CHICAGO -- Just last month BlackRock’s Bob Doll told a room full of almost 2,000 advisors at the IMCA Annual Conference in Las Vegas that he believes the U.S. will continue to outperform developing markets and outperform Europe and Japan. “Investors should be overweight the U.S.” he said.

On Friday, at the Morningstar Investment Conference in Chicago the CEO of BlackRock, Laurence Fink, said U.S. economic growth could be slashed 1% a year for the next 10 years if the deficit is cut by $4 trillion as proposed. Even without deficit cuts, Fink predicts the US economy will only grow 2% to 3%, or even 1.75%, over the next five to 10 years, below the 3% to 5% expected globally. The economy has weakened, he added.

Yet Fink believes investors should be looking at the long-term, not the short term, when planning their portfolios. One sign of what he called “short-termism” was the number of investors who own bonds. Over the long term, he said, investors should be in equities, which are currently the most under-invested asset class. If investors want to have enough for an adequate retirement they will need to be in equities, he said.

Fink believes the government must deal with the corporate tax rate and the deficit to spur investing. Every 1% increase in interest rates, Fink said, adds $140 billion to the deficit.

With stock prices so cheap, Fink believes investors should be jumping in.

While acknowledging the recent "skittishness" that has taken a 7% bite out of stocks, "Equities are the most under-invested asset class in the world," Fink said here at the Morningstar Investment Conference.

"I would say to anybody who has planned on living beyond 10 years that, systematically, equities are a much better long-term investment than bonds at these prices. You could buy a great large-cap portfolio of equities with international businesses that are going to give you anywhere from a 2.5% to 3.5% dividend," he said.

Fink also said he did not foresee any large municipal bond defaults.

"I don't think you're going to see any failures of the state GOs," he said, referring to general obligation bonds. "They have the ability to tax." But smaller issuers could have trouble because "they don't have the ability to find revenues… I think the problem in municipals is that, for many years, people who bought municipals [regarded] one municipal as good as another," without sufficient regard for credit quality or risk.

The next few years will be volatile, but Fink isn’t bearish.