Howard Marks: Global Alts Miami 2025

Summary

Highlights

• Howard Marks explains the dominant influence of psychology over fundamentals in short-term market movements. 🌀
• The Nvidia stock drop is used as an example of how global market psychology can impact the investment environment. 📉
• Marks questions the herd mentality during periods of financial bubbles and the fear of missing out. 🐑
• He emphasizes investing based on strong fundamentals and not relying solely on asset price trends. 📈
• Marks believes in the isolation of alternative assets from volatile market trends, focusing on fundamentals. 🔍

Key Takeaways

• Psychology over fundamentals: In the short term, market psychology often outweighs technical analysis, affecting investments worldwide. 🧠
• Fundamentals matter: Evaluate investments based on strong and improving fundamentals, not just price movements. 📊
• Alternative assets: Marks discusses the need for diversification within alternative asset classes, focusing on fundamentals. 🔄
• Interest rates and investments: He reflects on the significant role interest rates play in determining asset values. 💹
• Emotional control: Key to investment success is controlling emotions to avoid the herd mentality and irrational decision-making. 🤯

Overview

Chapters

• 00:00 - 01:00: Introduction and Opening Remarks In this introductory chapter, Howard Marks, a respected investment figure known for his clarity and insightful commentaries, is set to discuss his latest memoranda. The narrative hints at the uncertainties in the investment world, emphasizing the importance of understanding the current economic environment, especially as it transitions away from an 'easy money' period. Marks is poised to share his thoughts on strategic investment timing, even during volatile periods.
• 01:00 - 04:00: Market Psychology and Bubbles The chapter discusses the importance of market psychology and investment strategies. It emphasizes that successful investing comes from buying undervalued assets rather than simply good assets. Investor Howard Marks is highlighted, noting that he frequently challenges interviewers and stresses the need for thorough research. The chapter underscores the importance of being vigilant and strategic in investment decisions.
• 04:00 - 10:00: Alternative Investments and Market Uncertainty The chapter titled 'Alternative Investments and Market Uncertainty' dives into the factors affecting market confidence, prominently discussing interest rates, tariffs, and inflation as significant uncertainties for Fed guidance. It highlights the Federal Reserve's meeting, with an expected interest rate steady at 4.5%, and explores the nervousness around tech stocks, using Nvidia as an example, which experienced a significant drop amid broader market anxieties.
• 10:00 - 16:00: Importance of Interest Rates and Long-term Investment Perspective This chapter discusses the impact of fluctuations in interest rates on investments, emphasizing the need for a long-term investment perspective despite market uncertainties. It highlights the recent stir caused by a less expensive Chinese chatbot that has caught the attention of major financial news platforms like Bloomberg and the Financial Times. Howard Marks comments on the arrival of deep seekers in the tech space, although he admits a lack of expertise and involvement in technology investments.
• 16:00 - 21:00: The Challenge of Forecasting and Administration's Unpredictability This chapter discusses the challenges associated with predicting market trends and how administration's unpredictability can affect stock valuations. A specific example highlighted is Nvidia's significant drop in value which serves as a lesson in the volatility and unfathomability of the stock market. The narrative emphasizes the importance of understanding and anticipating sudden changes in stock value for investors.
• 21:00 - 30:00: Howard Marks' Career and Investing Philosophy The chapter discusses Howard Marks' career and investment philosophy. It highlights his practice of closely monitoring the stock prices of companies in his industry using his phone. The chapter also notes the significant downturn in stock prices, including Brookfield, with which Marks is associated, and how markets globally have been influenced by this trend.
• 30:00 - 39:00: Distressed Debt and Private Credit Opportunities The chapter begins with a discussion on the unusual market movements instigated by specific news concerning Nvidia, leading to a broader reflection on the interconnectedness of investment assets. A critical point raised is about the psychological factors influencing investor behavior. Despite the distinct nature of threats affecting individual companies, the reactionary mood spreads, causing a ripple effect across various investment avenues. This chapter tries to unearth these hidden psychological triggers and how they manifest in unexpected market engagements.
