He also cited Grantham Mayo founder Jeremy Grantham, who has predicted only emerging markets equities will perform well over the next seven years. Equities, in their view, have only been more overvalued twice in the last 100 years—in 1929 and 1999.

Since the start of 2000, the S&P 500 has only returned 3.5 percent. Since 2009, margin debt has fueled the rally, and when stocks go down, they fall 6.5
percent faster than when they go up, Yusko said.

In his contrarian view, it is time to buy hedge funds. "Nobody wants them," but they performed very well in the 2000-2002 bear market, he said.
 

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