Monday, November 4, 2013

It's The Economy Stupid: BlackRock's Fink Sees Bubble-Like Equity Markets

LET THE BUYER BEWARE… Just a reminder, cash may not pay much (or nothing), but it is not a negative return either.  Taking some profits when the market has returned over 25%-30% in the last year is not a terrible idea.


Fund Fire

BlackRock's Fink Sees Bubble-Like Equity Markets

By Kathleen Laverty

November 4, 2013


After urging investors to bet on equities for more than a year, BlackRock CEO Laurence Fink is now warning that “bubble-like markets” are forming, while asset managers are starting to hold more cash, Bloomberg reports.


Fink, who leads the world’s largest money manager with $4.1 trillion in assets, was so confident that equities would soar last year that he said he would invest 100% of his personal fortune in stocks, as reported.


But with domestic equities now trading at near-record highs and corporate debt spreads narrowing “dramatically,” Fink sounded a more cautious note last week, saying it is “imperative” that the Federal Reserve begins to taper its bond-buying program.


Some asset managers are already becoming more cautious in their holdings. Hedge fund manager David Einhorn, at Greenlight Capital Re, has already started his own tapering, with long positions exceeding short positions by 35 percentage points as of Sept. 30, down from about 42 percentage points in the second quarter of this year, Bloomberg reports.


Fund manager Wally Weitz, who runs the $1.1 billion Weitz Value Fund, is also treading carefully and was sitting on 29% of assets in cash and Treasurys as of Sept 30.


Meanwhile, the $11.4 billion Yacktman Focused Fund, run by Donald Yacktman, held 21% of its assets in cash as of Sept. 30. This compares to the fund’s 1.4% allocation to cash at the end of 2008, Bloomberg reports.


John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury



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