• 39:00 - 43:00: Final Thoughts and Closing The chapter delves into the predominant influence of psychology on short-term investing, highlighting its minimal connection with fundamentals during this period. The author references a memo on bubbles, discussing how recent developments do not fundamentally alter industries, companies, or countries, emphasizing psychology as the common theme.

Howard Marks: Global Alts Miami 2025 Transcription

• 00:00 - 00:30 some investment operations are very ethical Mr Reggound I think Howard Marx is here today First up we going to talk about Howard Marx The investment guru Howard Marks discuss his latest memo His legendary investor Howard Marks a master at clarity and distillation Do you ever imagine become one of the largest investment firms in the world and you would be one of the best known commentators in the world we never know where we're going but we sure as hell ought to know where we are We're no longer in an easy money environment We want to buy at a time while the knife is still falling Success in investing
• 00:30 - 01:00 doesn't come from buying good things but from buying things well It's our job to cut foreign knives That's how you get bargain It keeps you on your toes This is the memo by Howard Marks Pack crowd 8 in the morning This is pretty impressive So thanks for all for coming Uh I've been interviewing Howard for 21 years before you were all born obviously Um all the same questions All the same questions Today will be different though because if you don't research for Howard you're in serious trouble because he will challenge me Most of it was on Bloombo TV We've done a few conferences
• 01:00 - 01:30 But I won't waste time because you want to hear about from him not me I think in the audience today particularly deepseek is front of center as is interest rates because the Fed meets today and of course announces tomorrow with no change expected I think it's 4.5% Nevertheless you know tariffs and inflation is an uncertainty for the Fed guidance But I want to just start Howard and go straight into it if I can Let's just talk about deepseek Let's talk about uh Nvidia the darling of the tech stocks have been rattled I think Monday fell by 16% They may have bounced back
• 01:30 - 02:00 will bounce back this morning but nevertheless this Chinese chatbot cheaper version if you like has certainly rattled on Bloomberg this morning headlines FT What is the Howard Mark's take on the tech space now that deep seekers arrived well I don't have a tech a take on the tech space I don't know anything about tech and and you know and and we practically don't uh do anything with
• 02:00 - 02:30 with stocks for the most part But I think is a really important lesson to be learned from the action yesterday And uh you know I I I was busy yesterday and I came down here and took a look at my phone and it talked about the uh Nvidia being down 600 billion dollars in value at the time And uh but the interesting thing to
• 02:30 - 03:00 me was that everything else was down big and you know unsurprisingly perhaps to you I keep the the stock prices of the companies in our industry on my phone and they were all down big uh including Brookfield which we're uh allied with and and that's the interesting part and markets all around the world have reflected this action Why the the the development with regard
• 03:00 - 03:30 to Deep Seek which put Nvidia down so much was very specific a a competitive threat to their activity and as the Brits would say full stop right so why would anything else go down in sympathy why why the investment manager stocks and and and so forth and and so what what's the connection what's the common thread and the answer is psychology And
• 03:30 - 04:00 um you know psychology is by far the dominant influence on investing in the short run It has very little to do in the short run with fundamentals How did yesterday's developments fundamentally affect all these other companies and industries and and countries and the answer is they didn't The common thread is psychology And you know I put out a memo earlier this month on the subject of bubbles because January 2nd was the
• 04:00 - 04:30 25th anniversary of the first memo I ever wrote that got any response called bubble.com about the what was going on in the tech space 25 years ago And I said in the memo this memo that that a bubble is not a period of rising prices It's a period of of uh temporary insanity And if if it were just objective
• 04:30 - 05:00 clinical unemotional investors looking at at uh at Nvidia there would be no reason why yesterday's news should knock all these other things down But it it it just shows you the pervasiveness of psychology and the irrationality of the markets in the short run But is it also valuations are very stretched i mean temporary incent Yes Well it's temporary insanity that leads to stretched valuations but to me the important thing is not the stretched valuations It's how
