Howard Marks: A Storm is Brewing in the Stock Market (The 'AI Bubble')

Billionaire investor Howard Marks is warning about a 15 trillion dollar storm that is brewing in the stock market. Marks is the co-founder of Oaktree capital management, one of the most highly respected investment firms in the world. You see, Marks made his career out of being willing to go against the crowd. As legendary investor Warren Buffett puts it, “Be fearful when others are greedy and be greedy when others are fearful”. Well, as you are about to hear, Howard Marks believes we are likely in one of those periods where it could save you a lot of money and financial pain to be fearful about what is happening in the stock market. Particularly, with the so called Magnificent 7 stocks.

Throughout history, bubbles have often formed due to excitement about new technology. The stock market bubble of 1929 saw technology stocks of the day rise dramatically. Back then, an example of that new technology was the advent of the radio. Oh boy is it crazy how things change! From 1921 to 1929, Radio Corp of America, or RCA for short, saw its stock increase from $1 a share to $573 a share as investors got excited about how radios would transform society. The radio did in fact go on to change the lives of people across the world. However, that did not protect people who bought Radio Corp of America stock from losing a lot of money. RCA stock went on to fall by more than 95% as the bubble finally burst.

Mark Twain famously said “History Doesn't Repeat Itself, but It Often Rhymes”. Now, in the year 2024, the technology that has been getting investors excited is Artificial Intelligence. Similar to other technological innovations, Artificial Intelligence has the potential to fundamentally alter society. This enthusiasm has been concentrated in a group of companies that have come to be known as the Magnificent Seven.

[Angelavaldess]

The stock market is just filled with both overvaluation due to rapid gains and strong economic fundamentals justifying high valuations. Raises concern for my $600K equities going 8% up and 20% down. So is it better to hold on or sell off positions to hold cash?

[KarinaMilan]

Roughly $120K in my portfolio are in tech/TSLA stocks, can I get an advice on any other stocks that I can acquire to diversify my reserve across multiple markets while creating a comprehensive portfolio allocation that balances my concerns of risk aversion and returns that meet yearly inflation.

[FraserRyan-ozbj]

I think it's important to stick to stocks that are immune to economic policies. I'm looking at NVIDIA and other AI stocks that have the potential to power and transform future technologies. It seems AI is the trajectory most companies are taking, including even established FAANG companies

[N_Conway]

The key is risk analysis. The markets are and has always been unpredictable. Thus the important point is not how much one might make but what one could lose. trading and holding on speculative stocks/Crypto and even great stocks can test ones ability in the arena of our ability to control ones loss aversion bias…buy high sell low…The market is overvalued by almost all measures like the CAPE and Buffett indicator. Speculation is high with things like meme stocks (are they dead yet?), our kitty dude, Ai dreaming and all.... It is all about how much one can lose during times like these. Does that mean don't invest, of course not but one must access the risk and have a way out if the tide goes been engaged in active trading and managed to grow a nest egg of around 2.6B'tc to a decent 24B'tc....I'm especially grateful to Francine Duguay, whose deep expertise and traditional trading acumen have been invaluable in this challenging, ever-evolving financial landscape.

[bretjrepaziklis]

Despite the challenging economic situations, you have taught me the most effective methods to increase profits. May God bless you with even more knowledge! Sir Ronal'

[Pat_laura]

We can't ignore the potential impact on portfolios. Bonds are often considered a safe haven, and if they crumble, investors like me might scramble. I’ve been investing for 11 yrs and my $1m portfolio has never been this depleted, how i do hedge this?

[Farmwald]

I don’t know how but you’ve managed to package an unbiased analysis. Stocks have stayed aloft as signs of cooler inflation I believe the Fed is finally done with raising rates, that means “Santa has come early” to the markets. What are the best additions to a $500K portfolio to boost performance?

[mayalucia-]

Purchasing a stock may seem straightforward, but selecting the correct stock without a proven strategy can be exceedingly challenging. I've been working on expanding my $210K portfolio for a while, and my primary obstacle is the lack of clear entry and exit strategies. Any advice on this matter would be greatly appreciated.

[bigmoose]

When was this recorded and can you please link to the source as well?

[idreesabdallah.]

I want to know how to literally value a stock. Like what exactly do I need/do for me to valuate a stock?

[dlphcoracl]

Howard Marks is the proverbial 'broken clock'. He has been preaching this for the past two decades. When we do eventually have the next bear market, the individual investor's losses will be miniscule by comparison to the cost of opportunity lost by listening to Howard Marks and sitting in cash for the past two decades.

[PennyPincher]

The difference between now and the late 1990s is that today's magnificent 7 have the earning to back up their stock value.

[wesselmartens]

Jesus Christ the quality of this video is low

[ChristianSoschner]

Interesting the stocks already corrected in this sector about 30-50% from June onwards.

The problem in 2000 were the many public companies without any viable business models.

Those who had positive cashflows survived with ease.

The major player in AI like NVIDIA, AMD, TSMC, Apple, Alphabet, Meta, Microsoft, Tesla all have well established business models.

I rather see danger looming in private markets where funds play arbitrage games. Should those companies ever go public, their valuations will be slashed.

My 2ct

[drexelmildraff]

Stock market bubbles have gone back to Canal stocks in the early 1800s. Railroad stock were much bigger and lasted much longer. There was also the NIFTY 50 in the early 1970s. There are many bubbles in stock market history (tulips in Holland in the 1600s were a bubble, but not a stock market bubble).

[lfs-xr]

You will NOT put me off investing! BUYING MORE....

[splinx]

2:29 3:54 4:06 |5:03 5:26 | 5:56 6:23 6:50 7:30 8:09 8:19 8:38

[CoolestGuyInTheRoom]

Some companies are the strongest in history. There has never been companies as strong as Mag 7. If there is a diwn turn, so be it. I rather own these companies today and on the otherside of whatever "may" happen.

[synjinkai]

Keep adjusting your stop loss and enjoy the party. Pretty simple.

[rmondave]

Amazon and AAPL are doing well enough for me.