Odd Lots
How Oaktree's Howard Marks Spots a Market Bubble
Jan 27, 2025
Howard Marks, co-founder and co-chair of Oaktree Capital Management, is a renowned credit investor famous for his insights on market bubbles. In this discussion, he delves into how he identifies market bubbles compared to bull runs. Marks shares his experiences from the dot-com bubble and the 2008 financial crisis, highlighting the psychological impact of FOMO on investors. He also offers perspectives on the current Big Tech boom and AI investments, emphasizing the need for strategic thinking and risk assessment in today's volatile market.
53:51
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Quick takeaways
- Howard Marks emphasizes the importance of observational skills and psychological factors over numerical analyses when assessing market bubbles.
- He distinguishes between market bubbles and healthy growth cycles, highlighting the absence of collective mania in today's tech stock performance.
Deep dives
Historical Context of Market Bubbles
Howard Marks reflects on the late 1990s and the dot-com bubble period, highlighting that while the investment environment was generally placid, the equity market experienced exponential growth, averaging a 20% annual rise for a decade. He mentions that during this time, many companies with 'dot com' in their names went public despite lacking revenue or profits, demonstrating the irrational exuberance of the market. Marks notes that credit investors, like himself, found fewer opportunities during this prosperous period, as they rely on market dislocations and urgency which were absent at the time. This historical perspective sets the foundation for understanding the behavioral and numerical indicators that characterize market bubbles.
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