All of these men have something in common.
- Michael Burry
- Jeremy Grantham
- Leon Cooperman
- Stanley Druckenmiller
- Kevin O’Leary
I hear from clients every week that our economy can’t continue the way it is going. People are feeling like something has to change, pop, or correct. I got into the financial services business in 2011. The Great Recession was still in the forefront of everyone’s minds, and we worked with a lot of people who were waiting for the other shoe to fall. But it never did.
The government successfully stimulated the economy and bought bonds and created new money through 2014. Interest rates were slashed to make borrowing easier. These measures helped the market grow higher and hit record after record.
Many people saw their 401k and retirement accounts exponentially grow, and today approximately 1,700 people become a millionaire everyday according to a 2016 Fortune article
. From 2010 to 2015, the number of millionaires grew by 2.4 million people. This climb in assets is attributable to the government stabilizing the economy.
Michael Burry is a physician, and he was a hedge fund manager. There was a movie called the Big Short made about him because he was the first to see the subprime mortgage meltdown in the mid-2000s. “Burry in June described the markets as the ‘greatest speculative bubble of all time in all things’ and said retail investors were buying into the hype around meme stocks and cryptocurrencies before the ‘mother of all crashes.’”
Jeremy Grantham is an investment strategist and founded a Boston based asset management firm that has $188 billion under management as of 2015. In January he said the market is a “fully fledged epic bubble.” He went on to say, “When you have reached this level of obvious super-enthusiasm, the bubble has always, without exception, broken in the next few months, not a few years. We will have to live, potentially, possibly, with the biggest loss of perceived value from assets that we have ever seen.”
Leon Cooperman is a 78-year-old billionaire hedge fund manager and his investment management firm has $3.3 billion in assets under management. In May he said, “Everything I look at would suggest caution, intermediate to long term, would be the rule of the day. When this market has a reason to go down, it’s going to go down so fast your head’s going to spin.”
Kevin O’Leary, the wealthy Shark Tank TV show host, in April said, “The generation that is trading right now has never gone through a sustained correction. It’s coming — I don’t know when, I don’t know what’ll trigger it, but they will learn their lesson.”
Stanley Druckenmiller, is a retired hedge fund manager. When he closed his fund down in 2010, he had over $12 billion in assets under management. In May, “I have no doubt that we are in a raging mania in all assets. I also have no doubt that I don’t have a clue when that’s going to end.”
And therein lies the problem… And now allow me to provide a possible solution.