Salient to Investors:
Joseph Baratta at Blackstone said:
- The stock market rally may last 2 more years with compound annual growth of 8% to 10%, as long as the Fed provides support.
- Equity markets are not overvalued when measured by the prices buyout firms are paying for companies.
- US economic fundamentals are strong, sentiment is very positive, earnings have been growing, the Fed is quite accommodating.
- Private-equity firms have been taking profits – Blackstone has sold $10 billion in assets in the past 12 months.
- Higher interest rates and weaker markets 5 years from now could make it harder to profit from selling investments. With the Fed expected to begin scaling back QE, Blackstone is seeking deals that require less debt financing because the next buyer will have less access to capital and it will cost more.
Kyle Bass at Hayman Capital Mgmt said many investors are wise to buy stocks, and equities are the natural place for pensions and hedge funds.
Industry players from Leon Black at Apollo Global Mgmt to Wesley Edens at Fortress Investment said the Fed-fueled market rally makes it an ideal time to exit investments. Black says it is a fabulous time to be selling and is selling everything that is not nailed down in his company’s portfolio.
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