Billionaire value investor Howard Marks warns savvy investors that the bond market bubble continues to linger while the stock market is way overvalued.
"There's nothing that's cheap today," the Oaktree Capital co-chairman told CNBC.
"We're in a bond bubble ... Bonds yield the least they've ever had," he said.
"P/E ratios are higher than usual," he said. "That is not a position that warrants a full ration of risk."
He also warned that certain technology stocks have been "anointed" like "nothing can go wrong" and that makes them a "dangerous place" for most investors.
"Several times in my career, which spans almost fifty years, I've seen one group of stocks anointed as super stocks. The companies are so great that nothing can go wrong. Because they are so great there is no price too high ... [But] the key to understand the markets, everything of value or truth eventually gets overdone."
"The willingness of people to say, 'I love the FANGs, there is no price too high,'" is worrisome, he told CNBC, referring to Facebook, Amazon, Netflix and Google-parent Alphabet.
If index funds "buy the FANGs regardless of price then that's a risk. There's nobody sitting at the index funds saying let's not buy that today because it's too expensive. They have to buy it," Marks said.
"And anytime people buy because they have to, then the world is a dangerous place."
To be aure, the S&P 500 index had its biggest one-day drop in almost three months on Thursday as investors fled riskier assets, with technology stocks leading the charge, in response to an increasingly aggressive exchange of threats between the United States and North Korea.
U.S. equities steepened their losses late in the session after President Donald Trump said his earlier warnings to North Korea may not have been tough enough. He also said the nuclear-armed nation should be "very, very nervous" if it even thinks about attacking the United States or its allies, Reuters reported.
Trump was responding to North Korea's claim it was completing plans to fire four intermediate-range missiles over Japan to land near the U.S. Pacific territory of Guam.
Investors have been jittery about North Korea since Tuesday when Trump said any threats from Pyongyang would be "met with fire and fury like the world has never seen."
(Newsmax wires services contributed to this report).
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