Translated by: Plain Blockchain

Recently, Howard Marks, a legendary figure in the investment world, shared his profound insights into the current investment environment on Bloomberg. He did not attempt to spread fear or predict short-term market trends, but instead focused on explaining how "Liberation Day" redefines our thinking about investment.

Marks pointed out that the world is not coming to an end, but the rules of investment are fundamentally changing. Over the past decades, investors have benefited from the tailwinds of globalization: open trade, efficient supply chains, and low commodity prices. However, these tailwinds are gradually fading. Instead, we are entering an era of fragmentation. Countries are re-examining trade policies, tariffs are rising, and domestic production is being prioritized, even if it means higher costs. This shift has profound implications for the economy, inflation, and asset prices.

Trade is not just a political issue, but an economic engine. When countries achieve mutual benefits through specialization and efficient trade, everyone benefits: lower prices, higher productivity, and broader access to goods. However, reversing this trend comes at a cost. One of the most underestimated effects of globalization is its role in suppressing inflation. As global trade expanded, the cost of many goods dropped significantly, which was beneficial to central banks, consumers, and investors. But as trade shrinks, cost pressures rise. Domestic manufacturing typically means higher wages, higher input costs, and lower efficiency. This is not a bad thing, but it is inflationary and changes the assumptions we have relied on for decades.

So, how should investors respond? Marks emphasizes that we need to rethink the context of every investment decision. For example, if inflation is more structural, valuation multiples may need to be adjusted downward, capital costs will rise, and discount rates will become important again. He is not saying "sell everything," but suggesting that investors recalibrate their investment strategies and not rely on old models in this new world. Assume less mean reversion, increased systemic change, while remaining cautious about the risks taken.

Another key point is: in such an environment, predictions do not work. We cannot reliably predict what policies, partnerships, or power dynamics will look like 6 to 12 months from now. This is not a flaw, but reality. If we cannot predict precisely, what can we do? Marks believes we can rely on probability, positioning, and pricing as anchors. Instead of trying to predict, focus on whether the pricing of assets is reasonable in this new context, and then ask yourself: "Does this make sense?"

When uncertainty is high, discipline becomes especially important. Marks suggests that investors view volatility as a lens for discovering opportunities, not a reason to avoid. The best opportunities often arise when others are hesitant, but you must remain logical, not emotional. Moreover, do not confuse price declines with increased risk. Markets will discount, which is part of the cycle. The key question is not "Will it fall lower?" but "Am I being fairly compensated for the risks I'm taking?"

Despite these changes, Marks still believes that the United States is a powerful place worth investing in. It has deep capital markets, world-class innovation, and the rule of law—although evolving, still superior to most alternative choices. However, the label of "automatically the best" no longer applies. What is needed now is judgment, not taken for granted.

Howard Marks did not provide specific market predictions; he offered a perspective. What is needed at this moment is not just a reaction, but a reassessment of how we invest—and why. The world is changing, and smart investors will adapt accordingly.

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