Wednesday, February 8, 2012

Now Blackrock President: Be 100% in Stocks

Bloomberg reports:
Investors should have 100 percent of investments in equities because of valuations and higher returns than bonds, said Laurence D. Fink, chief executive officer of BlackRock Inc. (BLK), the world’s largest money manager.

Investors who seek the safety of treasury bonds will have minimal returns and will not be able to meet their needs with the U.S. Federal Reserve expected to keep interest rates low, said Fink, who in 1988 co-founded the New York-based manager with $3.5 trillion of assets. By contrast, equities are trading at the lowest valuations in 20 or 30 years
“I don’t have a view that the world is going to fall apart, so you need to take on more risk,” he said in an interview with Bloomberg Television in Hong Kong today. “You need to overcome all this noise. When you look at dividend returns on equities versus bond yields, to me it’s a pretty easy decision to be heavily in equities.”
Fink is clearly no business cycle theorist, but he does see what is in front of him: a very undervalued stock market, given that the economy is starting to turn. Fink recognizes the turn, but doesn't quite recognize that is a Fed manipulated turn and that it will ultimately lead to major price inflation. That said, he is very correct to be bullish on stocks. And, he is very right about bonds, more than he realizes. With accelerating price inflation coming, a heavy Treasury debt load and fewer international buyers of U.S. debt, bond prices will be headed much lower.


  1. The challenge with a world currency (and so many countries pegging the dollar) is that printing money does not have the effect the US would like it to have.

  2. money manager: "You need to take on more risk."
    investor: "But with all the world debt problems, isn't that too risky?"
    money manager: "Don't worry, I'll be fine."

  3. Yeah, because being in stocks was such a great place to be during the seventies, the last time we had big inflation.