“Are We in a Bubble? My Take on Howard Marks’ Latest Memo”

Are We in a Market Bubble?

That’s the question legendary investor Howard Marks tackled in his latest memo, On Bubble Watch. If you’ve been paying attention to the stock market—especially the tech sector—you’ve probably noticed that a small group of companies is dominating the market like never before.

The “Magnificent Seven” (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla) now make up over 30% of the S&P 500’s total market cap. That’s an unprecedented level of concentration, and it’s starting to feel familiar—just like the dot-com bubble of the early 2000s.

Marks points out several indicators of a potential market bubble:

✔ Market optimism is high—investors believe prices will keep rising.

✔ Valuations (P/E ratios) are stretched—stocks are expensive relative to earnings.

✔ People assume the dominant companies will always win.

So, does this mean we’re heading toward a major crash?

Marks stops short of calling it a bubble, acknowledging that today’s leading companies actually generate massive profits (unlike the speculative dot-com stocks of the past). However, he warns that high valuations can’t stay elevated forever—at some point, the market will adjust.

💡 My Take on Marks’ Memo & What It Means for My Investing

I don’t believe we’re in a full-blown bubble yet, but we’re at a point in the cycle where investors need to be more disciplined than ever. When assets are expensive and optimism is high, it’s easy to get complacent.

I’ve been thinking a lot about how this environment impacts my investment approach, and here’s where I stand:

1️⃣ Stock Market Returns Will Likely Be Lower Moving Forward

Marks argues that the S&P 500 won’t deliver the same high returns over the next decade as it did in the past. I agree. When markets are at all-time highs, future upside is limited unless earnings growth justifies the valuations.

This is why I’ve been less focused on traditional stock market investments and more focused on cash-flowing assets with predictable returns.

2️⃣ Private Lending & Real Estate Still Offer Better Risk-Adjusted Returns

With stocks priced for perfection, I’m doubling down on private lending and real estate. Here’s why:

✔ Private Lending (42 Solutions) → I control the terms, earn 12%+ interest, and have collateral protection.

✔ Real Estate Investing → Even if property values fluctuate, I can structure deals that generate strong cash flow from day one.

✔ Direct Ownership → Unlike stocks, I don’t have to worry about market volatility wiping out my returns overnight.

3️⃣ Risk Management Is More Important Than Ever

Bubbles don’t pop when people expect them to. They pop when everyone assumes risk doesn’t exist anymore.

I’ve built my investment strategy on protecting the downside first—whether it’s:

✔ Lending at conservative Loan-to-Value (LTV) ratios so I never take unnecessary risks.

✔ Avoiding overleveraging in real estate even when cheap debt is tempting.

✔ Only investing in deals with high cash flow and a clear exit strategy.

While some investors chase big returns at any cost, I’m focused on building wealth that lasts.

🔑 Key Takeaways for Smart Investors Right Now

1️⃣ Stay disciplined. The easiest way to lose money is by chasing hype and ignoring fundamentals.

2️⃣ Focus on cash flow. Speculation is risky—real wealth comes from income-producing assets.

3️⃣ Look for inefficiencies. The best opportunities are often in private markets (real estate, private lending, alternative investments).

If Marks is right, and the stock market delivers lower returns over the next decade, then investors who diversify into high-yield, cash-flowing assets will be in a much stronger position.