Last month, Bloomberg’s Erick Schatzker sat down with Howard Marks, co-chairman of Oaktree Capital, to discuss the fund manager’s investment approach.

With respect to whether the now-stretched equity valuations make for what some are calling “treacherous” conditions, Marks comments, ” The riskiest thing in the world is to believe there’s no risk. When people talk about risk in the market, that’s a healthy thing.”

According to Marks, however, there is an incongruity between words and actions. “The problem,” he said, “is that even though most people are not thinking bullish, most people are acting bullish.” Many people are still buying, Marks explains, because they “have to in order to make a decent return.” While he believes that caution has been advisable for the last five years, Marks says Oaktree is not a net seller. “Our clients hire us to manage their money,” he says, “not go to cash.”

Regarding his investment philosophy, Marks explains: “An investment strategist goes to work every day facing two risks; the risk of losing money and the risk of missing opportunity. Every day they should say, ‘should I balance them 50/50 or worry about one more than the other?’ Over the last five years, I would worry more about losing money.”

According to Marks, the best strategy in this kind of environment is to adhere to higher standards when choosing investments. “In an overheated market, ” he said, “prices are high, risk is high, standards are low. You have to be selective.”