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The massive stock market rally in the midst of the coronavirus pandemic has been built largely on optimism and has overlooked potential negatives that could end up catching investors off guard, Howard Marks, co-founder of Oaktree Capital Management, said in a client note.

Much of the rally seems to be based on injections of liquidity by the U.S. Federal Reserve and stimulus payments by the Treasury, which investors assume will bring about a financial recovery without major negative consequences, the veteran distressed debt investor said in the note dated Thursday.

But the potential for further gains does not fully outweigh the risk of a decline if events disappoint or multiples contract, said Marks, who is also co-chairman of Oaktree, which had $113 billion in assets under management in March, according to its website.

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“In other words, the fundamental outlook may be positive on balance, but with listed security prices where they are, the odds aren’t in investors’ favor,” he said.

High-profile hedge fund managers Paul Tudor Jones and Stan Druckenmiller said recently they were becoming more bullish on stocks. Jones’ speech, reported by Bloomberg, was at the Economic Club of New York, and Druckenmiller spoke to CNBC.

The market plunged when much of the U.S. economy shut down in response to the coronavirus pandemic, bottoming on March 23 with the S&P 500 down around 35% from its Feb. 19 record high.

Investors have flooded back into stocks since then, spurred by factors including the Fed’s and Treasury’s actions, a decline in COVID-19 cases in places hardest hit by the pandemic, and a some better-than-expected economic data. The S&P is currently around 9% below its record high.

Oaktree, which Brookfield Asset Management Inc bought a majority of in 2019, recently sought to raise up to $15 billion for a distressed fund as company valuations plunged, Reuters reported.

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