• 05:00 - 05:30 they got there And it's through this loss of objectivity uh which then you have to then you have to say to yourself well how is that affecting every other part of the market including the parts I care about is that therefore the herd mentality that everyone follows nvidia even though shares are rising and rallying In fact you got to be in it or you lose out Well that's what happens But that's what happens in a bubble People say uh you know uh uh basically everybody everything swings towards optimism and
• 05:30 - 06:00 greed and risk tolerance Uh but basically you know we're supposed to uh be afraid of losing money our own and our clients But in a bubble the bubbles go where they go because FOMO takes over from the fear of losing money and you know people become petrified that that somebody else will be in something and they won't be in it and they'll they'll have to kick themselves
• 06:00 - 06:30 or they'll they'll lose out competitively You know Kindleberger in the book bubbles mania uh panics man mania and crashes said "There is nothing so injurious to your mental well-being as to watch a friend get rich." And and that uh statement typifies the sentiment that takes over in a bubble But for those in the audience who are waking up this morning extremely nervous highly exposed what's your advice at this current moment how do you deal with the
• 06:30 - 07:00 situation well uh first of all you know with your approach to it No first of all I mean yesterday's what happened yesterday the reality affected uh Nvidia AI tech the impact the carryon impact into other sectors should go away you would think because it had no fundamental import except that it canoted elevated
• 07:00 - 07:30 psychology and and so everybody should look at their holdings and and try to make sure that the things they own they own based on strong and improving fundamentals and not just u and that and that they don't hold them just because they think they're going up Now of course nobody in this room would ever hold anything just because they think it's going up They would have to have reasons but I think it's time to
• 07:30 - 08:00 double check Um let's talk about market dislocation Yes And navigating market uncertainty I won't go into politics on this because there's uncertainty about what's going to happen regarding tariffs Obviously that's going to weigh on the Fed guidance tomorrow Guidance probably more important than the actual rate decision We all all agree on that But I mean how how do you how do you navigate I mean you've well the question really is sorry how should investors position themselves for the coming months i'm not asking you to forecast I know you don't like that question I wouldn't do that
• 08:00 - 08:30 But how do you position yourselves now in the alts and the alternative classes well I think that I think that one of the characteristics of alternative investments is uh these are we everybody makes these investments because they're supposedly alpha investments There's supposed to be out investments where the uh return will be primarily a function of the
• 08:30 - 09:00 skill and judgments made by the managers of the investments Not that's as opposed to beta uh investments where most of the return is a function of what goes on in the market So I think you know we should be the the alternative uh managers and their investors should be relatively isolated from so-called market developments and what what should be right well they they should be but
• 09:00 - 09:30 sometimes psychology takes over and becomes this overarching trend u uh it's not supposed to be the case but I think you know we we just have to uh We should be able to isolate our clients from market developments because they should not be uh uh the at the heart of our returns And you know if if we what I say at Oakree is that we try to find
• 09:30 - 10:00 companies we try to invest in companies that will grow and companies who will repay the money we lend them That's the important thing not what the Fed does or what the market does or what the administration does or something like that Um and u so you know one of the features of of alternative investing should be that we diversify our clients from market developments and and uh but of course we we have to constantly make sure that we've made our investment decisions for
• 10:00 - 10:30 good fundamental reasons Do you feel a wall of uncertainty coming at you from your 35 years or is it longer of being in the markets oh 55 kind How Howard Howard is I shouldn't say this but I will say this if you don't mind Howard is 80 next year He's actually 78 now but he's 79 in April and he's still flying around the world He has an incredible energy Um also you know survived cancer two three two years ago and he's and he's just standing strong So he's just an extraordinary powers It's a question of how do you push through this well you
