I know Mark Yusko for a long time and I can tell you two things about him: He’s a really nice guy and his investment philosophy is the polar opposite of mine. I respect his point of view because I know he’s very thoughtful and hardworking in order to arrive at it. However, I think it runs completely counter to the way investors ought to think about investing.
Mark is a believer that markets can be timed, hedge funds are worth paying gargantuan fees for, people should embrace complexity over simplicity, outperforming managers can be identified ahead of time and effectively monitored, alpha should be a goal of all market participants, recessions can be predicted with enough accuracy to be a worthwhile endeavor, low-cost index funds are “dumb” and macroeconomic information can be processed and distilled down to its investment implications by anyone who tries hard enough.
I think none of those things are true and all of them are harmful. Mark believes the opposite. He comes the hedge fund world and so it’s not strange that he believes in them. I come from the evidence-based investing and financial planning realm, so it’s not strange that I can’t agree with any of it.
We had a mini-debate on the air yesterday for my show, The Halftime Report, and I thought it was a really good segment. Mark predicted a 50% crash for the stock market a couple of weeks ago and has made the statement that a 50% crash is what’s necessary in order for stocks to be back at “fair value.”