Author: Zhao Ying
Source: Wall Street News
Artificial intelligence is making the world more unpredictable than ever before, and most investors have not yet realized the depth of this impact.
Howard Marks, co-founder of Oaktree Capital Management, stated at a capital markets industry conference in New York on Tuesday that the influence of AI is accompanied by its unpredictability, and it is far from sufficient for investors to formulate strategies based solely on their judgments about future trends.
He cited the example of Jack Dorsey's Block, which laid off 4,000 employees last month—about half of its total workforce—pointing directly to the market's severe underestimation of AI's impact.
Marks believes that, in the face of the fundamental business model risks brought by AI, holding equity in AI-related companies is superior to providing debt financing to them. Investors should participate as owners rather than fixed-income investors.
AI's Unpredictability: Both a Strength and a Risk
In an interview with Bloomberg Television host Lisa Abramowicz, Marks stated that the very force that gives AI its importance also endows it with elusive uncertainty—whether in terms of what it will do, what it won't do, or the extent to which it will replace human jobs.
Marks supported his view with specific data. He mentioned that Jack Dorsey's Block announced layoffs of approximately 4,000 people last month, representing about half of its total workforce, and asked, "How many people in the world truly understand the significance of this?"
"Most people in the investment world decide their course of action based on their judgment of the future," he said. "That is not enough."
Marks also pointed out that the rise of AI has intensified investors' concerns about the lack of transparency in private markets.
The Historical Pattern of New Technology Bubbles
Having witnessed multiple cycles of boom and bust, Marks remains cautious about the market frenzy triggered by new technologies. He stated that new things always ignite people's imagination and are easily marketed to the masses. Precisely because they are new, their flaws have never had the chance to be exposed in practice.
"There has never been a steel bubble or a hamburger bubble in history," he said. "But new technologies or new financial innovations lead people to buy in based on mere promises, without understanding the downside risks."
The Logic of AI Investment Allocation: Equity Over Debt
Regarding specific investment strategies, Marks clearly expressed a preference for equity investment. He believes that if investors are taking on the fundamental business model risk of AI companies, they should receive corresponding returns as owners, rather than participating as fixed-income investors.
"If you are taking on the fundamental business model risk, shouldn't you be rewarded by being an owner rather than a fixed-income investor?" he said.
