Big money: 'Awfully dangerous' to take risk now

Source: Canyon Partners

The smart money has a warning for investors: Taking on more risk in the markets, especially in company debt, could cause big losses soon.

"Going out on the risk spectrum in today's environment seems like an awfully, awfully, dangerous thing to do," Joshua Friedman, co-founder and co-CEO of $23 billion hedge fund firm Canyon Partners, said Monday at the Milken Institute Global Conference in Los Angeles.

Friedman, an expert on investing in bonds and companies in financial distress, noted several "credit bubbles in the system" including high-yield and bank debt.

"It's clear that we have an overshoot in credit," he added, referencing the high amount of lending to companies that has taken place since the financial crisis.