Value Doesn’t Die

Published on
February 18th, 2019
Duration
46 minutes

Value Doesn’t Die

Skin In The Game ·
Featuring Mark Yusko

Published on: February 18th, 2019 • Duration: 46 minutes

A.I. and machine learning are changing the face of finance, but the underlying principles of investment remain the same. Mark Yusko, CIO and managing director of Morgan Creek Capital Management, outlines to Grant Williams both the changes that are taking place and the opportunities provided by this fast moving financial landscape. Filmed on February 7, 2019 in Grand Cayman.

Comments

  • OD
    Orin D.
    23 February 2019 @ 02:50
    Mark Yusko is great at talking at a very high level about concepts but there is a lack of real detailed analysis of anything in particular
    • FG
      Flavio G.
      10 March 2019 @ 23:41
      There is a name for that: dilettante
  • IF
    Ian F.
    22 February 2019 @ 21:32
    Yusko is a great salesman but complete bullshitter. 46 minutes of conjecture and opinion. Completely useless discussion -- no analysis, nothing actionable, just hyperbole and bar room market "analysis". Yusko - "I think the dollar is in secular decline." That's a big fucking statement, better back it up with something more than "I think". These lines may work on dumb retail money but that is better left off RV. Very likable guy though.
    • GW
      Greg W.
      23 February 2019 @ 20:35
      There are videos available specifically for analysis and others for actionable trade ideas. I enjoy these bar room conversations. Your comment seems unnecessarily critical and harsh. Why say this should be left off RV? Why limit the variety of conversations available for everyone instead of choosing the ones relevant and interesting for yourself?
    • VS
      Vasil S.
      24 February 2019 @ 11:55
      Yusko has made his point on the secular decline on the dollar over the past two years. Check out the Macro Voices podcast for more information. I enjoyed the interview personally.
  • CS
    Chris S.
    21 February 2019 @ 20:31
    Brilliant conversation! I almost forgot how good Mark is, as he is mainly tweeting about crypto. But his argumentation is so well structured, his language is clear and full of anecdotes. I always find it a pleasure to listen to him. Please more!
  • WB
    Wes B.
    21 February 2019 @ 14:59
    Yusko always gives a good interview but Grant used kid gloves here. Yusko has been very vocal and very wrong about many things the last few years (BTC, EM, etc). I am not convinced he won't eventually be right but he's paid a very large opportunity cost that can't be overlooked. I am also salty because he blocked me when I questioned him on BTC being a safe haven asset similar to treasuries...
    • GW
      Greg W.
      23 February 2019 @ 20:42
      There was a good portion of the conversation on the topic of being wrong. Everyone will be wrong many times, if they are making decisions and taking positions. The most important thing is risk management, cutting losses and taking profits. Position sizing. Re-evaluating and being able to change ideas. Dollar cost averaging and making decisions according to a time horizon, and a strategy which provides a risk reward ratio that makes sense over a short term or longer period depending on that strategy, etc.
  • AH
    Andreas H.
    21 February 2019 @ 13:43
    was he not Long crypto and Long EM in 2018?
    • AH
      Andreas H.
      21 February 2019 @ 13:44
      oh, and from what I know he missed the Rally in 2016 and 2017 in the US market, well, well...
  • TH
    Timo H.
    20 February 2019 @ 06:18
    Mark does not seem to tolerate crypto sceptics on Twitter. He blocked me after I asked a few tough questions I knew the bitcoin believers cannot answer. No name calling was needed...
    • TM
      The-First-James M.
      20 February 2019 @ 11:58
      Why not ask them here? People will have opinions and it's constructive to discuss these things.
  • NG
    Nick G.
    19 February 2019 @ 23:26
    Very glad to see that crypto is now neglected, maligned and ignored. Obviously a great time to buy. The comment section of RV is a great source of "value".
    • FG
      Flavio G.
      22 February 2019 @ 17:03
      I can imagine some Dutch thinking likewise about tulips in 1638
  • gg
    georgy g.
    19 February 2019 @ 22:27
    Why is mkt overvalued? Seriously. Where is the recession? Please show me
