Howard Marks comments...

...as we were sitting here waiting to start, that I was animated when he spoke to me yesterday, and really, for the credit investor, we have our first opportunities in several years. We thought that the environment was lackluster. I think I told you last year and maybe the year before that, that our mantra for 4.5 years has been "move forward but with caution." We didn't think there were compelling opportunities to move forward and we thought there was a great need for caution. Now of course, there are opportunities. I mentioned to Alex that there's this old Chinese curse, you should live in interesting times. Times are more interesting now. For some, it's a curse. They say in golf, that every putt makes somebody happy. And so some of the price declines and some of the weakness, which has been noted so far, makes the perspective buyer very happy, and the holder, very unhappy. But we've raised a lot of capital over the last 1.5 years to be prepared for an opportunity that we believed was coming. And now, we are more interested, now that it seems to be here. We have bonds that have gone from 90 to 60 in the last few months, and not only in the energy sector. And we had a dinner here last night, Jay and I did, and one of our colleagues from the distressed debt group who was supposed to be there from L.A. begged off. He says, "I'd like your permission to stay in L.A. There's too much for us to do." Well believe me, it's been a long, long time since you could say there's too much for us to do. Maybe actually 7 years, fourth quarter of '08. You need to be post Lehman. There was too much to do. And now there is again, but it's been a long time. 

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[on the energy space] 

Well, I think that hedges were in place that have worn off that companies will lose their credit lines. And so it's not -- there's never a demarcation line. I think that $37 oil will produce a lot of opportunities for the distressed investor. $30 will produce more if it gets there. Of course, nobody -- maybe with the exception of the people in this room, if you let me know or give me your cards afterwards, nobody knows where the price of oil is going. And there's nothing intelligent to be said about the future of the price of oil. And so, you have to invest in it very gingerly and carefully. But I wrote -- a year ago, December 18, I wrote a memo on oil. I said, "At $110 everybody says, if it ever gets to $90, I'm going to back up the truck. When it falls to $80, at -- they say if it ever hits $60, I'll give it a lot of thought. And when it hits $50, they said, can't touch it, falling knife." So certainly, it looks like a falling knife, but I've always believed that it's our job to catch falling knives, but to do it with caution. 

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...liquidity is a complex topic. And I wrote a memo in the first half of the year about it and anybody who wants to can read it on our website. But if you think about it, we only -- one only needs liquidity for 3 reasons: to be a day trader or a short-term trader, for-profit, which we never are; to be able to realize profits after a long hold; and to be able to fix one's mistakes. But while we do some of all of those, well some -- we do some of the latter too, we don't trade for profit in the short run. But we think of trading just as a way to effect our fundamental long-term investment decisions. And so we don't care that much about trading for the short term. It happens that when liquidity gets worse, it gets harder for the people who have holdings to exit. If we're holding cash at that time, that's -- I mean, dried up liquidity has given us, probably, our best opportunities ever. So we kind of welcome it. And I said in that memo that the best defense against a lack of liquidity is to only own things you can hold through the long term. And I think that because of our investment process and because the vast majority of our capital is in locked up funds, we can hold for a long time. We raised the funds in the last 1.5 years for distressed. So far, we've announced having raised $9.9 billion. And that funds got 10 years to run from here without requiring an LP extension. So we don't need Mr. Market to give us our returns, the fundamental results will give us our returns. 

