting out today, he pointed to artificial intelligence - but cautioned that understanding AI's implications could also mean concluding it is overvalued.