    • TM
      The-First-James M.
      20 February 2019 @ 02:18
      Re, overvaluation, here are a handful of leading examples: https://www.finviz.com/quote.ashx?t=NFLX https://www.finviz.com/quote.ashx?t=FB&ty=c&ta=1&p=d https://www.finviz.com/quote.ashx?t=AMZN&ty=c&ta=1&p=d https://www.finviz.com/quote.ashx?t=MSFT&ty=c&ta=1&p=d https://www.finviz.com/quote.ashx?t=GOOG&ty=c&ta=1&p=d I could pick on a number of metrics, but P/S and P/B on the above are rich to nuts. Re, recession risk, follow the Twitter feed of people like Raoul, Mark and Julian Brigden.
    • gg
      georgy g.
      20 February 2019 @ 11:19
      Many reasons why margins structurally higher than in previous cycles. And ev/s is a function of growth and margins. There is still good value in these MKTS. Fed does not have the mandate to cause recession. If someone was saying for 10 yr Amzn is overvalued, he is probably not early but just wrong. Not saying there is no recession forever, but only that it is not necessarily coming this or even next year. Many variables
    • TM
      The-First-James M.
      20 February 2019 @ 11:49
      "Many reasons why margins structurally higher than in previous cycles". Debt-funded Corporate Buy Backs - reducing shares in circulation and boosting EPS - being one of them. This became the "Stealth QE" in 2018, referred to by Mark.
    • CB
      C B.
      20 February 2019 @ 14:42
      One metric: PE10
    • MB
      Matthias B.
      23 February 2019 @ 15:33
      Hi Georgy, a fair ponit you rise but think of these: the tax reform in the US was an adrenaline shot with no structural benefit to the economic cycle: US corp EPS would be worse or already in a recession without the massive sbb; this Jan/Feb alone most major central banks made a dovish pirouette any skilled ice skater would be jealous of thus kicking the can down the road desperately trying to avoid any economic slowdown or suppress eco cycles to unfold. Last but not least, the incremental contribution from the ever growing debt to the economy is vastly shrinking, again with more debt thrown down the pipe to avoid a slowdown. Be honest to yourself, if it was not for desperate monetary stimulus, the recession would already be here.
  • DS
    David S.
    19 February 2019 @ 22:09
    Financial value changes every day, especially in the world of globalization, automation, bad management, etc. Value companies can die or lose most of their market value. Deutsche Bank was value. Kodak was value. Lehman Brothers was value. Why would anyone say that value never dies? The world of investing is replete with failures of companies that were valuable at one time. I guess it would be prudent to have stop losses on all your value companies. You could also say that you were wrong, and it was not a value company after all. DLS
    • WS
      Will S.
      20 February 2019 @ 00:30
      "Value" is a price metric for assets that have something tangible backstopping them. A bankrupt company that the market has yet to figure out is not value, despite what the Cramer's of the world say. If a company provides something of use, has a good balance sheet and is being neglected, that is a value proposition. Pundits are pundits. Value is subjective and not all people are capable or willing of assessing value in a methodical and/or honest way.
    • DS
      David S.
      20 February 2019 @ 00:54
      Will S. I agree with your definition. We all hope to find some. My comment refers to "value never dies." It can change and you need to reassess often. DLS
    • MS
      Michael S.
      20 February 2019 @ 05:57
      "Companies that were valuable at one time", as you said, is not "value". Those companies you mention were all "growth" companies once too. They are talking about how "value" as an investment strategy and "value" as a fund manager vocation never dies.
    • TM
      The-First-James M.
      20 February 2019 @ 11:56
      David S, I guess that's where the terms "Value Trap" comes from. This is probably the Value Investor's nemesis, which is why it's so essential that earnings and valuation metrics aren't the sole driver of a Value Investment thesis. Business quality/longevity must be considered.
    • DS
      David S.
      20 February 2019 @ 12:07
