Miami - Howard Marks is known in the financial world not only for the $223 billion in assets he manages at Oaktree Capital, but for his ability to identify where the market is on the pendulum between euphoria and panic.
More than the volume, it's Marks' consistency that impresses. Over decades, his strategies have delivered an average annual return of 19% (net of fees) to his clients.
Equipped with his famous flip chart for drawing probability curves, he spoke for just over an hour to an audience of about 120 managers and investment advisors at the first international edition of the XP Global Conference .
The "master of cycles" dissected the anatomy of tech bubbles and what he called the "sea change" that ended four decades of favorable winds for investors.
For Marks, the current moment calls for disciplined caution. He argues that the 2,000 basis point decline in US interest rates over the past 40 years was the most important financial event of the last half-century, creating a generation of "geniuses" who were, in reality, simply being carried along by a conveyor belt of cheap capital.
Now that the tide has turned, Marks believes that success will depend on a real understanding of risk, which he defines not as volatility, but as the probability of permanent capital loss.
Marks demonstrated that even the most skeptical veterans are being challenged by the speed of technological advancement. Between December 2025 and February of this year, he accomplished something unprecedented in his 35-year career: he wrote two memos on the same topic, Artificial Intelligence (AI), within a span of just two months.
"The world has changed too fast to wait," he said, referring to the influence of his son, Andrew, and the AI model Claude on his thinking process. "AI has enormous potential, but excess capital and high prices without research is typical bubble behavior that destroys capital."
Alongside Artur Wichmann , CIO of XP, Marks spoke about these topics:
Current market situation
The intrinsic value of an economy or company grows gradually, but the price fluctuates wildly around that value because people either love the assets too much or hate them too much. Bubbles always involve something new – railroads, the internet, or AI – because the new allows for unlimited imagination and the flaws haven't yet appeared. People buy in because of FOMO (fear of missing out) and envy at seeing their neighbor get rich. AI has enormous potential, but excess capital and high prices without research are the typical behavior of a bubble that destroys capital.
AI and previous revolutions
Past technologies, like radio or the internet, were tools to facilitate human work. AI has the unprecedented potential for autonomy: it can do the work for people and decide what to do. This has serious social implications. Silicon Valley geniuses say it's great that people no longer need to work, but work provides structure, purpose, and a sense of teamwork. A society without work and with government-guaranteed income worries me.
The star of private credit
The sector grew from almost nothing to US$1.5 trillion in 15 years. As Warren Buffett says, it's only when the tide goes out that we discover who was swimming naked. Private credit was sold as safe because "it has no volatility," but that's a fake out. Just because the price doesn't fluctuate on the screen every day doesn't mean the credit risk has disappeared. Now that the scenario is more difficult, the failures of those who weren't disciplined in their paperwork and rates will begin to surface.
Central pillar of investment philosophy
The most important thing is not what you buy, but how much you pay. There is no asset so good that it cannot become dangerous if it is expensive, nor so bad that it is not a good deal if it is cheap enough. I learned that risk is not volatility, it is the possibility of permanent loss. My goal is to be "always good, sometimes great, never terrible". If you avoid major disasters, the returns accumulate extraordinarily.
Risk definition
The academic world says that risk is volatility, but that's a distraction. Risk is the possibility of bad results and permanent loss of money. The most common mistake is thinking that to earn more return you just need to take more risk. If risky assets guaranteed higher returns, they wouldn't be risky. What happens is that assets that seem riskier need to appear to offer higher returns to attract capital. The secret is risk control, not risk avoidance.
The importance of "sea change"
Between 1980 and 2020, interest rates fell from 22% to 2%. This was the most significant event of the last half-century. This drop acted like a "conveyor belt" that carried investors and increased asset values without requiring any real skill. This period of zero interest rates is over. In the new scenario, strategies based solely on cheap leverage will not be the winning ones.
Longevity in investments
Many investors try to "break the record" every year and end up shooting themselves in the foot. I prefer the philosophy of a fund I managed: it was never number one in a single year, but ended up at the top of the ranking after 14 years because of its consistency. My goal is to be "always good, sometimes great, never terrible." If you avoid debilitating losses and big mistakes, long-term success will take care of itself. I don't invest to get rich, I invest to stay rich.
