Investors should not own "long term debt of any kind" while the Federal Reserve continues its bond-buying program, private equity billionaire Wilbur Ross told CNBC on Friday.
As for the stock market, Ross said in a "Squawk Box" interview, "The economy is more likely to accelerate in 2014 than not. So I don't things are grotesquely overvalued in terms of equities."
Stocks have been lower this week as investors watch the twists and turns in the Cyprus banking crisis. Both the Dow Jones Industrial Average and the S&P 500 are headed for their biggest weekly losses of 2013. But remember, blue-chips hit all-time highs last week, while the broader market kept rallying to new five-year highs.
"Where I'd be very wary is bonds. If the 10 year Treasury reverts back just to its average yield from 2000-2010, you know how much [the price] will go down?" Ross asked and answered, "23 percent, 23 percent. That's a huge risk."
He added: "We've been advising friends that it's not worth getting a few extra basis points to take that kind of downside risk for a year or two while [Fed Chairman] Bernanke keeps this quantitative easing going."
(Read More: Fed Keeps Easing, Not Worried About Stock Bubble)
He did say that he's urging his portfolio companies to "borrow as much long-term, fixed-rate money as they can."
Ross said the latest developments in Cyprus' pursuit of a financial bailout is not that worrisome unless you're a Russian oligarch.
(Read More: Allow Bad Cyprus Banks to Fail: AEI Banking Expert)
He said he does worry that this is the first time a government has been faced with going back on the "100,000 euro guaranteed deposit" level.
Lawmakers in Cyprus are getting ready to vote Friday on a series of bills—alternatives to a controversial tax on bank savers there—put forward in a renewed effort to strike a bailout deal with European partners after talks with Russia collapsed.
(Read More: Clock Ticking for Cyprus, Lawmakers to Vote)
The European Central Bank has set a Monday deadline for Cyprus to agree to a rescue package, threatening to cut off funding to its banks otherwise.
Overall, Ross said that Europe needs to stay in the front of investors' minds with elections coming in Germany and politics in Spain. But while the European risk was economic last year, now it's political, he said.