Howard Marks

Co-founder and Co-chairman of Oaktree Capital Management, and a prominent investor and commentator on market cycles and credit.

Mentions

Appeared in

Discussed in

Key positions and views

The post-2021 shift to a higher interest rate environment is a structural, long-lasting 'Sea Change' that has ended the era of easy money for leveraged investors.

Private credit has matured from a high-alpha niche into a competitive, fairly-priced mainstream asset class where the illiquidity premium is no longer substantial.

While AI is a profoundly transformative technology, it currently lacks the essential human qualities of intuition and character judgment required for superior investment selection, making it a tool rather than a replacement for top investors.

A disciplined focus on risk control and an awareness of market cycles and investor psychology are paramount; avoiding losers is the key to long-term success, and the best opportunities appear in times of distress.

When investing in companies with high fundamental business model risk, such as those in AI, it is preferable to be an equity owner to capture potential upside rather than a debt provider with a fixed return.

Podcast consensus on Marks

Points of consensus

▶Multiple sources confirm Marks's view that the private credit market emerged around 2011-2012 as a direct result of banks reducing risk-taking after the Global Financial Crisis and subsequent regulation (claims 10, 37).Apr 2026

▶Across several appearances, Marks consistently states that the private credit market has grown to approximately $1.5 trillion (claims 12, 28).Apr 2026

▶Marks's perspective on Artificial Intelligence is consistent: he believes it currently lacks the crucial human elements of intuition and character judgment needed for top-tier investment decisions (claims 30, 34).

▶He repeatedly uses the 'Nifty Fifty' stocks of the late 1960s as a cautionary tale, noting in multiple discussions that investors who bought and held for five years lost approximately 95% of their money, emphasizing the danger of overpaying for quality (claims 9, 40).Apr 2026

Points of debate

▶Marks presents a nuanced view on AI's role in investing, stating it makes the world profoundly less predictable (claim 45) and lacks human intuition (claim 34), while also arguing it represents a significant improvement over most human investors because it can operate without emotional mistakes (claim 43).

▶There is a tension in his market outlook. He believes the S&P 500 is expensive based on historical metrics (claim 59) and predicts better buying opportunities ahead (claim 38), yet he does not believe the current enthusiasm for AI has reached the level of a market bubble (claim 44).Apr 2026

▶Marks's assessment of private credit's attractiveness has evolved. He identifies its lucrative origins but now asserts it has become a competitive, mainstream asset class where excess returns ('alpha') are no longer significant and the illiquidity premium is merely adequate (claims 5, 29, 33).Apr 2026

▶He highlights AI's disruptive potential, citing Block's 40% workforce reduction as a direct result (claims 39, 49), but also states that AI has not yet affected the business model, hiring, or work processes at his own firm, Oaktree Capital (claim 53).

Key themes

▶The 'Sea Change' to a Higher-Rate WorldApr 2026

Marks argues that the shift away from the near-zero interest rate environment of 2009-2021 is a structural and long-lasting change. This new paradigm fundamentally alters the landscape for leveraged strategies like private equity, increasing the cost of debt and creating a more challenging environment for generating returns.

Investors should re-evaluate strategies that were successful in the prior era, as the tailwind of declining interest rates and cheap leverage has now reversed, placing a premium on operational improvements and disciplined underwriting over financial engineering.

▶The Maturation of Private CreditApr 2026

Marks traces the evolution of private credit from a post-GFC niche into a $1.5 trillion mainstream market. He contends that as capital has flooded the space, competition has increased, compressing spreads and eroding the once-significant illiquidity premium, making it a fairly-priced rather than a high-alpha asset class.

The 'gold rush' phase of private credit may be over; allocators should now view it as a core credit holding with modest premiums, not a source of outsized returns, and be wary of managers taking on excessive risk to generate higher yields.

▶Pragmatic Skepticism Toward Artificial Intelligence

Marks views AI as a force that makes the future profoundly less predictable, but he remains skeptical of its current ability to replace human judgment in investing. While acknowledging its power in data analysis and its potential to eliminate emotional errors, he believes it lacks the intuition and ability to judge character essential for superior investment selection.

For analysts, this suggests a hybrid approach where AI is used as a powerful tool for data processing and identifying patterns, but final investment decisions, especially in complex or distressed situations, still rely heavily on experienced human oversight and qualitative judgment.

▶The Primacy of Risk Control and Market Cycles

A core tenet of Marks's philosophy is the importance of understanding market cycles and controlling risk, encapsulated in Oaktree's motto: 'If we avoid the losers, the winners take care of themselves.' He frequently draws on historical examples like the LBO boom/bust and the 'Nifty Fifty' to illustrate how investor psychology leads to excess and eventual downturns, stressing that tough times are what reveal poor investment decisions.

This philosophy advocates for a counter-cyclical approach, suggesting that the best opportunities arise when fear is high and capital is scarce, and that building portfolio resilience is more critical than chasing momentum in euphoric markets.

Source episodes

Sentiment over time

Not enough data for timeline

Changes over time

1978

Marks starts Citibank's high-yield bond fund, which he considers the first of its kind from a mainstream institution, when the entire market was only $2.5 billion.

1984-1991

Marks observes the rise of the leveraged buyout (LBO) business, with deals financed with up to 95% debt, followed by the 1991 credit crisis where many prominent LBOs failed.

1995

Co-founds Oaktree Capital Management, starting with $7 billion in assets under management.

2011-2012

Marks identifies this period as the emergence of the private credit market, as non-bank lenders stepped in to fill a void left by banks constrained by post-GFC regulation.

2022

Marks declares a 'Sea Change' in the market environment, believing the shift to higher interest rates that began this year is a structural and long-lasting phenomenon.

Suggested prompts

How does Marks's view on the 'Sea Change' in interest rates challenge the growth and exit assumptions underpinning the $2.5 trillion of private equity dry powder? &nearr;Given Marks's skepticism about AI's ability to replicate human intuition, how might Oaktree's investment strategy evolve if AI capabilities advance beyond data marshalling? &nearr;Marks argues private credit is now 'fairly priced' with compressed premiums. What are the implications for LPs who have increased allocations to this asset class in search of alpha? &nearr;How does Marks reconcile his belief that the market is not in a bubble (claim 44) with his assessment that the S&P 500 is 'expensive' (claim 59) and his prediction of better buying opportunities ahead (claim 38)? &nearr;

Key concepts

Private Credit 4 ep Artificial Intelligence (AI) 3 ep Market Cycles & History 3 ep Oaktree Capital Management 3 ep Investor Psychology 3 ep Valuation 2 ep High-Yield Bonds 2 ep Private Equity / LBOs 1 ep Risk Management 2 ep

Notable quotes

“I wrote a memo in December 22 called The Sea Change, and it talked about the change in the interest rate climate, which I think is structural and long lasting.”

Howard Marks · Howard Marks - Navigating Private Credit (EP.439)

“the introduction of AI, render the world much less predictable than at any time, probably any time ever, and certainly any time in my lifetime.”

Howard Marks · Oaktree's Howard Marks on Unpredictablility, Importance and Investing in AI

“It's only in tough economic times that we find out who lend money stupidly and to whom. And that period lies ahead.”

Howard Marks · Oaktree's Howard Marks on Unpredictablility, Importance and Investing in AI

“if you're taking fundamental business model risk, shouldn't you get paid for it by being an owner rather than a fixed income investor?”

Howard Marks · Oaktree's Howard Marks on Unpredictablility, Importance and Investing in AI

Report last updated: Apr 21, 2026

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