The UK’s ‘answer to Warren Buffett’ says it’s time to get out of stocks and bonds

Key Points
  • Jim Mellon of the Burnbrae Group says market fully valued
  • Claims that bonds have already fallen through key resistance levels
  • Sees more regulation coming for FANG stocks
Jim Mellon: US equities fully valued, close to a top, global bonds in bubble-like territory

A British investor who some like to call Britain's answer to Warren Buffett has given a stark warning on both stocks and bonds.

Jim Mellon of the Burnbrae Group says U.S. equities are close to a top, there are ominous signs for the bond market, and profits at large tech companies will likely sag in the face of new regulation.

"We are pretty close to a top. I have been in this market for 30, 40 years and I would say it is extremely fully-valued by most measures," he told CNBC Wednesday.

For fixed income, Mellon said global debt was in a bubble-like territory. The investor said he expected bond values to fall further having now broken through key resistance levels.

"The dividend yield on the S&P 500 is below the 2-year Treasury note for the first time and that's an ominous sign," Mellon added.

For FANG (Facebook, Amazon, Netflix, and Google) stocks, Mellon admitted he had been on the wrong side of market moves in the last six months, but he remains bearish on big tech.

"I do think they have unacceptably high valuations and are pretty unaccountable in terms of their behavior and something is going to happen."

Mellon added that over time, large tech companies are going to be more strictly regulated and their profit margins will come under pressure.

Mellon's wealth, estimated at around $1 billion, was largely made by investing in emerging markets. He has been described as Britain's Warren Buffett — a description he has flatly rejected due to the difference in both age and fortune.