Post date: Jan 25, 2013 10:51:53 PM
Reuters Business Report - After years of favoring fixed income, hedge fund leaders are putting their stock, in stock, and bailing on bonds.
Simon Lack of SL Advisors, and author of Hedge Fund Mirage doesn't mince words:
SIMON LACK, AUTHOR, THE HEDGE FUND MIRAGE, AND FOUNDER, SL ADVISORS :"I think investors should have no fixed income.They should use equities and they should use cash in a barbell strategy based on their risk appetite to generate returns. I think bonds are overpriced and you should exit bonds. "
It's about value according to Patrick Wolf of Grandmaster Capital:
PATRICK WOLFF, CEO, GRANDMASTER CAPITAL :
"Equity valuations are much more reasonable. So if you went back a dozen years, you could have said well interest rates of 5%-6% don't look that appealing relative to where they were in the '80s, that's true. But of course stock P/Es were at stellar levels. Now, you have P/Es that are very reasonable and you have rock bottom interest rates. So interest rates can come back up by a few hundred basis points and stocks still look attractive in value."
And Parker Global Strategies' Ginny Parker has a warnings for investors:
GINNY PARKER, CHIEF INVESTMENT OFFICER, PARKER GLOBAL STRATEGIES :
"We are very, very worried about the bond bubble. This is something that could last decades as far as its impact on investors, on individuals. The debt ceiling, we believe, that Congress will eventually address something a little bit more than just kicking the can down the road. I think that Congress understands that we are all very, very vested in coming up with some form of a solution."
And the trend is confirmed by retail investors.
New data from Thomson Reuters' Lipper supports the cash surge in equities:
Stock mutual funds showed gains for the third straight week. Bond fund flows declined.
The S&P 500 has been higher for 8 sessions in a row- reaching a five-year peak.