Recently one of our clients sent me over an article from Yahoo Finance titled Mark Yusko: 'The US is going to have a crash and it will be massive.' Clearly that is a great title for an article because it is scary as hell. Just keep in mind in today's world, you have to say something like that to get quoted. Writers know that is great click bait. They salivate over quotes like that one from Yusko. But more importantly to me and you, is this really going to happen? Is the market going to crash? Perhaps eventually, but not likely in the near term. Is it going to be massive? Almost impossible to answer. Our view is that the market is still heading higher. S&P earnings are growing in the low teens and the global economy is on the upswing. Interest rates remain extremely low and are still near zero in Japan and Europe. These conditions don't suggest an imminent crash but we are always monitoring variables that could change our outlook.
Why did Yusko say this?
The next question is why did Yusko say, "I'm telling you right now, the US is going to have a crash and it will be massive." Mark Yusko is CIO of Morgan Creek Capital Management. His firm is an allocator of capital as they don't manage investments in-house. He is also a huge proponent of alternative asset classes: hedge funds, private equity, long/short, etc. He would love to get institutions to move long only money to his company which invests in alternatives.
Furthermore, he wants to be in the headlines for the name recognition. Hey it's good branding. But keep in mind, he makes recession calls pretty much every year.
In July 2012, Yusko told advisors at a conference not to expect any returns until 2021. "Since 1999, the return on stocks [meaning the S&P 500] is zero," Yusko said, adding that he expects the same over the next eight to nine years. "There is a technical term for it. That sucks." Was Yusko correct? Nope. The S&P 500 is up almost 100% from that speech.