Mohamed El-Erian, CEO and co-chief investment officer for Pimco, offers a long history of experience in bonds and asset management and went on record with Barron’s to share his thoughts about the market:
The fundamental question is: How long are they comfortable riding the liquidity wave? It has been a very profitable trade because, as I mentioned, the Fed has been able to disconnect financial markets from underlying fundamentals. As a result, the price/earnings multiple of the Standard & Poor's 500 has gone all the way to 16½, and people expect it to go up even further. So even though earnings are facing head winds, people are putting that aside, because the liquidity wave has been so profitable as an investment strategy.