TOPLINE
Billionaire investor Leon Cooperman gave a bleak prognosis for the stock market, warning that future returns will probably be “unimpressive for a long time” and valuations are too excessive as a result of the market has been “pulling a lot of demand forward,” he mentioned in an interview with CNBC on Monday.
“Future returns will be relatively unimpressive for a long time,” Cooperman predicted.
Andrew Harrer/Bloomberg Finance LP
KEY FACTS
Cooperman warned that he sees indicators of euphoria creeping into the market citing the SPAC and IPO increase in addition to the “craziness in many of the stocks that the Robinhood crowd has latched onto.”
“The market has no margin of safety,” he mentioned, including that he expects valuations to ultimately come down as soon as traders notice that many of the good points this 12 months may be credited to authorities assist.
Though many on Wall Street have cheered low rates of interest from the Federal Reserve, Cooperman reiterated that the central bank is barely pursuing a coverage of zero-interest charges as a result of “things are bad in the economy.”
An excessive amount of of the present rally may be attributed to stimulus from the Federal Reserve and debt-fueled spending by Congress, he mentioned, including that by pulling a lot demand ahead, the market will probably see lackluster returns in the long term.
Among the many greatest issues for the market as we speak, Cooperman mentioned, are U.S.-China relations which have “soured badly,” a delayed fiscal package deal from Congress and quite a lot of “uncertainty” across the upcoming presidential election.
He additionally criticized traders who purchased up shares of Apple and Tesla after the businesses introduced stock splits: “Everybody understands that splits don’t create value,” Cooperman mentioned.
Essential quote
“We came into 2020 with a full employed economy, yet we were running a trillion-dollar deficit,” Cooperman mentioned. “And now we’re piling a lot of debt on top of that. And so I would have to say I have a conservative view,” he added.
Tangent
Cooperman advised CNBC that he’s unsure who he’ll vote for within the November presidential election, although he added that “this election, in my opinion, is pivotal in the [market’s] long-term outlook.” He defined why he stays undecided, describing Trump as “a man with limited character who has good economic ideas, but he’s very divisive in his dialogue.” On the opposite aspect, with Joe Biden, “we have a man of decent character who I’m not sure what he stands for.”
Massive quantity
Cooperman has a internet worth of $2.5 billion, in line with Forbes’ estimates. A legend on Wall Street, he based funding agency Omega Advisors in 1991 earlier than turning it right into a household workplace on the finish of 2018.
Key background
The S&P 500 is up round 9% this 12 months after hitting a number of new file highs and totally recoverings its losses from the coronavirus outbreak. The index is up by 7% this month alone, which might be its finest August since 1984. Final week, the Dow Jones Industrial Common equally turned constructive for the 12 months.
Additional studying
Dow Rises 150 Factors, Turns Optimistic For 2020 (Forbes)
Dow Jumps 150 Factors After Federal Reserve Pronounces New Method To Inflation (Forbes)
S&P 500 Closes At New Report Excessive, Totally Recovering Losses From Coronavirus Pandemic (Forbes)
Citi Boosts S&P 500 Goal, Says Federal Reserve Will Do ‘Whatever It Takes’ To Forestall One other Market Crash (Forbes)
