the kind of world that we compete in . It ’ s been an evolving pattern . Probably the most significant thing that has gone on is back in the ’ 70s there was this thing called the “ Nifty Fifty .” And the Nifty Fifty dominated the world . And , when I was starting my fund in ’ 72 / 3 / 4 , the Nifty Fifty was important and then , all of a sudden , we did well and the Nifty Fifty gradually dropped out of significance . Those were Xerox , Polaroid , etc . Now , what is the comparison today ? The world is focused on the “ Magnificent Seven .”
And there was this other in-between area in the Internet bubble in the late ’ 90s , where the world was focused on eyeballs . And that is what the conversation was around . That too had a peak moment , and as that peak moment faded , guess what asset class did very well ? Small-caps did very well after the Nifty Fifty sort of receded , and we had a 10-year run . The same thing happened in the Internet bubble . We had a 10- or 11-year run in smallcaps . And , perhaps , the same thing could be happening today with the Magnificent Seven , as they recede slightly . We ’ ve had the beginning of a very sharp rally in the small-cap world in the last couple months . The market ’ s up 25 % since the lows of October in small-cap , and they ’ ve done better than large-cap for the first time in some time . So , maybe it ’ s a good time coming for small-caps .
MARK SHENKMAN
Founder & President , Shenkman Capital Management , Inc .
It is a great honor for me to introduce my friend and competitor for the last 46 years , Howard Marks . Our careers have traveled similar paths . We both completed our military service in the Army in 1969 , and that was the height of the Vietnam War . And we both then entered the financial world . Howard went to Citibank , and I joined New England Merchants Bank in Boston . We were both given what we thought was an exciting assignment : covering the Nifty Fifty , a group of 50 high-flying , large-cap blue chip companies . And since this museum specializes in financial history , I thought you might be interested in that 16 of those 50 companies have been merged , and 10 have gone out of business .
However , with their lofty multiples , the great performance did not last , and when the bear market of 1970 hit , these stocks plummeted nearly 50 %. In 1978 , the CIO of Citi Equity Group banished Howard to a new platform at the bank , which had no recognition ; it had no benchmarks and no acceptance in the financial community . It was called junk bonds and convertible securities . In 1973 , I was also assigned research of the Nifty Fifty at Fidelity Management & Research . In 1978 , Howard and I witnessed the birth of today ’ s high-yield bond market . Howard quickly realized that this subsector of the fixed income market was incredibly inefficient , but with hard work and comprehensive credit research , the non-investment grade market could be exploited .
In the early 1980s , the high-yield market was still in its infancy , but new issuance was rapidly growing , as a result of the boom in LBOs . Howard would tell you he was at the right place at the right time . That is true . Howard recognized the extraordinary opportunity and he capitalized on the growth of this new asset class . In 1985 , Howard moved to Los Angeles and joined TCW . In 1995 , when Howard departed TCW , he was managing only $ 7 billion in high-yield bonds and security assets .
In that same year , he co-founded Oaktree Capital Management with five partners , including Bruce Karsh . In his wildest imagination — this is what Howard told me — he never believed that one day Oaktree would manage $ 10 billion in assets . Currently , Oaktree ’ s assets under management are approximately $ 190 billion . Today , the total size of the leveraged finance market is a staggering $ 5 trillion .
The phenomenal growth in the leveraged finance market is a direct results of Howard ’ s tireless efforts to expand the market , domestically and globally . Many of you know Howard from his wonderful memos , tv appearances and books . Howard is a student of finance and financial history and truly understands the investment lessons of past market cycles . However , there ’ s another side of Howard that I ’ d like to share with you that I feel is just as important . While Howard has achieved incredible success at the highest levels of global finance , he remains the same modest , private and humble individual I met over four decades ago . For an individual with such an extraordinary record of success , these outstanding qualities are remarkable and rare , given his achievements . Howard is a true legend and trailblazer on Wall Street . For these reasons , Howard is a most deserving recipient of the Museum of American Finance Lifetime Achievement Award .
HOWARD MARKS
Co-Chairman , Oaktree Capital Management
I have a lot of people to thank tonight . I ’ ll start with Mark . He got me into this , so I said he had no choice but to introduce me . I appreciate the comment about humility . It reminds me of Winston Churchill , who said , “ He ’ s a humble man , and he has a lot to be humble about .” I also want to thank the Museum , David Cowen and Peter Cohen in their leadership roles , Bob Pisani and Consuelo Mack doing the emceeing job tonight , the other honorees — Tina , Rich and Chuck — who join me up here . I ’ m very pleased to be associated with all three of them .
As some of our other speakers have mentioned tonight , we ’ re all here because we believe in the importance of capitalism , private enterprise , the free markets , the highly efficient and highly functioning capital markets that we have , the access to opportunity and financial literacy . All of these concepts are essential to all of us here and make our country what it is today . I have had a great benefit from all of these things , and we all have the responsibility to perpetuate these things .
I was privileged to attend the Wharton School as an undergraduate and then the business school at the University of Chicago as a grad student . Where else in the world would I get to accomplish what I have and to have associations with all of you , without those institutions and without financial education ? Where else would the child of parents , neither of whom went to college , have the opportunity to enjoy the life I have , meeting people like John Whitehead in the course of my career ?
History is essential . And you really can ’ t function in the financial world if you ’ re not informed about it . The philosopher Santayana is famous for having said that those who are ignorant of history are doomed to repeat it . That ’ s an important lesson . One of my heroes , John Kenneth Galbraith , said that the outstanding
14 FINANCIAL HISTORY | Spring 2024 | www . MoAF . org