In the News: Washington Post

"This rally may have a bad ending," portfolio manager Axel Merk tells the Washington Post

" 'We're seeing everything move up," said Axel Merk of Merk Mutual Funds and author of the book "Sustainable Wealth," due out this month. "But that's exactly what we saw in the pre-crisis. . . . Some investors are going to jump on the bandwagon because they want to be a part of this. But this has to have a bad ending.'

Merk said stocks are overvalued and that the recent rally is a direct result of investors taking advantage of the easy money created by the Federal Reserve's fiscal policies. In response to the economic crisis, the Fed has reduced interest rates to near zero and flooded the market with money by buying up Treasurys and other assets.

'People are again yield-hungry,' said Merk, 40, who added that he has no stocks in his personal portfolio. 'They're going to grab anything that gives them a little bit more return than Treasurys that yield close to nothing. Rather than normalizing things where we would have slower growth but market-based returns, we have the Federal Reserve interfering in the markets artificially, depressing yields and encouraging exactly the sort of practices that got us into trouble in the first place. We haven't resolved the issues from the last crisis.' "