Howard Marks: Investing Wisely in AI: Lessons From The Internet’s Evolution

In this interview with CNBC, Howard Marks is convinced that AI will revolutionize the world, akin to the internet’s impact. Investing in AI, however, poses challenges. Just like the late ’90s TMT bubble, where internet stocks soared then crashed, predicting AI’s impact on portfolios isn’t straightforward.

While it’s clear AI will be crucial, determining its reflection in investments is complex. 25 years ago, nobody foresaw the internet’s full impact. Today, it’s indispensable. Yet, many internet stocks from that era are worthless.

Acknowledging AI’s significance is easy; accurately integrating it into portfolios is the challenge. Investing in AI requires caution and foresight, as history has shown with past technological revolutions. Here’s an excerpt from the interview:

Marks: People are now convinced AI will change the world. I imagine it will.

I don’t know how to invest in it. I don’t know if the future of AI is adequately reflected in the price of the beneficiaries, or over reflected.

But if you go back 25 years ago exactly to mid 1999, everybody was sure that the internet would change the world, and it did.

And can you imagine today living without the internet and e-commerce and so forth.

And yet the internet and e-commerce stocks that were the beneficiaries of that thinking in the TMT bubble of the late 90’s, the vast majority are now worthless.

So I run through this only to say that this stuff isn’t easy, and anybody thinks it’s easy is misleading themselves.

And so to say, well I think that AI will be very important, that’s the easy part, but knowing how it should be reflected in portfolios that’s the hard part. Even graphics artists may use AI tools like an ai image maker to produce unique and high-quality images.

You can watch the entire interview here: