US stocks are showing early signs of a bubble, according to Oaktree Capital Management co-founder Howard Marks. However, he believes the critical point for a market correction has yet to arrive. Oaktree Capital Management is a global investment management firm specialising in alternative investments, managing assets for institutional and individual investors. Marks cautioned that while he isn’t sounding alarm bells, current market conditions are undeniably expensive.
Marks drew parallels to the late 1990s, a period characterised by intense investor enthusiasm for technology stocks. This era prompted then-Federal Reserve chairman Alan Greenspan to famously warn of “irrational exuberance.” Despite the warning, the market continued its upward trajectory for several years before the eventual bursting of the tech bubble.
Marks highlighted the extended period since the last “serious market correction,” noting it has been 16 years. This lengthy interval may have lulled investors into a sense of complacency. He pointed out that some technology stocks appear “quite highly valued” when viewed through a historical lens.
Marks stated that “reversion to the mean is very likely”. His comments serve as a reminder of the cyclical nature of markets and the potential for significant adjustments following prolonged periods of growth.
