This podcast interviews Howard Marks about his memo on market bubbles. Marks argues that bubbles are driven by investor psychology, specifically the fear of missing out (FOMO), rather than solely by rising prices. He uses historical examples like the Nifty Fifty and the dot-com bubble to illustrate how the "no price too high" mentality leads to disastrous outcomes. Marks emphasizes the importance of maintaining risk aversion and an idiosyncratic investment approach to avoid being swept up in bubble mania and to capitalize on the subsequent bargains. He also distinguishes between equity and credit bubbles, highlighting the different risk profiles and potential outcomes for investors in each asset class.
