NEW YORK Famed short-seller James Chanos says he's disappointed no one has gone to jail over the financial crisis. Money manager Todd Petzel says the wealthy families for whom he manages money are worried about inflation and the U.S. government's inability to deal with its mountain of debt.
Those are some of the highlights from the second day of the Reuters 2012 Investment Outlook Summit. A diverse group of money managers and investment advisers are sharing thoughts on topics ranging from the debt crisis in Europe to income stagnation in the United States to ideas on where to invest in the coming year.
Here are some of their thoughts:
James Chanos, founder of Kynikos Associates LP
Chanos, whose $6 billion hedge fund specializes in betting on a decline in stock prices, says federal prosecutors should have gone after Wall Street bankers with the same vigor they pursued the executives of Enron. He said some Wall Street bankers "looted" their companies by getting big bonuses for peddling now worthless mortgage-backed securities.
"I strongly believe that there should have been, and should be, prosecutions for what happen happened in '08," said Chanos.
The hedge fund manager, who has been an outspoken supporter of President Barack Obama, also said he does not understand why so many of his colleagues in the $2 trillion hedge fund industry are big critics of the White House.
"I keep asking my hedge fund compatriots, 'How bad has your life under Obama really been?'"
Todd Petzel, chief investment officer at Offit Capital Advisors
Petzel says many of the wealthy clients of Offit Capital, which manages $6 billion, are concerned about the U.S. deficit and fear it may lead to renewed inflation down the road.
"What our clients worry about is that European banks will melt down, and they are very worried about deficits," he said. Another worry, he said, is "the dysfunctional nature of the political discourse" in Washington.
Tad Rivelle, chief investment officer, fixed income, of TCW
Rivelle, whose firm oversees $120 billion in assets, said TCW is still underweight Treasuries because the risk-reward ratio continues to look unattractive.
"If the Fed miscalculates and overdoses (on its monetary easing), then you will be happy shorting Treasuries," Rivelle said of the Federal Reserve's near zero percent interest-rate policy aimed at creating inflation.
Rivelle said TCW does not believe the United States is going to see "prosperity" anytime soon because it still has a lot private and public debt to reduce.
"We are still working our way out of leverage and no one should fool themselves that it would be snap, crackle, pop for the economy," said Rivelle.
(Reporting by Jennifer Ablan, Joe Giannone, Svea Herbst-Bayliss and Sam Forgione; Editing by Leslie Adler)
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