Mark Yusko: Gold Miners are Orders of Magnitude Undervalued Relative to Gold
Tom welcomes a new guest Mark Yusko who is CEO and Chief Investment Officer of Morgan Creek Capital Management. Mark says we have the highest amount of leverage at all levels today, which is very similar to 1929. The 1929 crash was terrible, with markets falling 47%, then rallied back and then collapsed again. America today has an addiction problem, and that addiction is debt. Debt has to be defaulted on or inflated away, which is the path they choose in the 1930s.
Every bear market has a sharp drop, then a reflective rebound, and then you have a fundamental down cycle. This cycle takes 18 to 24 months. The damage we have done from the shutdown will have long repercussions. We will have depression-like economic activity, which will lead to much lower stock prices.
Social media today exaggerates people’s personal biases and creates echo chambers. He discusses his alternate Gold FAAANG, which is composed of undervalued stocks that he believes will do well during the next few years. People today believe that value no longer matters, but Mark argues that it always matters.
Time Stamp References:
0:30 – His journey into investing.
5:30 – This market rally isn’t sustainable.
8:40 – America is addicted to debt.
10:30 – Bear markets take 18 to 24 months.
12:15 – 3 Trillion in additional debt.
16:00 – The value of a dollar today.
20:00 – Why value doesn’t die.
23:30 – His alternate to the FANG.
29:00 – Gold is wildly undervalued.
30:00 – Countries will inflate their currency.
36:30 – Avoiding your personal cognitive bias.
Talking Points From This Episode
• Comparisons between 2008, 1929, and today.
• The stages of a bear market.
• Chasing price versus chasing value.
• US, Japan, and Europe in the race to the bottom.
• Overcoming personal bias and belief.
Mark Yusko is the Founder, CEO, and Chief Investment Officer of Morgan Creek Capital Management. He is also the Managing Partner of Morgan Creek Digital Assets. Morgan Creek Capital Management was founded in 2004 and currently manages close to $2 billion in discretionary and non-discretionary assets. Before founding Morgan Creek, Mr. Yusko was CIO and Founder of UNC Management Company (UNCMC), the Endowment investment office for the University of North Carolina at Chapel Hill. Before that, he was Senior Investment Director for the University of Notre Dame Investment Office.
Mr. Yusko has been at the forefront of institutional investing throughout his career. An early investor in alternative asset classes at Notre Dame, he brought the Endowment Model of investing to UNC, which contributed to significant performance gains for the Endowment. The Endowment Model is the cornerstone philosophy of Morgan Creek, as is the mandate to Invest in Innovation. Mr. Yusko is again at the forefront of investing through Morgan Creek Digital Assets, which was formed in 2018. Morgan Creek Digital is an early-stage investor in blockchain technology, digital currency, and digital assets through the firm’s Venture Capital and Digital Asset Index Fund.
Mr. Yusko received a BA with Honors from the University of Notre Dame and an MBA in Accounting and Finance from the University of Chicago.
His FAAANG Picks: FNV AEM AGI AU NEM GOLD