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...as I do travel a lot and meet a lot, I always get -- there's usually one question that I get more than any other. And of course, that one question for the last 2.5 years has been, "What month will the Fed raise interest rates?" And my answer is always the same, "Number one, I have no idea. And number two, why do you care?" I mean, if -- point is, if rates are going up, what matters is how much, how fast and -- but certainly, not which month. And if I told you a given month, would that change your actions? More recently, the question has been, we know things can't stay good forever, what could knock them off? And what does the question mean? Well it means that people understand and believe in cycles, which is a healthy thing, but on the other hand, people couldn't imagine 6 months ago anything going wrong. And that's the nature of our world. I think I told you last night that my favorite cartoon was from, I think, was the financial analyst journal, excuse me, in the '60s. And it showed a guy who was giving a -- reading a speech before a TV camera. And he said, "Everything that was good for the market yesterday is bad for it today." And that's the way our world goes, black to white, the swing of the pendulum. And 6 months ago, people, they had an instinctive sense that it couldn't be good forever, but no idea what could knock it off. And of course now, and I pointed it out in my memo last December, that not only did essentially nobody predict that oil would have in price, but nobody is asking about oil. So it's very, very easy to miss the thing that's going to knock the market off stride. And now we get lots of questions about oil and other commodities, I think that we get some questions about China. I think that China's performance in the short term is going to be very important for the performance of the world economy. And liquidity has been a major theme. I mean, now all of a sudden people are thinking -- are able to think of lots of things that could do the market in. And of course, the market moves in stages. And in the first stage, everybody thinks, everything's going to -- a few smart people think things could get better, and in the middle stage, everybody thinks that things really are improving. And then, the last stage of the bull market, everybody thinks that things will get better forever. And now, in the first stage, maybe a few years ago, people started to think, "Well, there could be a problem." And now, most people think that there can be a problem, and we'll reach a stage where everybody thinks things are going to get worse forever. And of course, that's when the opportunities will come to a maximum. 

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Well, we have 3 basic jobs. And your -- we're about, thanks to your question, we're about to touch on the third one. But the 3 jobs are: raise capital, buy low, sell high. By definition, we're unlikely to be able to buy low and sell high at the same time. And we readily accepted it's something that's not within our control. So -- and I think that people build models for us, which include the realization of carried interest, but I think it's extremely hard to make any forecast about. The worsening climate for asset prices does not imply that we are going to be able to accelerate the pace of realizations. We don't sell things just to fill a need for earnings. We only sell them if their time has come, if they're fully valued and we get a good buyer. And so I can't really say anything intelligent about when we're going to be able to realize. And my excitement about the increased availability of bargains, we're not going to be somebody else's bargain. And so it's -- that in itself does not imply an acceleration of the trend in realizations. 

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[on the apparent disconnect between credit and equity markets] 

It's a good question, it's a hard one. I think the fixed income markets we're talking about are inherently more illiquid and are the site of the dried up liquidity. And the issuance of high-yield and leverage loans, let's say in '11, '12, '13 and '14 was a huge record numbers, given the strong demand. Leverage loans had 95 straight weeks of inflows to mutual funds that's really dramatic. And so Wall Street filled the vacuum, shall we say. And now, there are no takers for it. Though securities like they used to say about mutual funds were sold not bought, and now the buyers are gone. So I think personally that credit has probably gone from being the cheaper of the 2 -- the more expensive of the 2 worlds the cheaper now. And the relative move that you point out has been really quite dramatic in a rather short time. And so, that's another thing that's making us excited about the opportunities. 

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[on the unintended consequences of the Fed raising rates] 

There's nothing in this world that's either all good or all bad. And the Feds [indiscernible] over this for the last 2.5 years certainly indicates that there have been arguments on both sides. It seems clear that the Fed is going to raise rates, unless something happens in the next week or 2 this month. There are reasons not to do it. What we would do to the rate of growth in this country? How can we do it when the rest of the world is cutting rates, what will it do to the dollar, the negative consequences are on our global competitiveness. So it's not an easy thing. I have felt for a while that the merits on balance were on the side of raising rates. I don't like the fact that the rates have been administered, and I don't like the fact that the Fed hasn't had any room to react if the market, if the economy should recon. That room has to come in the form of the ability to drop rates, which is hard to do from 0. But it's not an easy decision, and that's why I'm glad I don't have -- as Obama would say, that's above my pay grade. I'm glad I didn't have to make that decision. But there are a lot of reasons, negatives on both sides. And I think with us having a very strong currency already, further strengthened by relative increases in interest rates, I think it's -- we're going to have significant challenges on the export side. 

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[more on liquidity] 

...you should not mark down the return you demand, just because you think an asset is highly liquid. Similarly, you shouldn't mark it up just because it's illiquid. We come to the value that we'll pay for an asset based on the -- what we think is the intrinsic value of the business and we -- as we predict a return based on the future value of the business and I'm talking about the value of the business, I'm not talking about the value of the security. And we think, if we get the business decisions right, the security decisions will take care of themselves.