Here's where Howard Marks sees the potential for opportunity

Bad decisions have been made in the debt market that will ultimately lead to good investment opportunities, noted debt investor Howard Marks said Wednesday.

"When those bad decisions are going to be put the test and fail and present opportunities to us, we never know," Marks said in an interview on "Power Lunch" from the Sohn Investment Conference.

That said, there are certain areas to watch, such as oil and gas and other metals and mining. That's where he believes the worst decisions have been made.

"People lent a tremendous amount of money to companies in those sectors … whose revenues are enormously dependent on the price of their products, which is unpredictable," said Marks, the chairman and co-founder of Oaktree Capital.

"A lot of mistakes were made. Some of them have already presented. The default rate on high-yield bonds is up and most of the increase comes in those sectors."

Late last week, the energy high-yield default rate hit at a record 13 percent, according to Fitch Ratings.

"If oil stays where it is, there will be more defaults. If it goes down, there will be even more still," said Marks.

But he believes the opportunities may not just be limited to the energy sector.

"The most important contagion will be psychological. When there start to be a lot of defaults in one sector, people get worried with regard to all the other sectors, sometimes not having anything to do with fundamentals, it's just that their complacency is replaced by panic."