- Howard Marks says interest rates won't return to zero anytime soon.
- The billionaire investor warns the ballooning US federal debt may cause problems in the future.
Interest rates aren't going back to zero anytime soon, and the best investors won't be usurped by artificial intelligence, Howard Marks says.
The billionaire investor and Oaktree Capital Management cofounder also rang the alarm on ballooning government debt, suggested bitcoin has its uses, and called for the Federal Reserve to intervene in the economy as little as possible. He spoke during a recent episode of the "We Study Billionaires" podcast.
Here are Marks' 8 best quotes from the interview, lightly edited for length and clarity:
1. "The declining interest rates were responsible for the majority of all the money that's been made in the last 45 years." (Marks hailed the Federal Reserve's embrace of lower rates as a "sea change" for financial markets, as it made borrowing cheaper and debt financing easier.)
2. "The rates are high today to fight inflation. I don't think they're going to stay this high. But they're through coming down in any major way, and they're through being ultra-low."
3. "I just think it's too good to be true to think we can have a credit card we never have to pay the balance on." (Marks was warning that continued growth in the US federal debt will likely have serious consequences down the line.)
4. "AI, just like passive investing and machine learning — even maybe to a greater extent — will knock out everybody who doesn't add value. It should be harder and harder and harder to run money and be paid highly for producing inferior. But hopefully there will still be a small group of people who can do something that the machine can't do."
5. "Can an AI-enabled computer sit down with CEOs and figure out which one is Steve Jobs? Can it sit down with five business plans and figure out which one is Amazon? I just don't think so. This is an art form."
6. "There are people who believe that when you have a bank crisis, like we did with Silicon Valley Bank and some of the others, that the weakness of the banks shows the strength of bitcoin. It's in many ways an anti-bank play. It does seem that there are good uses for some coins, and bitcoin seems to be the one in the lead so far."
7. "Humility is a really important thing, especially in the market, which humbles us all. Anybody who doesn't allow for humility, in a field where there's randomness and uncertainty, and qualitative and subjective things are important, is riding for a fall."
8. "People used to talk about the factory of the future, which would have one man and one dog, and it was the dog's job to keep the man from touching the equipment. It was the man's job to feed the dog. I would like to have the Fed keep its hands off the machinery most of the time."