Index Popularity Leading To 2000 2.0?
By Mark Yusko, CEO and CIO of Morgan Creek Capital Management and Portfolio Manager of the AdvisorShares Morgan Creek Global Tactical ETF (GTAA) One of the most important indicators of the overly ebullient sentiment in the U.S. equity markets is the sudden acceleration of assets moving toward passive strategies like Index Funds and Smart Beta (which we contend is an oxymoron like jumbo shrimp…). To that point, Vanguard just set a new record for inflows in Q2. The last time they had this type of inflow activity was in the first quarter of 2000 and we know how that movie ended, with markets down 40% over the next three years. We think the future is likely to look very similar to the past as slowing economic growth, falling earnings, high valuations and a potential U.S. Recession in 2017 conspire against further gains in the S&P 500. Mark Twain famously quipped that “history doesn’t repeat, but it rhymes”. One thing we know from history is that investors are amazingly...
Read More