Apollo's Harris: 'Almost Every Asset Overvalued'

Wednesday, 30 Apr 2014 07:08 AM

By Dan Weil

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The Federal Reserve's massive easing program has pushed both stocks and bonds to overvalued levels, says Joshua Harris, co-founder and chief investment officer of private equity titan Apollo Global Management.

The S&P 500 stands within 1 percent of its record high, and the 10-year Treasury yield has dropped 36 basis points this year.

"The quantitative easing and the excess money and the low interest rates have driven pricing up of almost all financial assets to beyond what their intrinsic value might be," Harris said at an investment conference in Los Angeles, CNBC reported.

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"Almost every asset is overvalued."

That makes it difficult for his firm to invest. "Even though we can all chat about the benevolent growth environment that exists in the U.S., and to a lesser extent globally, the ability to make money and invest wisely on that is very challenging right now," he explained.

Apollo is now seeking to invest in "sectors that are still relatively depressed," Harris proclaimed. He sees investment opportunities in Europe as banks there deleverage in a major way.

"The deleveraging of the banks in Europe will dwarf anything else really going on," he noted. "And the market's ability to absorb the banks getting smaller and getting out of some of these risky businesses will create the valuation arbitrage where you can actually make interesting investments across Europe."

Not everyone views all financial assets as overvalued. Top-performing, stock-focused investment newsletters are bullish on small-cap stocks, Mark Hulbert, editor of Hulbert Financial Digest, writes in The Wall Street Journal.

"Only as the bull market continues do investors begin to look further and further down the market-cap rankings," Thomas Rice, editor of Bowser Report, told Hulbert. "That's when the new money entering the market trickles down to the lowest-priced stocks."

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

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