Keep pulling the thread on Howard Marks.
Howard Marks believes the current euphoria around artificial intelligence is most comparable in kind, though not necessarily in degree, to the TMT internet dot-com bubble of 1998-2000.
Howard Marks states that he has never heard anyone clearly explain how artificial intelligence is going to become a business, make money, and impact life, making its future less clear than the internet's was in 2000.
Howard Marks predicts that while artificial intelligence will change the world, most of the companies people are currently investing in to profit from AI will ultimately end up worthless.
Oaktree Capital Management, co-founded by Howard Marks in 1995, oversees approximately $223 billion in assets in alternative investments.
Howard Marks asserts that the Nifty 50 bubble was different from the current AI boom because it was centered around established great companies, not a single novel technology.
Howard Marks argues that the 2005-2007 subprime mortgage crisis is not comparable to the AI boom because it was a financial invention, not a technological innovation.
Howard Marks believes that while the internet did change the world as predicted during the dot-com bubble, there was a clearer view in 1999-2000 of how it would do so, particularly through e-commerce.
Howard Marks posits that most financial bubbles form around something new, like the South Sea Company in 1720 or tulip bulbs in 1620, because the imagination is untrammeled and can envision trees growing to the sky.
Howard Marks cites Warren Buffett's observation from a 2000 annual meeting that while the internet would increase productivity, it was not clear it would have a positive impact on profitability.
Howard Marks speculates that cost savings from AI may not accrue to AI service providers due to price competition, but rather to consumers in the form of lower prices.
Howard Marks advises investors not to assume that today's leading AI companies are certain to be the leaders of tomorrow.
Howard Marks warns against investing in laggard AI companies just because they are cheaper, calling it a "lottery ticket mentality" that ignores their low probability of success.