• 10:30 - 11:00 personally and just general Yeah I mean you know you can't be a good investor if your emotions uh dominate you Uh because then you'll make the same mistakes as everybody else in the market You'll buy too much when things get too exciting and prices are too high and you'll get depressed and sell when things are too low and and everybody else is selling So you know it
• 11:00 - 11:30 control over one's emotions is is one of the most important things in the short run Uh you know you asked about uncertainty I think that uncertainty you know and what do you do about developments in the in the political arena today um uh you know uncertainty is the word of the day um with in in normal circumstances you try to figure out what you think will happen Uh that's important in the long run in let's say
• 11:30 - 12:00 the political arena and you maybe bias your plans a little bit toward that Although again what should matter is the specifics of your companies and industries and not what goes on in the in in the in the so so-called big picture Uh but you have to admit today that we know less than usual about what the future holds in that regard And uh you know I think that I think that uh th this administration is less predictable than that's the problem isn't it it's unpredictable and uncertain There's two
• 12:00 - 12:30 there's two feelings to it Yeah Well um I don't I don't know if the members of the administration could predict what they're going to do a year from now I certainly know I can't uh I mean I I don't think you could enunciate a common thread that runs through these activities other than uh you know dislike of the establishment Uh but exactly how it's going to manifest
• 12:30 - 13:00 itself we don't know And uh you know uh we want uh tax cuts and smaller deficits Um and we want um to discourage imports and control inflation And uh there are many ways in which the individual manifestations
• 13:00 - 13:30 uh of the attitude are in conflict with each other There's you know there's it's it's hard to find the common logic Uh so uh you know most people you have a very strong view of what they stand for and what they're going to do in consequence And I think today we we have to just watch to see uh how how this administration's uh predilictions determine its actions We've I will go into in detail asset
• 13:30 - 14:00 classes after this question Hopefully not hopefully not interest rates We must tackle that Yeah it's really about the guidance tomorrow when the Fed announces 4.5% But I think I think the question for the audience really is um how how do you see you talked about facts right see change in rates back in 2022 your memo 2029 2021 was that period you talked about the sea change in rates um how does the
• 14:00 - 14:30 rate environment affect asset prices Howard well how do they now now you're talking because you know um interest rates constitute our environment enironment just like water is to fish you know and and they determine whether the the rate of in economic activity and they determine the value of assets because among other things the value of an asset is the discounted present value of the future
• 14:30 - 15:00 cash flows and when you decrease the interest rate you increase the the discounted present value So it's it's a direct relationship Um however I will take issue when you say it's all about the Fed guidance tomorrow because I I I try to dissuade people from caring too much about short-term events And I wrote a memo in November uh of 22 which got relatively little attention uh called what really matters And I talked in there about five things
• 15:00 - 15:30 that don't matter in my opinion short-term events short-term performance short-term trading hyperactivity and volatility should not matter to a long-term fundamental investor Uh and and I I mentioned in there that in 2017 for example the only question I ever got was what month is the Fed going to start raising interest rates and I would say well why do you care if I tell
• 15:30 - 16:00 you March what will you do and if I tell you oh no no it's not not March it's May What what will you do different and and people ask about these things that in my opinion have no importance They'll you know the day an an interest rate action is announced that may influence prices that day and maybe the next day but it doesn't in influence the course of events that will determine on long-term based on long-term policy and
• 16:00 - 16:30 on the larger economic environment that materializes So I don't care about about the guidance Um you know I made the case in late 22 uh which I called a C change that that you know in 1980 I had a loan outstanding from a bank personally and I I got a slip in the in the mail that said "The rate on your loan is now 22 and a quarter." And 40 years later in
• 16:30 - 17:00 2020 I was able to borrow at two and a quarter And so rates came down by 2,000 basis points over 40 years And anybody who came into this business since 1980 which I imagine includes most of you uh have only seen declining interest rates or ultra- low interest rates or both And I don't believe that the next 10 years will be characterized by declining interest rates or ultra- low interest rates Um and that's a major change in
