He highlights how optimism and psychological fluctuations can drive bubbles, with echoes of the late ’90s tech boom. While tech stocks are expensive, Howard doesn’t view them as the primary concern; it’s the high valuations of more average companies that are more alarming.
- Howard’s advice is to be cautious and defensive, suggesting a shift from equities to credit investments, which offer more predictable returns and less risk.
- Credit, unlike equities, offers a promised return, making it a safer option during times of high equity valuations, even with tighter credit spreads.
- While credit spreads are at their tightest since 1998, the probability of credit investments providing stable returns is still high compared to equities.
- The US remains an attractive investment destination, but its exceptional status may be diminishing slightly compared to other regions, which might offer cheaper alternatives.