Oaktree's Howard Marks Warns of Looming Market Bubble

As of August 20th, 2025, Oaktree's Howard Marks (Trades, Portfolio) has expressed concerns about the state of the US equity market. In a recent interview with Bloomberg, the renowned credit investor stated that US equities are in the "early days of bubble territory," with valuations that feel disconnected from reality.

Marks drew parallels between the current market behavior and the late 1990s tech craze, when Alan Greenspan had warned of "irrational exuberance." Despite Greenspan's warning, the market continued to march on for years before eventually collapsing. Marks cautioned that people often lose the habit of thinking about market corrections, but emphasized that a reversion to the mean is not just possible, but likely.

According to Marks, the market has been enjoying a relief rally since Donald Trump's April 2025 tariff announcement. However, he argued that this rally needs a firmer foundation to justify today's price levels. One red flag he's monitoring is the total market capitalization of US equities, which has reached a record high relative to GDP. Marks also noted that with more companies being taken private or staying private longer, this figure could be even more distorted than it appears on the surface.

For investors seeking a more defensive approach, Marks is leaning into credit over stocks. Even with tight spreads, he sees credit as the safer corner of the market compared to richly priced equities like Tesla (NASDAQ:TSLA). While Marks still considers the US the best place in the world to invest, he likened it to "buying a luxury car at full sticker price" – still world-class, but no longer cheap. The fundamentals may not be broken, but they are no longer doing all the heavy lifting.