Tags: Black | Ross | Harris | debt

Ross, Black, Harris: Don't Invest in Stocks or Bonds

Wednesday, 01 May 2013 08:41 AM

By Dan Weil

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Now is a time to shun stocks and bonds, three investment luminaries said at the Milken Institute Global Conference in Los Angeles, according to CNBC.

They believe the Federal Reserve’s massive easing program has pushed stocks and bonds too high.

"We're seeing overvaluation in all traditional asset classes," said Joshua Harris, chief investment officer of Apollo Global Management.

Editor's Note:
 
Unthinkable Haunts Investors: Evidence for Imminent 90% Stock Market Drop. 

"Sometimes it is better to hide," added Wilbur Ross, CEO of WL Ross.

Leon Black, Apollo’s CEO, noted that it’s a great time to be a seller in financial markets. "We're selling everything that's not nailed down, and if it is nailed down, we're refinancing it. It's almost biblical. There's a time to reap and a time to sow. We're harvesting."

Ross sees a debt bubble emerging from low interest rates. "There's a tremendous amount of interest rate refinancing risk being built up," he explained. "We're just building a bigger and bigger time bomb."

The day of reckoning will come when companies have to refinance their debt after the Fed finally begins to unwind its easing, Ross said, adding that from 2018 to 2020, "a wall of maturities" will require refinancing of $500 billion of low-rated debt.

Harris added that investors should "run — do not walk" from bonds at the current prices.

To be sure, given recent signs of economic weakness, it’s unlikely the Fed will reverse the easing anytime soon.

When it comes to the Fed’s purchases of Treasurys and mortgage-backed securities, “after reviewing the efficacy and costs of this program, I have concluded that the efficacy has been as high or higher than I expected at the onset of the program and the costs the same or lower,” New York Fed President William Dudley said in a recent speech, The New York Times reports.

Editor's Note: Unthinkable Haunts Investors: Evidence for Imminent 90% Stock Market Drop. 

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