“Everybody is outside of their own asset class,” Barrack said in a Bloomberg Television interview Tuesday with Erik Schatzker and Stephanie Ruhle at the Milken Institute Global Conference in Beverly Hills, California. “When amateurs enter the marketplace for all of this, you are going to get an abundance of something and it is usually not good.”And here is some more:
Central banks globally have pushed investors into higher-yielding assets by reducing interest rates and purchasing bonds. The Standard & Poor’s 500 Index reached an all-time high on Friday and sovereign debt in Europe is trading at negative yields.
“Institutional investors that are in this endless search for yield are ignoring the risk peril of all the consequences of those things,” he said.
To protect themselves from possible future losses, real estate investors should look for “equity-type returns” in the capital stack, Barrack said during the panel discussion.The article is about real estate investors, but you can substitute nearly any asset class that throws of yield and uses low cost leverage to boost returns.
“Floating debt can choke and kill you quickly,” he said.