July 13, 2011
post contributed by Megan Flynn
Mark Yusko of Morgan Creek Capital Management challenged those in attendance to keep up with his auctioneer’s pace at May’s roundtable event. It was a unique event where Roundtable members were joined by industry colleagues from CAIA, commencing the organizations’ new mutual affiliation.
Beginning by introducing his presentation’s unique content and style, he warned the membership that what he was about to discuss was very different from the common opinion being shared in market today. Yusko suggested a reverse Q & A, asking the standing room only audience for suggestions for topical subjects they would like to discuss before the night was over. American sovereign debt, Obama, China, emerging markets, gold, rating agencies, and subprime, were all proposed by members and noted by Yusko. It was an unexpected and refreshing start, one which was perfectly suited for the NYHFR. “Perfect, that’s exactly what I was going to talk about,” he said.
Yusko explained, regardless of how much you plan, something unexpected will always happen. The synergies in what Yusko was saying and how he was presenting it made the message that much more authentic and compelling. Since there is no way to plan for every potential outcome possible while still being effective, everything needs to have a certain amount of flexibility. In one of the most memorable moments of the presentation, Mark shared a personal analogy that was well received by the members of the Roundtable as it was charming and genuine, yet still reminded members of the very applicable and important point. US stocks have been dead money for the last 10 years Mark said, and we are continuing to do the same thing over and over again expecting a different result. According to Yusko, we are living in a world where “risk” is not rewarded and low debt wins.
US Stocks continue to be overvalued as confidence has been eroding since the 1980’s caused by our increasing debt. The US is following the Japanese path on Debt, Rates, and GDP Yusko said. However, there is no law that says you have to own stocks and bonds, and regarding a few overseas locations mentioned during the presentation, he believes that “We are standing on the verge of the biggest wealth creating opportunity in the history of the world.”
Roundtable members can access Mr. Yusko’s presentation slides by logging in here.