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Latest Memo From Howard Marks: Implications Of The Election

|Includes: Oaktree Capital Group, LLC (OAK)

A new memo was just released from the desk of Oaktree's Howard Marks. In it Marks takes a look at what he thinks the outcome of the election could mean....

I'm starting this memo a week before Election Day. I promise to try to stay away from the merits of the candidates and the question of who will win, and instead confine myself to the important messages that we should take away from the election and the actions we should push for as a result. The outcome of tomorrow's election won't change these things as far as I'm concerned.

Angry Voters

Of course, the big story of this election year has been the unprecedented, unconventional rise of Donald Trump. Trump threw his hat into the ring with a complete lack of experience in elected office or other public service, and without an established campaign organization. In fact, he had no established party's ideology. He adopted some Republican elements but rejected others. And yet he has been able to attract a large group of voters, probably about 50 million strong.

He did this by assembling backing from an unusually diverse mix of elements. These included dedicated Republicans who weren't about to vote for a candidate of another party; the many Clinton haters who've had 24 years to gel since Bill's first inauguration; people who were attracted to Trump's celebrity, reputation for business success, outspokenness and colorful manner; and supporters of the right. But this tells only part of the story.

The aspect I consider most important for the future relates to the Trump supporters - and some of the most active and vocal ones - who are motivated by an anger regarding "the system" that is neither purely emotional nor illegitimate.

Many are older, white, non-college-educated men who might be described as "demographically dislocated." When these men were born, white males ran America; their communities weren't mixed and becoming more so; and the cultural shifts occasioned by the civil and women's rights movements, technological change and mass immigration were unimagined. Certainly the shift to the America of today - with all these things quite different - might be jarring and unpleasant to the people I describe.

At the same time, many Americans - and often the same ones - are experiencing the effects of job loss and diminished economic prospects. Fifty or even thirty years ago, men without college degrees could easily obtain good-paying jobs and the pride associated with being able to maintain their families at a good standard of living. One earner per household was enough, and one job per earner. Strong labor unions ensured adequate pay and benefits and protected workers from too-rapid changes in work rules and processes.

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