Legendary fund manager Seth Klarman of the Baupost Group made some rare public comments recently at the CFA Institute in Boston. Suffice it to say that he does not have a bright and sunny view of the world.Some choice quotes relayed by Aaron Pressman at Reuters:
* “Given the recent run-up [in stocks], I’d be worried that we’ll have another 10 years of zero returns.”
* “I’m more worried about the world broadly than I’ve ever been in my whole career.”
* Current market conditions remind Klarman of a Hostess Twinkie snack cake because “everything is being manipulated by the government” and appears “artificial.”
* Publicly traded real estate investment trusts…have “rallied enormously” and are “quite unattractive.”
* Inflation is a risk that Klarman said he is particularly concerned with given the government’s high rate of borrowing to bail out the financial system. Baupost has purchased far out-of-the-money puts on bonds to hedge the risk, he said.
Baupost has 30% of its assets in cash.