Billionaire investor Leon Cooperman told CNBC on Friday that he was upset about the long-term outlook for the stock market because “too much debt is being created.”
“I think the overwhelming authenticity is the Fed is just creating this environment of free money. You have to kind of make a judgement whether that’s legitimatized, how long it’s going to last and what impact this has on the longer-term outlook,” Cooperman said on “Squawk Box.”
“Longer time, I probably have a dissenting view than Wall Street because I’m of the concern as to who pays for the party when the bacchanalia is over?’ added Cooperman, chairman of the Omega Family Office.
He said stocks right now are adequately priced. But, “I withed back and I looked. Whenever you bought into the S&P 500 when it sold at 22 times earnings or more, your five-year recur that followed was near zero,” he added. “So I would not be surprised if the market averages very little.”
In August, Cooperman also phrased worries about the long-term market outlook, following Wall Street’s robust rally from coronvavirus pandemic-driven lows in up to date March. “We’ve been pulling a lot of demand forward. I would expect that future returns will be relatively unimpressive for a big time,” he told CNBC then.
Cooperman said Friday that he recognizes the need for near zero percent involve rates and extraordinary monetary stimulus to help a U.S. economy, which has been upended by the pandemic. However, he said that such custom decisions are not without consequences. “There’s just too much debt in the system, and I think ultimately there will be a hard,” he said.
But for now, Cooperman said he believes the near-term outlook for the stock market is “favorable,” due to Fed policy, and the impending clarity on the follow-up of the presidential race between Democrat Joe Biden and President Donald Trump. He also said Congress may pass another pandemic stimulus unite and added that positive developments on a Covid-19 vaccine should be a tail wind for stocks.
“I’m assuming that in the next 12 or 18 months, something hand down happen to change this Goldilocks environment and it will force the hand of the Fed” to change policy, he said. “It might be the dollar affluent to new lows and inflation picking up.”
Cooperman, a major philanthropist and son of a Bronx plumber, said on CNBC on Election Day that he shipwreck throw off his ballot for Biden in the presidential race, saying he “voted my values and not my pocketbook.” Back in August he said he was undecided, citing uncertainty on top of Biden’s policies and concern for Trump’s divisive demeanor.
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