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The hit to shares of asset managers and other companies caught up in Nvidia’s rout on Monday shows “the irrationality of markets”, says billionaire distressed debt investor Howard Marks.
The co-founder of investing firm Oaktree, which has $205bn in assets under management, on Tuesday said it was unusual that the AI-driven sell-off the previous day, sparked by advancements from China’s DeepSeek, also hit a wide group of other companies, including Brookfield Asset Management which owns a majority stake in Oaktree, and competitors such as Apollo Global, KKR and Blackstone.
“If it were just objective, clinical, unemotional investors looking at Nvidia there would be no reason why yesterday’s news should knock all these other things down,” said Marks at the Global Alts 2025 conference in Miami. “It just shows the pervasiveness of psychology and the irrationality of the markets in the short-run.”
Monday’s market tumult, which knocked nearly $600bn off of Nvidia’s market value and sent stocks of some of the largest asset managers on Wall Street lower, prompted a sense of unease at the start of the annual Global Alts conference, which convenes many hedge fund heavyweights. Many have bet heavily on the chipmakers powering the AI revolution, tilting their portfolios in recent months towards high-growth stocks.
“That’s what happens in a bubble,” Marks said. “Basically everything swings towards optimism and greed and risk tolerance but basically we’re supposed to be afraid of losing money, our own and our clients. But bubbles go where they go because [fear of missing out] takes over from the fear of losing money.”
Many of the behemoths of the asset management industry have wagered heavily on the needs of the burgeoning AI complex, investing in real estate to house computers and servers, the utilities that power those data farms, and underwriting loans to AI companies and chipmakers.
Marks’ perspective is closely watched on Wall Street primarily through his sporadic client memos, which have garnered a wide following. His memo in January 2000 called “bubble.com” threw him into the spotlight. In it, he said there was an “overwhelming” case for “an overheated, speculative market in technology, internet and telecommunications stocks”.
Marks’ comments on Tuesday followed a speech from the head of the US hedge fund industry lobby group the Managed Funds Association, which struck an optimistic tone about the new Donald Trump administration and railed against former Securities and Exchange Commission chair Gary Gensler, who proposed rules to increase regulation of private equity and hedge funds.
But Marks told attendees there was far less certainty under Trump and many of the policies the new administration was pushing were “in conflict with each other”.
“I don’t know if the members of the administration can predict what they’re going to do a year from now. I certainly know I can’t,” he said. “I don’t think you could annunciate a common thread that runs through these activities, other than a dislike of the establishment.”
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