Howard Marks: There They Go Again, on Market Cycles

In this 2017 memo, Howard Marks warns clients that the investment landscape has entered a period of excessive risk-taking and elevated valuations. He observes a dangerous decline in investor skepticism, noting that many are ignoring historical lessons in their pursuit of returns within a low-interest-rate environment. Marks highlights several concerning trends, including the dominance of high-priced tech stocks, the uncritical rise of passive investing, and the issuance of low-quality credit with few protections. He argues that while the exact timing of a market correction is unpredictable, the current complacency mirrors the behavior seen before previous financial bubbles. Ultimately, the text advises that it is better to prioritize caution and capital preservation too early than to face the consequences of a market downturn too late.