Some of the highest-profile investors speaking at the CFA Institute's annual conference this week have found more to worry about than celebrate in the stock market's government-engineered resurgence of the past 14 months.
Seth A. Klarman, president of Boston-based Baupost Group, a hedge fund manager with more than $20 billion in client assets, told the conference's roughly 1,600 attendees in Boston Tuesday that he's more worried now “than I've ever been in my career.”
“Virtually everything is being manipulated by the government,” with the apparent goal of muddling through rather than tackling serious problems, argued Mr. Klarman. “Every can is being kicked down the road,” he said.
Addressing the same crowd on Monday, GMO Chairman Jeremy Grantham likewise struck a skeptical tone. Under the Federal Reserve's current near-zero interest rate policy, the country's major banks would be awash in profits even if they were led by grade-school children, he said.
Meanwhile, the country's retirees, unable to earn enough on their savings, are being pressured to plow money into riskier assets such as stocks, which at current market levels don't offer obvious value, Mr. Grantham said.
In fact, a little over a year after a range of equity and fixed-income pockets were offering compelling values, bargains today seem few and far between.
“The rally has been indiscriminant,” with risks “starting to be priced close to perfection again,” as they were before markets began crumbling during the second half of 2007, noted Mr. Klarman.
“We may be going right back” to an environment where the spreads between risky and less risky assets become unusually narrow, Seth D. Alexander, president of the Cambridge, Mass.-based Massachusetts Institute of Technology Investment Management Co., said in a separate talk Tuesday.