• 17:00 - 17:30 the environment And you know the the the declining interest rates over that period and the ultra low interest rates were like a moving walkway at the airport and you get on the walkway and you walk at your normal speed and you make great progress over the ground and you say boy I'm fit but it's not you you know and in the same way uh you know people made certain decisions and companies made a lot of money uh over the period you mentioned 09 to 21 which was really the easy time because the Fed funds rate was zero most
• 17:30 - 18:00 of the time and averaged a half a percent and and the people who made those decisions say boy I'm I'm I'm a good decision maker but it was the rates and if you know Eisenhower said uh no Einstein said that the definition of insanity is is doing something over and over and expecting a different result I think another version of insanity is doing the same thing in an entirely different environment and expecting the same result So the things that worked
• 18:00 - 18:30 the best in a period of declining and ultra low rates will not necessarily be the things that work best in a period of stable and generally higher rates And and people have to accept that and and and so I look at the Fed to try to figure out which it's going to be and I have my conclusion You have confidence in Jerome Pal i do Yeah I think he's I I think he's uh I haven't I haven't taken issue with the Are you
• 18:30 - 19:00 relieved that he's he's staying as Fed chair when you heard yeah I would I would not take out any multi-year subscriptions uh uh at this point but I I'm I'm relieved that I I believe he'll be there until May of 26 And uh and and I I'm I think that's a great thing for the country Before we when we talking about what to discuss Howard said "Please can you point out my memo from October for those who read the memos I'm sure you all do ruminating on asset allocation the only asset classes are
• 19:00 - 19:30 ownership and debt They differ enormously in terms of their fundamental nature." Now to me ownership is stocks and debt is fixed income or bonds But I want to kind of just because we've got time is always against us always against us Howard but I want to ask in the capacity for this audience in alternative you are the probably the largest global investment of alternative classes 200 million I believe 200 billion excuse me aum and you know the roots are in private credit yes so it's distress debt and private credit here real estate even crypto they're all
• 19:30 - 20:00 alternatives so with that memo in mind ownership debt can you just I won't talk anymore just talk about the alternative ives that excite you that you're nervous about well you know if you take what I call ownership assets which are stocks companies properties for the most part their their probability distribution governing their future returns or future
• 20:00 - 20:30 developments looks something like this your standard bell-shaped curve And historically of course for the last h 100red years the S&P has averaged 10% return So quite good But sometimes 20 and sometimes zero for maybe a decade Zero in the decade of the as 20 in the decade of the 90s Then you look at lending strategies fixed income strategies and the distribution of returns looks like this It's very tall
• 20:30 - 21:00 and very narrow There's very little uh uncertainty with regard to what the long-term return on an 8% bond is going to be There's no upside You're not going to make 10 Here's a shocker but you're also likely I if if you put together a portfolio of 8% bonds you're you're probably not going to make less than seven So very little uncertainty but a lower expected return because it's more reliable ownership assets have a wider range of possible outcomes but a higher
• 21:00 - 21:30 um expected return because you're asked to shoulder uncertainty So what I said at the better which is which is better and in a in a market which is intelligent or efficient there is no better or worse It's only your personal choice and and the your predilictions and and the the application to your situation Uh so and and by the way it's not all one or all the other You mix them so you get
• 21:30 - 22:00 a a progression of curves Uh but the more uncertainty you shoulder you you normally expect uh a higher expected return but with increased uncertainty Um but you look today and you know the things that we do uh are typified by high yield bonds for example and I was really lucky because I was asked to start City Bank's high yield bond activities in uh
• 22:00 - 22:30 1978 when it when that business started and um so today high yield bonds offer 7.3% uh which is a pretty good return in the absolute and you know more than most institutions need But then you look at the S&P which historically has returned 10 for the last century and um you know Goldman Sachs came out at the beginning of November and said over the next decade stocks will make three and
