Key facts
- Howard Marks advised investors not to sell stocks due to concerns about soaring US debt.
- Marks stated that US fiscal problems are separate from the strength of US companies.
- He suggested that moving money into dollar-denominated assets like bank accounts, money market funds, or bonds would not shield investors from potential dollar devaluation.
- Marks proposed hedging fiscal deterioration risk by investing in assets denominated in other currencies or non-financial assets like gold and real estate.
- He noted that companies in other developed nations may have poorer growth prospects and less scale than leading US companies.
Billionaire investor Howard Marks has advised investors against selling their stocks due to concerns about the growing US national debt. In his latest memo, published on Tuesday, Marks argued that fiscal problems in the U.S. should not be seen as an indicator of the stock market's strength.
"The problem we face isn't a problem with the U.S. stock market or with U.S. companies," Marks wrote. "It's a problem with U.S. fiscal management, and ultimately a potential problem with the U.S. dollar."
He questioned the efficacy of selling US stocks and moving money into other dollar-denominated assets, such as bank accounts, money market funds, or bonds, stating that these options would not necessarily protect investors from the risk of the dollar losing purchasing power. Marks suggested that hedging against fiscal deterioration might involve investing in assets denominated in other currencies or in non-financial assets like gold and real estate.
However, Marks also noted that such alternative assets carry their own risks and that many companies in other developed countries may have less favorable growth prospects and scale compared to leading US companies, in addition to operating in more regulated and less business-friendly jurisdictions.