And the warnings about owning long-term debt continue — the drum beat that we have been hearing for the last five years.
This time it is vulture investing guru Wilbur Ross providing the advice, and here are some direct quotes from Ross today:
- "Investors should not own long-term debt of any kind while the Federal Reserve continues its bond-buying program."
- "The economy is more likely to accelerate in 2014 than not. So I don't think things are grotesquely overvalued in terms of equities."
- "Where I'd be very wary is bonds. If the 10-year Treasury reverts back just to its average yield from 2000 to 2010, you know how much [the price] will go down? Twenty-three percent, 23 percent. That's a huge risk."
- "We've been advising friends that it's not worth getting a few extra basis points to take that kind of downside risk for a year or two while [Fed Chairman] Bernanke keeps this quantitative easing going."
To take advantage of the long-term debt, Ross is urging his portfolio companies to borrow as much long-term fixed-rate money as they can.
Ross enters the video at the 2:24 mark.