Mark Yusko (@MarkYusko), founder and CEO of Morgan Creek Capital Management, which manages close to $2 billion in assets, joined Julia La Roche on episode 65.

In this episode, Yusko, a long-time macro investor, frames up the current macroeconomic backdrop and why we’re on the precipice of what he calls the Global Financial Crisis II as banks fail and jitters spread throughout the financial system. As Yusko puts it, “calm is the edge we need” as the crisis worsens.

Yusko was the 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.

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, contributing 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.

In this episode, Yusko provides a deep dive into the Endowment Model, which takes advantage of time-horizon arbitrage. He also delves into the mandate of investing in innovation, sharing an example of a half-a-million-dollar investment that turned into a $200 million return thanks to Sequoia’s early bet in Google on behalf of Notre Dame.

Yusko points out that the greatest wealth is created by being an early investor. However, making that investment requires believing in something before most people understand it, making you mocked, ridiculed, and criticized for your non-consensus action. Today, he continues to see that opportunity in blockchain technology, digital currency, and digital assets. He is again at the forefront of institutional investing through Morgan Creek Digital Assets, which was formed in 2018 to invest in these opportunities.

0:00 Intro

3:08 The Endowment Model

4:08 Taking advantage of time-horizon arbitrage

6:47 What else makes the Endowment Model unique?

8:00 Equity

10:20 Greatest wealth is created by being an early investor in innovation

12:08 Mark’s background

13:33 Dialogue and debate through active listening

16:00 Lessons investing in bonds

19:00 A-ha moment in venture capital

20:00 Investing in Sequoia early

21:19 Being a journalist might be the best training for investing

22:08 Half-a-million investment turns to $200 million thanks to Google investment

25:30 Living the path of technological innovation

30:40 The Truth Net explained

32:44 Macro backdrop

34:19 Liquidity drives markets

35:55 Fractional reserve banking

39:00 Banking system driven by liquidity

41:20 Satoshi Nakamoto’s Bitcoin 2009 white paper

44:00 Digital asset innovation

47:00 Bitcoin as a digital store of value

50:15 A better system

51:00 Duration mismatch in the banking system

55:00 Impact of money printing

57:16 Bitcoin

58:49 Money printing doesn’t create wealth

1:01:10 On the precipice of GFC II

1:07:00 Chance meeting with Howard Marks

1:14:30 Blockchain is an Operating System

Burke Olsen: Unnamed Heroes