Marks: How To Recognize Bull-Market Excess

Howard Marks explains how to avoid crashes by learning to recognize signs of bull-market excess
Published: May 26, 2022 at 4:56 p.m. ET
By Joseph AdinolfiFollow
SPACs and crypto craze led to lack of ‘fear of loss’ that keeps markets sane, says Mark…

With this in mind, Marks delved into what he described as the three stages of a bull market: during the first phase, a handful of forward-looking investors bet that things will get better. During the second, more investors realize that underlying improvement is actually under way. And in the final stage, virtually all investors believe that the recent period of frothy returns will continue forever.

One thing that set the pandemic-related bull market apart from the dot-com boom and other periods of hysterical optimism was that there essentially was no first stage, and very little of the second. Instead, many investors “went straight from hopeless in late March to highly optimistic later in the year.”


Toward the end of his note, Marks summed up his thinking with yet another popular adage: “what the wise man does in the beginning, the fool does in the end”.