More Videos
- Pop Queen Whitney Houston Dies on Eve of Grammys
- Greek Debt Saga Back on Center Stage for Markets
- Greece Now Struggles to Overcome Mistrust
- Low-Interest Loans to European Banks Prompt Concern
- British Bankers Arrested in Tax Probe
- The Fight Begins: Obama's Budget Going to Congress
- Fuel Removal Under Way on Italy Cruise Ship
- Boeing Frustrated With Dreamliner Glitch
- Pentagon Budget: $178.8 Bln for Warships, Fighter Jets
- US Stocks Avoid Closing Down Over 1%, Again
- In Search of America's ‘Hottest Forecasters’
- Dow vs. S&P 500: Which is a Better Investment?
- Mick Fleetwood on the MP3 ‘Dumbing Down’ of Music
- Avis on the Road to Strong Growth: Analyst
- Private Homebuilders: Dead Men Walking
- LinkedIn’s Growth Is Already Priced In: Analyst
- The Real Reason Behind Bank of America’s Rally
- 5 Hedge Funds’ Top Stocks Soar After 2011 Rout
MOST SHARED
- Low-Interest Loans to European Banks Prompt Concern
- Sun Arrests Pile Pressure on Murdoch Media Empire
- Clashes as Greek Parliament Debates Bailout Law
- Lodgenet Interactive Media in Hotel Rooms
- Pop Queen Whitney Houston Dies on Eve of Grammys
- Charting the Market: 50 Percent Correction Ahead?
- Barbie: Where Fashion Week and Toy Fair Collide
- Whitney Houston, Superstar of Records, Films, Dies
MOST POPULAR
HOT ON FACEBOOK
Investors Be Wary of Stocks, Treasurys: Pimco's El-Erian
Text Size 
Investors can still lose a lot of money in the stock market, but US government bonds aren't the solution either for those seeking safe havens, Pimco's co-CEO and co-chief investment officer Mohammed El-Erian told CNBC.
 |
Photo: Oliver P. Quillia for CNBC.com Mohamed El-Erian, co-chief executive officer of Pacific Investment Management Co. |
"Certain bonds aren't worth owning, like government bonds for instance," El-Erian said, adding that gaping deficits will force governments issue more debt.
"I am very underweight equities," he said, adding that he has cut his exposure to stocks to 30 percent compared with around 60 percent in normal market conditions. Pimco is the world's biggest bond fund.
"Fundamentally we are in a volatile journey to what we call the new normal, the new destination. The world is changing," El-Erian said.
People have to adjust to the fact that wealth has been destroyed, and the fact that there are more than 5 million unemployed in the US shows how serious the situation is, he added.
"The American consumer will return but will be a saner consumer… worried about their savings, worried about their retirement. That is a good adjustment. The problem is that it doesn't happen overnight," El-Erian said.
Asked whether he believed the stock market can re-test the March lows, he said: "The intellectually honest answer is we don't know."
"I have a fear right now that people are sucked into the equities market … go in as long as you can afford to lose that money," he added.
More videos of El-Erian: part two here >>> and part three here >>>
Two out of four conditions need to be met for an economic recovery to begin, according to El-Erian: house prices need to stabilize, banks must start lending again, the consumer must start spending again and the rest of the world must pick up.
For the moment, only the fourth condition is partly fulfilled, with timid signs of recovery in China emerging, he said.
Asked about attractive areas of investment, El-Erian listed mortgages, municipal bonds and corporate bonds, especially instead of stocks.
- Marketing clichés aside, sometimes diamonds are for investing.
- The ‘Fast Money’ traders weigh in on fashion related stocks from apparel to footwear.
- This list of the 10 most active cities for speed traps was compiled by Trapster.com. See if your town is there.
- This Valentine’s Day should prove a love fest for restaurants, as many couples will be dining out.
- Here’s a look at Westminster Kennel Club’s most successful breeds—and how much they cost.
- What kind of homes do celebrity couples share? Here’s our updated list. Take a look.
Data is a real-time snapshot *Data is delayed at least 15 minutes
