Market Characteristics checklist based on Oaktree Capital's March 27, 2006 paper, "It Is What It Is". If more marks are made on the left-hand side column, saving money is recommended. The purpose of the list is to gauge the "market temperature" or mood of the current market today.
Economy: | Vibrant | Sluggish |
Outlook: | Positive | Negative |
Lenders: | Eager | Reticent |
Capital Markets: | Loose | Tight |
Capital: | Plentiful | Scarce |
Terms: | Easy | Restrictive |
Interest Rates: | Low | High |
Spreads: | Narrow | Wide |
Investors: | Optimistic | Pessimistic |
Sanguine | Distressed | |
Eager to buy | Uninterested in buying | |
Asset Owners: | Happy to hold | Rushing for the exits |
Sellers: | Few | Many |
Markets: | Crowded | Starved for attention |
Funds: | Hard to gain entry | Open to anyone |
New ones daily | Only the best can raise money | |
GPs hold the cards on terms | LPs have bargaining power | |
Recent Performance: | Strong | Weak |
Asset Prices: | High | Low |
Prospective Returns: | Low | High |
Risk: | High | Low |
Popular Qualities: | Aggressiveness | Caution and discipline |
Broad reach | Selectivity | |
The Right Qualities: | Caution and discipline | Aggressiveness |
Selectivity | Broad Reach | |
Available Mistakes: | Buying too much | Buying too little |
Paying up | Walking away | |
Taking too much risk | Taking too little risk |