      Michael S. - I am not sure that Mr. Yusko is the fundamental value fund manager as you suggest. He may be in some investments, but I would like to see the track record and his fundamental analysis for Bitcoin over time. Value Never Dies is code for I am right, and the market will recognize it someday. My finance professor wallpapered his den with stocks that he thought were of valuable. Things change even for companies that have good current fundamentals. DLS
    • CB
      C B.
      20 February 2019 @ 14:48
      Hey David, Chris Martenson interviewed a guy named Tan Liu recently. I think their discussion would be enjoyable for you based on your comment.
    • DS
      David S.
      20 February 2019 @ 19:10
      C B. – Thanks for your comment. Mr. Tan's turn of phrase is interesting - capital gains are a Ponzi scheme - but I do not agree. DLS
  • WM
    William M.
    19 February 2019 @ 22:00
    Ways to win vs. the machines etc: value, longer time horizon, less liquid investments like very select microcaps.... but nobody knows the future....incl. the machines and those who program them.
  • CB
    Conor B.
    19 February 2019 @ 21:00
    How does Grant not ask Mark how he reconciles his value mantra with his crypto obsession? Interview feels way too cozy..
    • TM
      The-First-James M.
      20 February 2019 @ 11:54
      I would have liked Grant to have gone down this avenue aswell. Both he and Mark Yusko have opinions/interests in this area (understatement of the Century when it comes to Mark), and it would have been good if this could have formed a segment of the discussion. Maybe it was avoided for reasons of interview length, in which case, it would be great to see Mark featured in a Grant Williams conversation that dives deeper into the subject.
  • KD
    Karl D.
    19 February 2019 @ 10:35
    Mark Yusko is one of my favourite commentators... Great communicator and strips out the unnecessary complexity. Would have liked to hear more about markets and less about the 'industry', but I'm relieved to hear very little about crypto.
  • SS
    Shilpi S.
    19 February 2019 @ 05:33
    waste of time watching this interview. no value add from previous mark yusko interviews (which are v good btw).
    • CB
      C B.
      19 February 2019 @ 18:01
      Yusko says when the facts change he reserves his right to change his mind. On this occasion he has reaffirmed his view. That was clear.
  • PP
    Patrick P.
    19 February 2019 @ 02:37
    For some reason I like money managers that have a big ego.....but they then control it with large doses of humility. Sorry....IMO I think Mark misses on the latter.
    • DH
      Daniel H.
      19 February 2019 @ 05:24
      I follow him on Twitter. He has strong opinions I disagree with, but he is always polite and approachable. And he is more humble than you say.
    • PP
      Patrick P.
      20 February 2019 @ 00:23
      Daniel .. Twitter is like reading an email.. you can interpret it however....I spent 46 minutes listening to him in his own words.
  • ZH
    Zack H.
    19 February 2019 @ 01:17
    Great job, mark has tons of energy and easy to listen to.
  • dw
    darcy w.
    18 February 2019 @ 22:29
    The best thing I like about Mark Yusko, from the first time I discovered him on RV, is that you can have very little knowledge of finance, and yet still take away so much value from listening to him. He has the perfect combination. He is obviously a very thoughtful person. And is able to express himself very well. I never miss a chance to listen and re listen to him.
  • NH
    Neil H.
    18 February 2019 @ 21:21
    Great conversation with no conclusion. It is great that mark likes value and hates passive but is he invested heavily in value or is he very light on equities. Would have been good to get the answer to tie this conversation up
  • JC
    Joe C.
    18 February 2019 @ 19:34
    Stealth QE = Who exactly cutting corporate tax rate to incentivize buybacks? The fed? Treasury? Gov’t? How can that just unilaterally happen? Would love a deep dive to explain that a bit more... that’s a pretty wild assertion that deserves more time.
    • JC
      Joe C.
      18 February 2019 @ 23:46
      Actually I think he just meant the GOP tax cuts. Took it as a clandestine tit-for-tat on first listen.
    • TM
      The-First-James M.
      20 February 2019 @ 02:29
      Stealth QE - Corporate Share Buybacks funded by tax savings arising as a one-off from 2018's Trump Tax Cuts.