• 22:30 - 23:00 uh JP Morgan published a table at the very end of the year uh which showed that if you bought the S&P at today's PE ratio uh any time between 88 and 2014 you made between minus2% and 2% So slightly different but same zip code low singledigit returns So I if you can get low singledigit returns from the S&P
• 23:00 - 23:30 with great un certainty and 7.3 from high yield bonds contractually Isn't it better that's all And um and the the Wall Street Journal uh had a story yesterday The first sentence said that by one measure uh stocks offer the lowest equity risk premium since
• 23:30 - 24:00 2002 Um and in fact it was a negative relative to treasuries So you know you have to you can't say well stocks are better Stocks are great Stocks have returned 10% a year for 100 years You have to say what are they likely to return from where they're priced today and I think I think that the the outlook for uh ownership returns is not as good as it usually is relative to the risks entailed With that in mind then because time is against us I keep
• 24:00 - 24:30 saying that You are a pioneer in distress debt and in private credit There is a boom in credit private credit Can it be sustained and distress debt is often as you told me it's catching fallen knives John often within a crisis situation Yeah Which of those areas excites you and which of those would you think like for example private credit there's a a boom people are concerned about it Yeah Can it be sustained so I Well look I'm not nervous though The only
• 24:30 - 25:00 thing that ever makes me nervous is that we we won't have great things to buy I'm never worried that they're going to be negative developments in the macro environment That's what we make our money for especially if we can approach them on emotional because you have appetite for risk right a strong appetite Yeah But but you know one of the everything has been so placid with the with the momentary exception of the pandemic in 2020 Everything has been so placid uh in the investment environment from let's say 2010 to date really that
• 25:00 - 25:30 um you know there there hasn't been much distress and there hasn't been much for the bargain hunter or the opportunist to do in the last 15 years But uh you know I I do believe that in the period of ultra- low interest rates a lot of companies were saddled with uh capital structures that they will not be able to sustain given rates four or 500 basis points higher
• 25:30 - 26:00 which I think will prevail u and and where credit is not quite as easy to get and when those debts start coming due mostly in 26 and 27 uh some some percentage of them will not be easily rolled over and and then we'll have more to So I'm excited about that Um and uh uh and we've raised a big fund to to do it Um which is only half invested Um and but you know but when you talk about
• 26:00 - 26:30 private credit it's such a broad thing and uh I think you know the question we get is whether that is the next systemic risk area I don't think so because I don't think there's the interconnectedness and the high level of leverage that we saw for example in the banks during the global financial crisis But I think what you have to think about is whether the managers who who benefited from the onrush of capital into this sector
• 26:30 - 27:00 um wisely uh uh were patient applied high standards uh and and demanded uh good quality underlying assets uh during during this gold rush How do you Okay How how do you view two more questions How do you view crypto 109,000 I don't know My my son Andrew has convinced me not to say anything about it Okay But you He says "Dad it's not a good idea to talk about things you don't know anything about."
• 27:00 - 27:30 You talk about only your son can say that to you Of course You talk about temporary mania that fall into the Okay Who knows we'll see Warren Warren Buffett okay was back in 2018 likened it to Rat Poison Squared and predicted a band bad end You know what andrew uh lived with us during the pandemic and he bought it at 4,000 and today it's 102,000 So it's hard for me to tell him he's wrong Okay that's a good line Final question for you Are you going to slow down at all why right that's a good
• 27:30 - 28:00 answer I'll slow down when you slow down Okay I'm not going to slow down I mean what would I do what would you do well I'm not a golfer and I don't you know it it's stimulating what I do and I'm blessed with good jeans and I can keep going So why would you're traveling relentlessly Yeah Why would you fly you flew in last night You're flying out You know what Bill Graham who ran a club called the Fillmore which was a rock club in San Francisco in the 60s said once said "It's only work if you'd rather be doing something else." On that note thank you very much
• 28:00 - 28:30 [Applause] [Music]