Billionaire investor Wilbur Ross suggests owning bank stocks as a hedge against the Federal Reserve’s looming rate hike and market volatility.
Since the central bank’s antics are essentially to blame for recent unfriendly investor atmosphere, play it to your advantage, Ross, chairman and chief strategy officer of WL Ross investment company, told Fox Business Network.
“I really blame (Fed Chariman) Janet Yellen and the Fed for being so indecisive and putting so much emphasis on the 25-basis-point hike. There's never been a more programmed thing than that. And it's silly, 25 basis points is really a rounding error but made it into a huge psychological problem. So I blame a lot of the volatility on the Federal Reserve,” he said.
“One way to hedge yourself against rising rates is to own banks.”
Despite the volatility and investing risks, Ross does admit stocks are still your best bet.
“There is no alternative than to be in equities, question is which ones and how aggressively do you buy them at any given point in time,” he said.
An investor and businessman who made his billions advising bankruptcies and restructuring flailing companies, Ross was No. 20 in Newsmax's 100 Most Influential Business Leaders in America.
Ross is a force in the steel, coal, telecommunications, foreign investments, and textiles industries. He spent 25 years with Rothschild Inc.'s bankruptcy practice and then founded investment firm WL Ross in 2000. It was acquired by Invesco in 2006. He has spent the recent years turning around troubled banks, first the Bank of Ireland and then the Bank of Cyprus.
Ross successfully bet on the Irish banking system when it was on the ropes. Ross is known for restructuring failed companies in industries such as steel, coal, telecommunications, foreign investment and textiles. As of June 2015, Forbes
listed Ross’ net worth at $3 billion.
Ross, who specializes in leveraged buyouts and distressed businesses, leads a group of investors who last year poured 1.3 billion euros ($1.47 billion), into Eurobank Ergasias, the third-largest bank in Greece, the New York Times said.
To be sure, a top U.S. central banker said that now that the United States is closing in on full employment and inflation is likely to rise to target levels, the "next step" should be to start gradually increasing rates.
San Francisco Federal Reserve President John Williams said there's a "very strong case" for the Fed to raise interest rates next month if the economy continues to improve and policymakers are confident that inflation will pick up.
"Assuming the data are consistent with those (conditions), I think there's a very strong case for starting the process of raising interest rates" at the Fed's next meeting, Williams told USA Today
. "The next natural step...is to start raising rates and to do that gradually."
The Fed has kept interest rates near zero for almost seven years, and the central bank last month said it would consider a rate increase at its Dec. 15-16 meeting, the last of the year.
(Newsmax wire services contributed to this report).
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