Investor Howard Marks on where he's finding opportunity, valuations and bitcoin

Published Mon, Mar 22 20216:32 PM EDT

Kevin Stankiewicz @in/kevin-stankiewicz-b5593466 @kevin_stank

Oaktree Capital co-chairman Howard Marks told CNBC on Monday he believes investors can still find attractive opportunities in companies that were heavily impaired by the coronavirus pandemic . In a wide-ranging interview on "Closing Bell," Marks discussed his broader outlook on the U.S. economy, rising bond yields and bitcoin. "If you can find companies that have been penalized for their difficulties in the pandemic and the penalty was overdone and the difficulties were temporary, I think that's a good sector right now," said Marks, who co-founded investment firm Oaktree in 1995. "Although," he said, "after being trounced thoroughly by tech last year, so-called value and cyclicals have had something of a rebound already this year." One interesting characteristic to the investment landscape, Marks said, is the position of the overall stock market at this stage of what he believes will be a strong economic expansion after the pandemic. The S & P 500 and Dow Jones Industrial Average both hit all-time highs last week. The Nasdaq Composite was most recently at a record Feb. 16, and the tech-heavy index sits less than 6% below that intraday peak as of Monday's close. "It's very unusual to have the market at a high level — and certainly, you couldn't say this isn't at a high level — at the same time that a recovery is getting going," said Marks, whose periodic memos are closely watched on Wall Street. "Usually, high levels on stocks coincide with high levels on the economy." To be sure, Marks does anticipate the American economy to continue its rebound from its pandemic-induced recession . "You know, we expect that there will be a recession once in a while. I believe last year's recession was that recession for that cycle, and that we have commenced a new upcycle," he said. "It's not 100% sure, but I believe so." "The trends in income are very good. People are going back to work, and I believe that you'll see strong spending this year," Marks said. "But savings have been at a very high rate , and I think that the savings and rising income will buoy us certainly in the few years to come." Treasury yields have been rising this year, as investors grapple with expectations of an improving economy as well as the potential for problematic inflation. The 10-year Treasury yield began the year below 1%, but reached a 14-month high last week as it broke 1.7%. It was below that level Monday evening at around 1.695%. The moves in the bond market have pressured high-growth stocks, particularly those in the technology sector, because higher interest rates can decrease the relative value of future profits. "On the other hand, to the extent that the rising rates connote a strong economy, with all equities, that's an offset, and I think that is what's going on," Marks said. "The fear is of an overheated economy that produces inflation and thus calls for higher interest rates," he said. "I think that the great tech stocks, the great growth stocks, can offset inflation through their growth but you have to pick the right ones. It's not my business. Oaktree doesn't invest much in the … mainstream equities market, but that would be the goal." Marks also weighed in on the ascendancy of bitcoin, the world's largest cryptocurrency by market value. The digital coin has been in a major rally since the fall, going from near $11,000 apiece in September to over $54,000 as Monday evening. Bitcoin's all-time high reached roughly $61,500, according to Coindesk . Some companies have been buying bitcoin with cash on their balance sheets , while banks such as Morgan Stanley make entrances into the crypto world. Marks said he continues to learn about the asset class. Marks said his initial reaction to bitcoin in 2017, when it mounted a headline-grapping rally, was too negative. "While bitcoin doesn't have an intrinsic value, the same can be said of the dollar and many, many other things that have value like paintings and diamonds," Marks said. He added that he's been "more sensitized" to arguments by crypto bulls that bitcoin's limited supply of 21 million coins supports its price going up in the future if demand continues to grow. "I haven't reached a conclusion, and I still don't consider myself informed enough to have an opinion, certainly to express it publicly," Marks said. "I would just describe myself as more open minded, hopefully on many things, than I was in the past."

Howard Marks, Co-Chairman, Oaktree Capital.

David A. Grogan | CNBC

Oaktree Capital co-chairman Howard Marks told CNBC on Monday he believes investors can still find attractive opportunities in companies that were heavily impaired by the coronavirus pandemic.

In a wide-ranging interview on "Closing Bell," Marks discussed his broader outlook on the U.S. economy, rising bond yields and bitcoin.

"If you can find companies that have been penalized for their difficulties in the pandemic and the penalty was overdone and the difficulties were temporary, I think that's a good sector right now," said Marks, who co-founded investment firm Oaktree in 1995.

"Although," he said, "after being trounced thoroughly by tech last year, so-called value and cyclicals have had something of a rebound already this year."