Just because many forecasters predict the U.S. economy will continue to grow doesn't mean it's easy to make money.
"The quantitative easing and the excess money and the low interest rates have driven pricing up of almost all financial assets to beyond what their intrinsic value might be," Joshua Harris, co-founder and chief investment officer of $161 billion private equity firm Apollo Global Management, said Monday at the Milken Institute's Global Conference in Los Angeles.
"So even though we can all chat about the benevolent growth environment that exists in the U.S. and to a lesser extent globally, the ability to make money and invest wisely on that is very, very challenging right now because you're starting at a point in the valuation cycle that is very, very aggressive."
Harris added that it's a "time to be cautious" and that Apollo is still looking for investments in sectors that are still relatively depressed. "Almost every asset is overvalued," he said.
At the same time, Harris predicted overall economic growth in the U.S. of about 3 percent.
"I would characterize that as a reasonable and sustainable growth rate," Harris said.
One of the best investment opportunities, according to Harris, is buying assets from European banks, an opportunity long cited by private equity firms since the financial crisis.
"The deleveraging of the banks in Europe will dwarf anything else really going on," Harris said. "And the market's ability to absorb the banks getting smaller and getting out of some of these risky businesses will create the valuation arbitrage where you can actually make interesting investments across Europe."
Harris noted opportunities in consumer loans, mortgages, commercial property loans, companies, high-yield bonds and other distressed securities.
Harris added that most risks, such as potential conflict between Russia and Ukraine or China and Japan, aren't being priced into the market.
"I don't think there's any valuation of it in the marketplace. People are ignoring it totally," he said. "It's just another component and characteristic of the easy money environment that we are living in today."
—By CNBC's Lawrence Delevingne.