JULIAN ROBERTSON: There Are Two Bubbles That Can Bite Us

Legendary hedge fund manager Julian Robertson is speaking at Bloomberg Market’s Most Influential Summit.

Bill Conway from the Carlyle Group is also on the panel.

Robertson thinks that there are two bubbles that can bite us.

“I agree with the fact that the economy is definitely getting better. I think the cause of that is two bubbles that will bite us. The first bubble is that bonds are at ridiculous levels…The small saver has no place to put his money except stocks. I think that the situation is serious on that score. No one seems to be concerned about that. It’s a world-wide phenomenon that countries are buying bonds to keep them moving along economically. I don’t know when that will happen, but in a very bad way…”

Carlyle’s Conway later said that he agrees with the bubble idea intellectually, but he didn’t see a catalyst that will cause it to burst.

Robertson also said that there are some “great companies around.” He said one of them just became public last week. He said that Alibaba is a “fabulous company.”

“If Alibaba and some of the other things do as well as they are projected to do, then they are probably reasonable valued. Look, we are always looking for bargains…that’s sort of the way it goes in our business,” he said.

Last week, CalPERS said they would redeem from all their hedge fund investments citing fees and complexity. CalPERS only had $US4 billion allocated to funds. Robertson said that he didn’t think their move was all that important for the industry.

“Well it’s less than 1% of their holdings. They weren’t very seriously involved. I think it’s definitely much harder to run a hedge fund today than it used to be. In my opinion, it’s because there are more hedge funds to compete with. We had a field day before anyone knew anything about shorting. It was almost a licence to steal. Nowadays it’s a licence to get hosed.”

Robertson said that he’s “kind of cut back” a bit.

“I’m concerned that my obituary will say he died at 2 a.m. while getting a quote on the Yen,” he joked.

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