  • PU
    Peter U.
    18 February 2019 @ 19:23
    OMG; COLORED SOCKS AGAIN! Stop trying to be cool or like a millennial!
    • MS
      Michel S.
      18 February 2019 @ 20:22
      Like the fake Trudeau ..HE break any fashionable trend with that socks story
    • TM
      The-First-James M.
      20 February 2019 @ 02:24
      Couldn't really give a **** about his choice of socks to be honest. I do very much give a **** about listening to what emerges from his mouth...
  • DS
    David S.
    18 February 2019 @ 18:59
    It is extraordinary the difference in substance between this video and the Howard Marks video. DLS
  • RM
    R M.
    18 February 2019 @ 18:24
    Was a bit disappointed that since the theme was value, there wasn’t more discussion of how to recogonize it. Also mentioned was liquidity moves markets, but ideally you want to know which market(s) the liquidity flows to. For example, will the recent liquidity injections flow to commodities, emerging, or back into the neverending bull market in the usa? These are bright guys, just wished they had gone a lot deeper.
    • DS
      David S.
      20 February 2019 @ 19:29
      Daniel Lacalle's RVTV presentation Trapped By Liquidity was insightful to me. DLS https://www.realvision.com/tv/shows/skin-in-the-game/videos/trapped-by-liquidity
  • TJ
    Terry J.
    18 February 2019 @ 14:05
    Another classic debate and discussion from two top guys. So many excellent insights and learning points. I loved it. Mark's delightfully colourful socks mirror his personality.
  • FG
    Flavio G.
    18 February 2019 @ 10:27
    Mark Yusko became sucha a cheerleader of crypto (late in the crypto cycle) and then, after the crash .... silence ! Wonder how much of his customer's $ he lost on that call. How cozy of Grant to largely avoid the topic with him. Now Yusko says it's all about "intrinsic value", really? Reminds me Boy George's "karma chameleon. You come and go, you come and go"
    • MW
      Max W.
      18 February 2019 @ 15:57
      9 of his last 10 tweets are about BTC or crypto. He talks it all the time.
    • FG
      Flavio G.
      18 February 2019 @ 16:31
      Max, can't tell, he blocked me on Twitter after saying that he entered the BTC cycle too late, especially when compared to other investors like Fred Wilson (years ahead). Nothing offensive, just factual. Some people can't handle informed criticism well.
    • SB
      Salvatore B.
      18 February 2019 @ 19:08
      Silence? He couldn't possibly be any louder about crypto
    • JM
      Jim M.
      19 February 2019 @ 03:41
      Factual?? Sounds like opinion.
    • DH
      Daniel H.
      19 February 2019 @ 05:29
      I worry about Mark on crypto. In the end blockchain is just a linked list used as a database. But he has invested in it and has others joining him. I hope they do find a use case that makes sense and is scalable. Whether right or wrong on crypto, he is always interesting to listen to.
    • CB
      C B.
      19 February 2019 @ 18:11
      In the video Mark and Grant talk about how if you get one call wrong people call you an idiot and dismiss everything that you say afterwards. From this comment I think it is clear they called that dynamic accurately. Regarding crypto, I think you would have to believe that Eric Townsend's view is wrong. Townsend says that authorities eventually realize that crypto is a threat to government, currency monopolies and they legislate them to zero price for law abiding citizens. An allocation to crypto suggests that governments do not come to this realization, in time. Either way, I think the commentary that Yusko would give on crypto is that it is an allocation. That you size the position in a way that allows you time to hold it an realize the thesis. It's obvious that crypto has intrinsic value, because you can use it to buy dope online. What other currency allows you to buy dope online?
    • TM
      The-First-James M.
      20 February 2019 @ 02:22
      Mark has tweeted about Crypto on an ongoing basis from January 2018 up until the present date, so not sure where you get "silence" from. He also called the December 2017 Crypto correction to the day (a Gann Turn Date) via Twitter, suggesting it was going to be potentially severe. Sure, he didn't call the crash, but he was hardly urging people to "Buy Buy Buy" at the highs.