Mob boss calls a stock bubble

Leslie Shaffer | Writer for
Investment tips from a former mob boss
Investment tips from a former mob boss

Former mob boss Michael Franzese thinks investors should avoid the U.S. stock market, but should you take his investment advice?

"There's a bubble there that's going to burst at some point and when it does it's not going to be good," Franzese, a former mob boss for the Colombo crime family in New York who has become an author and motivational speaker, told CNBC.

It's not just the valuations. He's got another reason for advising investors to keep their money off Wall Street.

Read More Organized crime: World's most lucrative criminal activities

"I did a lot of things at times with people on Wall Street," said Franzese, who believes there is still a contract out on his life. "A lot of guys are shady and they did shady things with me and I don't trust them. And I don't like other people that I don't know really well taking care of my money. I think that I can do it better."

Michael Franzese, a former Colombo Family Capo
Jerritt Clark | WireImage | Getty Images

He advises investing in gold and , but if you're thinking about the exchange-traded funds, fuggedaboutit. He likes physical bars.

Read More Why the real bubble may be confidence in the Fed

"No matter what, it's always going to have a value," said Franzese, who dodged a question about whether he'd ever killed anyone. "Unlike stocks, where in our country, you go to sleep, everyone tells you everything is wonderful, you wake up and everything is gone."

To be sure, he doesn't expect financial Armageddon and he still thinks diversification is important, with some caveats.

"You have to have knowledge of what you're diversifying in and not trust somebody else to pick those spots for you unless you know him so well and you have so much confidence and you've done a lot with them throughout the years," said Franzese, who was played by Joseph Bono in the 1990 Martin Scorsese film "Goodfellas."

Read More Greenspan says stocks to see 'significant correction'

Should you follow his advice? He has some unusual bona fides.

At the age of 35, he ranked No.8 on Fortune Magazine's 1986 list of the 50 most wealthy and powerful mafia bosses, believed to be raking in up to $8 million a week at times -- although he told CNBC that if his fortune is still out there, he's not likely to be able to use it.

Read More Marc Faber: The asset bubble has begun to burst

"Business is business," said Franzese, who served a 10-year prison sentence on federal racketeering charges. "Whether you're doing it on the street illegally or you're doing it legitimately, there're certain principles that carry both ways."

Franzese has another unusual qualification for giving advice: he's still alive. He noted that out of the 50 bosses on the Fortune list, 44 are now dead and three are doing life in prison without parole. He's believed to be the only surviving high-ranking member of a major crime family to publicly walk away and refuse protective custody.

—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1