Milken confab investors: Watch for these bubbles

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Investors should be wary of excess in several crowded trades in today's market, according to large investment managers at the Milken Institute Global Conference.

"I am worried about bubbles forming," Robert Kricheff, a portfolio manager at bond investor Shenkman Capital, said Wednesday at the event in Los Angeles.

"I don't think there's a big broad bubble—you're not going to pull one string and the dress falls off—but there are definitely issues out there."

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Kricheff noted two areas of concern.

First are biotechnology companies. "Because of the tax regimes, we've seen valuations go way up," Kricheff said.

Second are troubled commodity companies getting emergency loans.

"Some of these companies don't need rescue financing. The debt needs to be reshuffled and they need to go through a reorganization," Kricheff said. "There may start to be a bubble in that."

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Sarah Ketterer, CEO and portfolio manager of global stock investor Causeway Capital Management, added a similar warning about so-called defensive stocks in Asia, Europe and the U.S.

Such stocks come from companies whose products and services are typically less susceptible to economic cycles, such as food staples and utilities, and are often seen as less risky investments.

"Defensives are at a huge premium," Ketterer said on the panel. "It's as if this enormous wave of artificial monetary creation has led to huge asset price inflation and it's gone to safety."

"When the volatility returns, will those stocks be as defensive as investors anticipate?" she asked. "They're trading at multiples far in excess of the market. ... Tthat is no room for error."

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Morris Mark, founder of Mark Asset Management, offered a more benign view.

"Usually when you're in a bubble, you don't know it. You're excited about something, you're clamoring for it," Mark said. "About the only thing I see people clamoring for today is security. ... I'm not sure you'd call that a bubble."