Howard Marks, founder of Oak Tree Capital, wrote his memo this year about tariffs 📕 (Nobody Knows (Yet Again)). A few days ago, after an interview with Bloomberg, he sighed, and the market subsequently plummeted. Earlier in January, he had anticipated concerns and uncertainties about the #AI bubble in his memo.
This (Nobody Knows) memo reviews the investment environment during the 2008 global financial crisis, the early stages of the COVID-19 pandemic in 2020, and the uncertainties faced in 2025 and beyond (especially related to trade policy, tariffs, and geopolitical issues). It is worth reading, and the original article is placed in the comments.
Comparison of the 2008 financial crisis, the 2020 COVID-19 pandemic, and current trade tariffs:
✅ Similarities: Uncertainty + Panic
1. Market turbulence, heightened panic
• 2008: Lehman Brothers collapsed, trust in the financial system eroded, and liquidity dried up.
• 2020: The outbreak of the pandemic led to a global standstill and a sudden economic brake.
• Current: Geopolitical tensions (US-China rivalry, Russia-Ukraine conflict, Middle East situation), high inflation pressures, prolonged high interest rates, and increasing de-globalization trends.
2. Strong government intervention, high policy uncertainty
• All three were accompanied by strong policy interventions, such as the Federal Reserve, fiscal stimulus, and regulatory easing/tightening, but the effects often decoupled from expectations.
3. The market bottom is "clouded"
• All three periods lacked consensus: nobody knows whether the bottom has arrived, and investors generally worry that "the knife is still falling," and the market could "break the bottom" at any time.
❌ Differences: Structural environmental changes
1. Interest rate and liquidity environments are different
• 2008: The Federal Reserve significantly lowered interest rates, QE was initiated, and zero interest rates + unlimited easing drove asset rebounds.
• 2020: Rapid interest rate cuts + unprecedented fiscal stimulus led to a strong "V"-shaped rebound.
• 2024–25: Interest rates will remain high, anti-inflation will be the main policy line, the Federal Reserve is "hesitant to cut rates," and the market no longer expects strong stimulus, with the rebound lacking support.
2. The nature of the crisis is different
• 2008 was a systemic financial crisis, rooted in the imbalance of bank balance sheets.
• 2020 was a liquidity crisis, characterized by temporary and external shocks.
• Currently, it resembles structural weakness combined with insufficient confidence, described as "chronic recession" or "fragmented downturn," no longer a single explosive point, but multiple sources of pressure: global debt, manufacturing reshoring, and supply chain restructuring.
3. Differences in valuation and market structure
• 2008/2020: Overall valuations dropped to extremely low levels, risk premiums were extremely high, and blindly buying ETFs was profitable.
• Now: Certain assets (US tech stocks, bonds, etc.) are still not low in valuation, "bottom-fishing" opportunities are scattered, testing stock selection and timing abilities.
4. The dominant forces of AI and high-frequency trading are different
• The current market is driven more strongly by algorithms, liquidity has become fragmented, and macro news or changes in expectations can be amplified by market systems, making volatility harder to predict.
🎯 Core idea: Nobody knows the future, but decisions must be made
1️⃣ The future cannot be "analyzed"
Max repeatedly emphasized that "analyzing the future" is a contradiction because the future is shaped by countless unquantifiable, unknown, and changing factors. We can think about and speculate on the future, but we cannot precisely analyze or predict it.
2️⃣ The apocalypse does not usually come
During the most severe moments of a crisis (like in 2008), investors are prone to apocalyptic panic, often missing out on important long-term investment opportunities. Nobody knows if it is possible to prevent a collapse, but if we wait for certainty, we may never act.
3️⃣ Inaction is also a choice
Max reminds us that maintaining an unchanged investment portfolio (not taking action) is also a form of "action" and should also be considered thoughtfully, not merely out of fear or numbness.
💡 Investment advice: Maintain rationality and courage amid uncertainty
• "When the buying opportunity arrives, you won't want to buy"
The best investment opportunities often come with the greatest fear. When you want to buy, market prices have often already rebounded. Excellent investments require rational action when others are in panic.
• The perception of the probability of predictions is very important
You must not only make predictions but also have the judgment to assess the likelihood of their correctness. In an extremely uncertain environment, accuracy is lower, so we must be more cautious and humble.
• Investment opportunities will not wait for certainty to arrive
The memo clearly states that during the 2008 and subsequent market crashes, he could not "confirm" that the bottom had arrived, but he also could not abandon opportunities because of this. So he and his team chose to continue deploying capital during the crisis.
🌐 About policies and tariffs: Simple motives vs. complex consequences
Max deconstructed the economic motives behind the Trump administration's trade war. He acknowledged that these goals themselves are reasonable (such as protecting manufacturing and reducing trade deficits), but criticized them:
• Ignored second and third-order effects (e.g., retaliation, price increases, supply chain disruptions)
• Overestimated the leverage of "tariffs" in the complex global economic system
• Underestimated the actual production capacity and the technical labor gap
• Ignored the long-standing logic of consumers choosing imported goods based on "cost-performance"
• Ignored the disturbance of political factors on policy sustainability
He pointed out a key economic principle: "Economics is a science of trade-offs." Protecting 1,000 steel jobs while losing 75,000 steel-using jobs is typically not worth it.
Finally, Max stated that the greatest certainty in the market is uncertainty. We must maintain a sense of reverence for the unknown, continually acknowledge "we do not know," and still make the most rational judgments in the face of "nobody knows." As Max stated in the text, "The predictability of the future has become lower, so faith can no longer be based on forecasts but only on reasonableness and valuation." Valuation + common sense + courage to bet brings opportunities after a crisis! 🧐
