Howard Marks Warned Me About S&P 500 Valuations: I Ignored Him and My Portfolio Doubled

On a recent episode of My First Million, Sam Parr told his co-host Shaan Puri that he keeps 80% of his portfolio in the S&P 500, which would not be remarkable except for who told him not to. Howard Marks, the Oaktree co-founder whose memos move money around the world, had sat in that same studio in August and warned that buying the S&P at 23x earnings would deliver returns “between -2% and 2%” over the next decade. Puri pressed Parr on whether he had a real rebuttal or was just ignoring one of the most respected risk minds alive.

Parr’s answer: “I don’t care.”

Since the warning, the index has cooperated with Parr, not Marks. The S&P 500 gained roughly 13% since Marks issued his caution, and Parr’s portfolio has doubled since he sold The Hustle in February 2021. So is Marks wrong? Or is Parr just early to being wrong?

My verdict: Parr’s process beats Marks’ forecast, even if Marks’ math is right

I’ve been reading Howard Marks memos for the better part of two decades, and I’ve watched smart people use his warnings to justify staying in cash through some of the best compounding years of their lives. That’s the trap. Marks isn’t usually wrong about valuation. He’s just operating on a timeline most retail investors can’t sit through without flinching.

Here’s the mechanic that matters: opportunity cost of waiting. When a famous investor says future returns will be low, the instinct is to reduce exposure. But “low” in Marks’ framing means -2% to 2% real returns over ten years, not a crash next Tuesday. The path to that low average usually includes years that look nothing like the average.

Run the numbers on a $100,000 portfolio. If you bought SPDR S&P 500 ETF (NYSEARCA:SPY | SPY Price Prediction) on August 1, 2025 at about $622 and held to about $739 on May 11, 2026, your $100,000 became roughly $118,900 in nine months. If you instead sat in 10-year Treasuries at about 4.4%, you collected closer to $3,300 in coupon income over the same window. That’s the gap. The forecast can still be right over the full decade, and you’ll have already banked nine months of equity gains the bond sitter never got.

Stretch the lens out. SPY is up 82% over five years and 261% over ten. Plenty of credentialed people warned against the index at multiple points inside those windows. Parr’s thesis is studying American history and targeting “8% nominal return every single year.” That number maps cleanly to a century of equity data. That’s pattern recognition.

The variable: what real return do you actually need?

The one factor that decides whether Marks or Parr is right for you is your required real return, after inflation.

Inflation isn’t trivial right now. CPI sits at 332.4 as of April, up from 320.6 a year earlier, well above the Fed’s 2% target. If Marks is correct and the next decade delivers 1% real, a retiree drawing 4% a year is liquidating principal every year. For that person, valuation risk is existential.

For a 35-year-old still contributing, the picture flips. Even at 1% real annual returns, dollar-cost averaging through a flat decade means buying more shares at lower prices, then capturing the eventual mean reversion. Parr is 38ish and still earning. The math forgives him.

Parr also made a point worth sitting with: the S&P 500 “is not an American index. It’s a global index.” Look at the top of SPY. NVIDIA (NASDAQ:NVDA) at 8%, Apple (NASDAQ:AAPL) at 7%, Microsoft (NASDAQ:MSFT) at 5%. These are global cash flow machines wearing American tickers. The 23x multiple Marks dislikes is partly the price of that earnings quality.

What to actually do with this

1. Calculate your required real return. Take your retirement number, subtract current savings, divide by years remaining, and back out inflation. If you need more than 4% real, you can’t afford to sit out equities on someone else’s forecast.
2. Stress test against Marks’ scenario. Model your portfolio assuming 1% real returns for ten years. If you still hit your goal, valuation worry is noise for you. If you don’t, that’s your signal to raise savings rate, not to time the market.
3. Write your plan down before the next selloff. The VIX hit 31 on March 27, 2026. Anyone without a written plan probably sold something they regret.

Marks may yet be proven right on the decade. Parr admits his biggest behavioral bias is refusing to sell losers, which is the same stubbornness keeping him indexed. The real lesson: a plan you’ll actually stick with usually beats the smartest forecast you’ll second-guess.