Howard Marks advises investors to have patience: Buffett had "bad years" too

The market now requires patience from investors rather than active actions, Howard Marks is sure. In an interview with CNBC, the co-founder of Oaktree Capital, which has more than $220 billion under management, says he sees neither a big sell-off nor signs of its approach. In such a situation, he recalls Warren Buffett: truly "fruitful" years in the market do not happen very often, and capital has to be managed in the intervals between them.

In Marks' assessment, the current market shows no harbingers of a recession, nor a rare sell-off when an investor should sharply increase risk. Despite geopolitical tensions, the investor says, the US economy remains resilient: fundamentals are good, he sees no obvious excesses that usually portend a downturn, and the US's status as one of the strongest markets supports capital inflows.

But the uncertainty around Iran, geopolitics and the implications of the AI boom is preventing investors from acting with high confidence. Now, according to Marks, it is more important for investors to maintain a position in the market than to try to be original and look for an unconventional move where there is no obvious reason to do so.

"Warren Buffett remarked this weekend that he's been in business for 60 years, and only five of those years have been truly 'fruitful'. But he's had to hold the portfolio for all sixty," Marks said. In his opinion, the best move now is to just keep the portfolio.

"The outlook (on the market - Oninvest) is essentially positive, but assets are expensive. So there's no sell-off in the department store right now, and that's what Warren means when he talks about 'harvest' times. It's just a period of steady movement," Marks summarizes.

The co-founder of Oaktree Capital highlights two other risks for the market - the boom around AI and private credit. Marks is not ready to call investments in artificial intelligence a bubble: according to him, the market is indeed gripped by strong optimism, but it is impossible to say yet whether it has become irrational. The potential effect of AI is so great that current investments may prove to be justified, and it will only be possible to assess this in years to come - when it becomes clear whether the corporation's 2025-2026 spending on AI was commensurate with the actual result.

Marks also describes the situation in private credit as an area of risk rather than a crisis already underway. After 17 strong years for lenders, he says, the main fear is that AI could hit software developers who have been actively borrowing money and trigger defaults. Marks admits that some losses will occur, especially for companies that took on debt during a period of cheap capital and now won't be able to refinance in a more expensive financing environment. But he emphasizes that there is no surge of defaults yet, and the main "wall of repayments" will be in 2027-2028.

This article was AI-translated and verified by a human editor