Howard Marks Warning: Why I'm Getting Out Now

TL;DR

Howard Marks argues that current S&P 500 valuations (PE ~23-24) historically produce annualized returns of 0-2% over the next decade, not the 10% average many expect. He recommends rebalancing into high-yield bonds yielding 7-8% and using a clinical, rule-based approach to portfolio allocation rather than emotional macro betting.

Key insights

• The riskiest thing in investing is the belief that there is no risk; risk comes from human behavior, not from securities or exchanges.
• S&P 500 annual returns are almost never between 8% and 12% despite a 100-year average of 10% – the norm is extreme outperformance or underperformance, not the average.
• When the S&P 500 PE ratio was 23 at the time of the transcript (and “twenty four twenty five” currently), every prior instance produced an annualized 10-year return between +2% and -2% with no excepti