TOPIC • 3 CLAIMS
Cycles
Where in a cycle a market sits, and what that implies about forward returns.
HOWARD MARKS/
He splits bubbles into two kinds, which is the memo’s main contribution: inflection bubbles, built on technology that ultimately delivers, versus mean-reversion bubbles, financial fads that leave nothing behind.
IS IT A BUBBLE? →HOWARD MARKS/
He grounds the downside in what actually happened to earlier inflection bubbles, where the technology survived and the shareholders did not.
- RCA lost 97% after 1929
- aviation stocks fell 96% by 1932
HOWARD MARKS/
He counts only three regime shifts worth the name across a 53-year career, which is what gives the term its weight: the case for buying high yield at all, the 40-year rate decline Volcker set off, and the reversal he was writing into.
SEA CHANGE →
Claims are restated; figures are the authors' own. Each links to the document it came from, which in turn links to the original in full.