Armen Panossian, Co-Chief Executive Officer of Oaktree Capital Management, has cautioned that markets are digesting a range of fundamental issues too quickly, prompting his firm to retain cash and wait for the right adjustment opportunity.

Panossian noted that post-pandemic "extremely abundant" liquidity, a market willingness to stay invested, and strong historical corporate performance have collectively led investors to selectively ignore potential economic data. He stated that a widespread belief that U.S. President Trump will not take any actions fundamentally damaging to the economy has further reinforced market resilience.

"When you layer in the impact of the Iran war, and then add the software industry pain we expect to emerge over the next few years, it's a bit puzzling why the market is so strong," Panossian said. He warned that investors are underestimating the fundamental risks facing the credit market.

Oaktree, which is owned by Brookfield Asset Management following an agreement reached late last year to acquire the remaining stake in the distressed debt specialist, is currently "building the pipes" to combine Oaktree’s credit capabilities with Brookfield’s asset management strengths to uncover global investment opportunities, according to Panossian.

Oaktree is now in a ready position. Panossian pointed out that there are not many "fat pitches" in the current market—deeply discounted debt or equity assets worth buying aggressively. The company is seeking high-quality businesses with weak balance sheets but sound fundamentals, while also accumulating as much "dry powder" as possible.

Commenting on the recent wave of redemptions in Business Development Companies (BDCs) triggered by concerns over the software industry and valuations, Panossian expressed surprise that banks have not tightened lending to private credit vehicles more significantly. "There has been some tightening, but not nearly as much as I expected," he said.