This man knows the market. He predicted: 1) Dot-com Bubble (2000) 2) Great Recession (2008) 3) The COVID Bubble (2021)…

10 tweets1 min read♥ 38.4Koriginal

Summary

Investment veteran Howard Marks warns that tariffs represent the biggest economic shift since WWII, signaling a departure from 80 years of globalization that drove prosperity and kept prices low. While uncertainty is high and inflation may rise, he recommends long-term investors consider buying quality US company shares at reduced prices, as the US remains the best investment location despite diminished advantages.

Summarized by ThreadOut AI from the full thread. May miss nuance — read the thread below.

#1
This man knows the market. He predicted: 1) Dot-com Bubble (2000) 2) Great Recession (2008) 3) The COVID Bubble (2021) Howard Marks just went on Bloomberg and said "tariffs are changing everything." Here is his latest warning: 🧵
#2
1/ This is the biggest change of sea since World War II. After the war a regime of economic integration was deliberately picked to make countries interdependent to prevent another war. This came to known as globalization. Tariffs signs a step back from this regime.
#3
2/ Global trade was the biggest driver of prosperity in the last 80 years. Marks likens it to a wave that lifted all boats. United States also massively benefited from this. How? It turned from an manufacturing economy to a service economy.
#4
3/ Global trade unleashed potential for every country. Because of the global trade, US could outsource low value manufacturing from poorer countries and focused on high value services. If people in the US aren't assembling iPhones for $1/hour, this is because of free trade. Tariffs threaten to change this.
#5
4/ Inflation will skyrocket. Global trade and cheap manufacturing lead to 40% reduction in prices of durable goods despite the fact that the USD lost 75% of its value since the World War II. This won't happen anymore. Costs will increase and goods will become more expensive.
#6
5/ It's a time of dislocation. The uncertainty is as high as it ever has been, making it harder to measure whether the market decline is overdone. There is no data to look because we are going through this for the first time. This is the big challenge we are facing right now.
#7
6/ It's not a time to be fearful. Prices for the shares of the highest quality companies in the world have gone for a sale. Whether it's adequate reduction to buy a big chunk is a different question but if you are in this for a long term, you should at least take a hard look.
#8
7/ US is still the best place to invest. It's just less of a best than it used to be. The worst possible consequence of this situation is the USD losing its reserve currency status. This will make US Government debt no more on paper, but a reality to be faced.
#9
8/ What's the right thing to do? US companies are still the bests in the world. Their shares have fallen significantly from peaks and investors thinking long-term should start taking advantage of this. This should be done without betting the house and keeping in mind that further turmoil is always possible.
#10
Do you want to become a better investor? I share all my insights in my weekly newsletter. Join 14,000+ readers to become a better investor. You will get a free e-book when you join 👇 capitalist-letters.com