Howard Marks says stocks aren't a screaming buy or obvious sell – and it's unclear if a boom or bust is coming

• Howard Marks says stocks aren't super pricey or cheap, and the economic outlook is uncertain.
• The billionaire investor warned against even trying to predict the Fed's next moves.
• Marks expects the inflation threat to fade and interest rates to hit about 3% by the end of 2025.

Stocks are neither super expensive nor cheap, the economic outlook is unclear, and predicting the Federal Reserve's next move is a fool's errand, Howard Marks says.

"I don't think today's a fat pitch," the billionaire investor said on the latest episode of "The Insight by Oaktree Capital" podcast, borrowing Warren Buffett's signature term for a blatant opportunity.

"The market is not crazy high and it's not crazy low," Marks continued. "It seems a little high, not enough to make you take action."

Marks is the cofounder and co-chairman of Oaktree Capital Management, which had $183 billion of assets under management as of September 30.

He argued that if stocks are only 10% overvalued, that's not enough of a deviation to bet on, as there's only a slightly greater chance they'll fall instead of rise. He took a similar stance on the economic backdrop.

"It's not clear that the economy is going to boom," he said. "It's not clear that it's going to crater."

"Anybody who thinks they know what the arc of the economy in the near-term future is going to be is nutty because we're all confused," he continued. "And anybody who's not confused, doesn't understand what's going on."

The mood on Wall Street has improved in recent months. Inflation has plunged from 40-year highs, the economy grew at a surprisingly fast rate of 5% in the third quarter, and the Fed has signaled interest rates have probably peaked and it expects to lower them this year.

However, veteran economists like David Rosenberg and Gary Shilling still anticipate a recession based on classic harbingers like an inverted yield curve, a shrinking money supply, and declines in leading economic indicators.

The so-so state of stocks and the economy mean there's "nothing smart to do today" for investors on those fronts, Marks said. 

"We're in that middle zone, what I call the zone of reasonableness," he said. "The market is not too high or too low. The outlook for the economy is not convincingly positive or negative."

Marks is best known for his public memos, which Buffett has praised in the past. On the podcast, the Oaktree chief warned against even trying to predict whether and when the Fed will hike, pause, or cut rates.

"When people thought they had the right answer three months ago, it turned out it wasn't the right answer," he said. "What makes them think today's answer is the right answer?"

Still, Marks felt confident enough to say that by the end of 2025, inflation will probably be history and rates will have dropped from over 5% to about 3% or 3.5%. He also trumpeted credit as an enticing investment, given the high quality of companies borrowing money today.

"These returns, whether they're approaching 10% for liquid credit or above 10% for private credit, these are fully competitive with equities — more than most people need, and they can be earned with greater safety than with equities," he said.